Formula One has an unusual business model, far removed from those of other sports. It works for the company but it produces problems for other stakeholders in the business. Those with the biggest headache are the circuits. They have to pay annual fees for a Formula 1 race which can cost as much as $40 million. This provides FOM with much of its revenue, but means that the circuits cannot hope to cover the costs of events by selling tickets. There are few venues which can accommodate more than 100,000 and so it does not take a rocket scientist to work out that each spectator must pay $400 if the event is to meet the costs of the fees, not including all the other costs that must be met to stage an event.

Thus race promoters have had to rely heavily on local government help in order to make events cost-effective. This is not a bad idea given the benefits that a Formula 1 race brings to a region but there are always going to be those who will argue that taxpayers should not be investing in races, largely because they either do not understand the benefits that a race brings – or choose to ignore them for political reasons. The fact is that a F1 race generates revenues of many different kinds for a region, in addition to attracting more visitors and more business. Cities spend far more to pay for an Olympic Games or a World Cup. London is reckoned to be spending as much as $15 billion on the 2012 Games. These will put the city in the global spotlight for a fortnight and will leave behind some facilities. It is hoped that the event will also help to regenerate the east of London. By comparison to this a seven-year deal for Formula 1 is a real bargain, with annual global exposure at each event and a bill at the end of it of around $500 million.

F1 also creates rather better regeneration possibilities as the event is spread over a longer period. Bernie Ecclestone comes in for a lot of criticism for charging cities too much, but one can argue that it is the cities rather than Ecclestone that set the ticket prices and that things would be a great deal better if they lowered prices and increased spectator numbers. The problem is that venues can rarely afford to invest in new facilities because all their available money is being spent on the fees. A different structure might be a better idea in this respect.

In the United States of America NASCAR has a very different approach. It negotiates commercial deals for the sport and then gives 65 percent of the revenues to the tracks. It gives a further 25 percent to the teams and drivers and keeps 10 percent for itself. Tracks also keep control of additional revenues that come from ticket sales, sponsorships, concessions and merchandise. The teams then earn their prize money from the tracks. Using this method, NASCAR earns less than FOM but there is a strong incentive for the tracks to act in the best interests of the sport, by ensuring successful events, which helps to enhance the value of the NASCAR brand. NASCAR makes additional money by its involvement with in the International Speedway Corporation, which owns around half of the tracks that are used. This means that it avoids questions of monopoly status but still makes a lot from the circuits. The company is privately-owned and much of the profit is ploughed back into the business to improve facilities. The result of all of this is that everyone is happy and they all work together for the future of the sport. The cost of ticket prices remain sensible and the fans pack the grandstands wherever the racing takes place. It is in the interest of the venues to add as many seats as possible to increase capacity and they earn additional revenue from these customers who spend money at concessions and on merchandise. The sport also has a centralised merchandising operation, organisation by a trust.

While NASCAR itself may make less profit each year than FOM, its earnings are increased substantially by its ownership of a number of venues. Fans get a better deal overall and the sport gives off a better impression. Thus the balance between the sport being a business and an entertainment is different to the F1 world, and encourages fan involvement, and the potential earnings that come from that.