Formula One’s teams are "losing sponsorship revenue at a rapid rate," according to James Allen of the FINANCIAL TIMES. Last year the 10 F1 teams raised $750M, down from $950M three years before. Switches to pay-TV have "also undermined audience in key growth markets such as Asia." By failing to control costs over decades, and a "tendency to skew payments heavily to the top teams, the F1 business appears to be perpetually on the brink of a crisis -- and the problem is self-perpetuating." Observers "paint a gloomy picture" of a sport where the funding of smaller teams is "under threat, and audiences are declining on TV and trackside, which in turn deters sponsors." Chime Sports Media CEO Zak Brown said, "The costs are, to me, the single largest issue and the one that then drives many of the others. We have an industry that is exploding in cost, and collectively they are not able to gather and get those costs under control."
FACING A THREAT: Other industry leaders agree the sport's appeal among fans and advertisers "is under threat." Yet for companies such as oil major ExxonMobil, which sponsors McLaren-Honda, the "expensive technical demands of the sport are intrinsic to its appeal as a supplier." ExxonMobil Motorsports Technical Manager Bruce Crawley said, "I’m not sure we’d be in racing if we did not have a technological justification. We are here for branding and marketing, business-to-business and technology. If you took out the technology side it would make it more difficult [to justify]." Potential advertisers and sponsors are "also concerned that the sport is not growing in the Asian market as had been hoped, despite the launch of Grands Prix in areas including China, Singapore, Korea and India over the past decade." Brown: "Asia has probably had the largest drop in reach, primarily driven by [broadcast rights] going to pay-TV, but that was the market most people were most excited in" (FT, 4/1).
