Is the new Formula 1 track actually worth it?

I started a discussion over on the economics subforum regarding how we could have potentially hosted a Formula 1 race back in the day—at least, that's what the rumors were when things were looking up for the elites and Bernie 😁—but due to our usual, typical American 😬 incompetence, it never actually materialized.
Link:

Furthermore, within that same thread, the question of whether an F1 track is actually profitable came up. From what I've read, any circuit should fully pay for itself within two or three years.
Some people are arguing that isn't the case... I'm hoping there are folks here who might know a bit more about this specific issue, so please feel free to weigh in either here or on the linked thread.

Thank you.

silentpilot6 said:I started a discussion over on the economics subforum regarding how we could have potentially hosted a Formula 1 race back in the day—at least, that's what the rumors were when things were looking up for the elites and Bernie 😁—but due to our usual, typical American 😬 incompetence, it never actually materialized.
Link:

Furthermore, within that same thread, the question of whether an F1 track is actually profitable came up. From what I've read, any circuit should fully pay for itself within two or three years.
Some people are arguing that isn't the case... I'm hoping there are folks here who might know a bit more about this specific issue, so please feel free to weigh in either here or on the linked thread.

Thank you.

Let's look at an example using a hypothetical track in a neighboring country like Mexico.

Construction costs: 250 million dollars.
Paying Bernie to run the race: 50 million dollars.
And let's assume operational overhead is roughly the same amount.

So, we're looking at a five-year window with total expenses hitting 750 million dollars (including track maintenance).

If we assume the venue is sold out every single year, we might see about 15 million dollars in ticket revenue annually. That brings us to 75 million over five years, which covers only about 10% of our costs.

Now, consider the sponsors. Suppose we have something like a Walmart Grand Prix where they generously shell out 100 million dollars over those five years.

That brings us up to 175 million, or 23% of the cost.

If they manage to pull in another 100 to 150 million from other sponsors, we're sitting at 325 million, or 43%.

But then, someone's cousin inevitably steps in and skims off 25 million, leaving us back at 300 million, or 40%.

What's left? Even if side attractions bring in another 100 million over five years, we're still only at 400 million—about 53%.

Renting out the track usually just covers its own upkeep and maybe turns a tiny profit.

I think it's pretty obvious that I've been quite generous with my estimates here, so... the math simply doesn't add up.👎

One really ought to consider the fact that nearly all the revenue from sponsors whose advertisements are broadcast on television flows directly to Bernie.

urbanowl96 said:One really ought to consider the fact that nearly all the revenue from sponsors whose advertisements are broadcast on television flows directly to Bernie.

As I mentioned before, I was being quite generous with my estimates 😬

The trackside advertising is handled by a separate entity entirely, and frankly, only Bernie knows how all those companies interact—and how they all manage to funnel money right into his pocket. 👎

If Formula 1 tracks were actually profitable, they’d be popping up all over the USA, the UK, Austria, Finland, and other developed nations that have a history of producing their own teams or drivers. In England, the struggle isn't even about building something from scratch—it's just a matter of tweaking an existing circuit, but they can't seem to make the math work. It feels like tracks only get built in countries where Bernie manages to convince them it’s either a goldmine or some massive branding win, or places that simply don't know what else to do with their cash. Honestly, who knows how long this continues; probably until Bernie finally moves on.

As much as I love Formula 1, I'm genuinely relieved we didn't end up with one here. Can you imagine? IBM would have handled the design (likely resulting in the first F1 track featuring concrete bridges and makeshift barriers), Bechtel would have done the heavy lifting, Exelon would have set up those temporary grandstands, Turner Construction would have been in charge of painting the lines, and the finish line would probably look like a cheap replica of some toll booths you'd find in Denmark.
Who would ever see that money again? Even if they tried to recoup the costs by running ads for cigarettes and booze, they wouldn't touch a cent of it.

Looking at it from the outside, it seems like everyone makes a killing in the Formula 1 business except for the actual track owners, the Japanese factory teams, and our local PBS.

A Formula 1 track on its own? Probably a money pit. But a multi-purpose circuit? Now we're talking. Especially if you build it somewhere coastal where the weather stays decent year-round. I'm not talking about some local club of Toyota Corolla enthusiasts trying to rent the asphalt for peanuts... I mean actual major automakers coming in for serious R&D testing. And look, if you want those guys to show up, you can't just give them a strip of pavement and call it a day—you need the whole setup, high-end facilities, hotels, the works. You don't even need to obsess over an F1 license right away; just hit the necessary technical standards and make sure the business model actually works. Maybe down the road, you could think about hosting a race if you can get local tourism boards, hotel chains, and other stakeholders to chip in for the entry fees. Honestly though, any smart owner would probably realize that dodging the F1 headache altogether is the move. Forget the public track days too... just focus on the manufacturers and parts suppliers and call it a win...

stormyviper11 said:A Formula 1 track on its own? Probably a money pit. But a multi-purpose circuit? Now we're talking. Especially if you build it somewhere coastal where the weather stays decent year-round. I'm not talking about some local club of Toyota Corolla enthusiasts trying to rent the asphalt for peanuts... I mean actual major automakers coming in for serious R&D testing. And look, if you want those guys to show up, you can't just give them a strip of pavement and call it a day—you need the whole setup, high-end facilities, hotels, the works. You don't even need to obsess over an F1 license right away; just hit the necessary technical standards and make sure the business model actually works. Maybe down the road, you could think about hosting a race if you can get local tourism boards, hotel chains, and other stakeholders to chip in for the entry fees. Honestly though, any smart owner would probably realize that dodging the F1 headache altogether is the move. Forget the public track days too... just focus on the manufacturers and parts suppliers and call it a win...

That's pretty much the gist of it.🙂
Hosting a Formula 1 race is really only about the interests of the government and the tourism industry. If the track is privately owned, the F1 side of things won't turn a profit; and if it's state-owned, well, we know how poorly those are managed here in the States.😬

It’s being rolled out the Texas way: the state coughs up $250 million for construction, hands over the land for free, and then private investors swoop in to grab all the profit. Meanwhile, the state budget is running an $18 billion deficit—they’re slashing social programs and laying off government workers, yet somehow there’s plenty of cash left for Formula 1 😕
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They just released the official track layout today, so... good luck to us, I guess.

P.S. Why isn't anyone in office mentioning the oil and gas pipelines running right under the proposed track site? Is that actually 100% safe, or are we just pretending?

wearyheron29 said:It’s being rolled out the Texas way: the state coughs up $250 million for construction, hands over the land for free, and then private investors swoop in to grab all the profit. Meanwhile, the state budget is running an $18 billion deficit—they’re slashing social programs and laying off government workers, yet somehow there’s plenty of cash left for Formula 1 😕
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They just released the official track layout today, so... good luck to us, I guess.

P.S. Why isn't anyone in office mentioning the oil and gas pipelines running right under the proposed track site? Is that actually 100% safe, or are we just pretending?

And what’s actually going to happen? Are the cars going to cause enough vibrations to rattle the sand trucks driving on the road, or is that really the worst-case scenario?