How the Money Works in Formula 1, from Revenue to Prize Fund

Our endurance team kept its accounts in a spiral notebook. Entry fee, tires, fuel, the brake pads we went through at Roebling, split four ways and settled by text message on the Monday. Nobody ever got paid for finishing anything.

Formula 1 runs on the same three questions and different numbers. Where does the money come from, who divides it, and what happens when a new name turns up wanting a share.

Where the money comes from

Three sources carry most of it, and the table above has the full breakdown. Media rights are the largest, around a third of the total. Race promoters pay for the right to host a Grand Prix. Sponsorship at series level makes up most of the rest.

That revenue goes to Formula One Group as the commercial rights holder, and in 2025 it came to 3.87 billion dollars. For scale, the figure was about 1.8 billion in 2017, when Liberty Media bought the commercial rights.

What teams earn is a separate question. They get a share of that pool, and then they go and sell their own sponsorship on top of it, which for most of the grid is the larger half of the business.

How it gets divided

Roughly 1.4 billion dollars went to the teams as prize money in 2025, about 36 percent of total revenue, or about 45 percent of the primary revenue the sport counts separately. The split is set by the Concorde Agreement, and it has two layers: a performance pool divided on the previous season’s standings, and payments made outside that pool.

Here is the part that surprises people. McLaren won both titles in 2025 and finished fourth on the prize money list, at 165.8 million dollars. Ferrari topped it at 277.7 million, Mercedes took 230.8 and Red Bull 202.8.

Two things explain that. The performance pool, about 1.05 billion dollars of the total, was divided on the 2024 standings, and McLaren’s share of it was the largest at roughly 147 million. The rest of the money sits outside that pool, in payments for long-run success and, in Ferrari’s case, a legacy bonus no other team receives, and that is where the other three pulled ahead.

What a new team costs everybody

Cadillac joined for 2026, and the eleventh entry means the same pool divides eleven ways instead of ten.

The mechanism for that is an anti-dilution fee, which a new entrant pays to the teams already there. It was 200 million dollars under the previous agreement. Cadillac reportedly paid 450 million, distributed as about 45 million to each existing team.

On the published projections, Cadillac earns something like 63 million dollars in its first season, while McLaren’s share of the pool falls from 165.8 million to roughly 128. Revenue growth may cover some of that. The arithmetic of a smaller slice does not go away.

The cost cap, and why it changed the business

Before 2021 a team could spend whatever its owner was willing to lose, and several did. The cap changed that, and for 2026 it sits at 215 million dollars, with driver salaries and the three highest-paid staff excluded.

What that did to the business model is the part people miss. A Formula 1 team used to be a money pit that bought marketing. Capped spending plus rising prize money turned several of them into companies that make a profit, which is why franchise valuations have gone where they have.

It also changed what money buys. When everybody is limited to the same spend, the advantage moves to how well it is spent, and that is a harder thing to purchase.

What this means for the people watching

Three practical things come out of all this.

A team fighting for eighth in the championship is fighting for real money, not pride, which is why the last two races of a season produce defending that looks disproportionate to the positions involved.

A midfield team with good sponsorship can out-earn a struggling famous one, because prize money is only half the picture. And a single title does less for the accounts than a run of good seasons, which is not how anybody celebrates it.

Our notebook had none of this in it. One season I added up what the four of us had spent and then closed it without telling anybody the number, which is the club racing version of financial strategy, and the only part of this subject I have ever practiced personally.

Jake Holloway is a club racer, track-day instructor, and motorsports editor based near Charlotte, North Carolina. He has raced karts, Legends cars, Spec Miatas, and amateur endurance cars, and he writes for GreenyCars about how racing actually works, from the rule book to the pit lane.