F1's Money Game: A History of Commercial Revolution

A massive entertainment empire worth billions of dollars. That's today's F1. Multimillion-dollar machines racing around tracks, a spectacular show watched by billions worldwide. But 75 years ago, this was just an amateur playground sustained by passion alone. When did all this begin?

It started in small British garages. The rebellion of small British teams dismissed as 'garagistes' in the 1970s. That was the starting point of today's F1, worth over $3 billion annually.

1950s-1970s: Chaotic Beginnings and the Garagistes' Struggle

F1 was pure as a sport but complete chaos as a business. From the 1950s to early 1970s, there was no centralized commercial organization. Individual Grand Prix events were scattered, with race organizers wielding enormous power. Teams survived on irregular and unpredictable 'appearance fees' to guarantee participation in each race.

Ferrari, Maserati, and Alfa Romeo were different. These manufacturer teams received preferential treatment and secured stable appearance fees. Meanwhile, the garagistes - small British independent teams dismissed with contempt - had to sit at negotiation tables for survival every time. The term 'garagistes' referred to those who built their own chassis in garage-like facilities and fitted engines from other companies. The term itself was an insult.

Television coverage was even worse. It was merely a makeshift arrangement where regional broadcasters individually contracted with organizers, leaving teams with no negotiating power whatsoever. Sponsorship was limited to technical partnerships with fuel or tire companies. There was no recognition that F1 could become a massive advertising medium.

These systemic weaknesses and the shared pain of most teams created the backdrop for the emergence of one man who would eventually control everything in F1.

1974-1981: The Birth of FOCA and the FISA-FOCA War

1974: The Beginning of Rebellion

Change began with the establishment of the Formula One Constructors Association (FOCA) in 1974. It was essentially a trade union representing the interests of independent chassis manufacturers against the overwhelming influence of race organizers and major manufacturer teams. The key figures were legends of F1 at the time. Led by Bernie Ecclestone, who acquired the Brabham team in 1972, along with March Engineering's Max Mosley, Frank Williams, Lotus's Colin Chapman, and Tyrrell's Ken Tyrrell, they formed FOCA's core.

The real power struggle began when Ecclestone became FOCA's chief executive in 1978. Max Mosley, a capable lawyer, served as his legal advisor, and they soon came into direct confrontation with FISA, which oversaw F1's administration.

Late 1970s-Early 1980s: Escalation of War

The FISA-FOCA war was a crucial power struggle that would determine F1's future. This war between Ecclestone's FOCA and Jean-Marie Balestre's FISA, which wielded absolute power, stemmed from two fundamental conflicts.

First, financial conflict. FOCA argued that since teams were the main players in F1, they should lead prize money distribution and TV rights negotiations. FISA maintained that all commercial rights should belong to them as the governing body.

Second, technical conflict became the catalyst. British teams in FOCA used innovative aerodynamic technology called 'ground effect' to compete on equal terms with the powerful turbo engines of major manufacturers like Ferrari and Renault, despite using relatively low-powered Ford-Cosworth engines. Balestre tried to ban ground effect under the guise of 'safety,' which FOCA saw as a malicious attempt to neutralize their technical advantage.

The 1980 Spanish Grand Prix was the pinnacle of the war. When conflict erupted over fines imposed by FISA on FOCA drivers, Ferrari, Renault and others withdrew from the race. However, FOCA teams proceeded with the race under the support of the Spanish King, and this race was held as an unofficial event without World Championship points. It was a symbolic event proving that FOCA could independently organize a Grand Prix without FISA's approval.

1981: Pirate Race and Negotiation Table

In 1981, Ecclestone and FOCA made their decisive move. They organized an independent race in South Africa. This race was held in 'Formula Libre' format to circumvent FISA regulations, with FOCA teams fitting 'sliding skirts' banned by FISA. This 'pirate race' imposed enormous financial burden on FOCA, but strategically, it was a brilliant move. It proved to the world that FOCA could successfully organize a championship-level event without FISA's approval.

The decisive moment arrived. While Balestre pressured the US Long Beach Grand Prix organizers, his most faithful ally Renault announced their intention to participate regardless of FISA's policy, for commercial interests in the American market. Ferrari followed Renault for practical reasons. Betrayed by his most trusted allies, Balestre lost the strength to continue.

1981: The Concorde Agreement and New Order

In January 1981, marathon negotiations took place at the FIA headquarters in Place de la Concorde, Paris. After 13 grueling hours of discussion, a historic agreement defining F1's future was reached. Named after the location where negotiations were held, the 'Concorde Agreement' was officially signed on March 11, 1981.

The core contents of the agreement were kept strictly confidential, but the known principles were revolutionary:

Mandatory Participation: All teams signing the agreement were obligated to participate in every round of the World Championship. This transformed F1 from a collection of sporadic events into a single 'product' with consistency throughout the season.

Regulatory Stability: Clear procedures were established for technical regulation changes. Future technical regulation changes would require unanimous consent from all teams, preventing unilateral influence by specific factions.

Transfer of Commercial Rights: The most important and revolutionary clause was granting FOCA the negotiation rights for F1's commercial rights, including TV broadcasting rights. This became the decisive weapon for Bernie Ecclestone to develop F1 into a commercial empire.

1987-2001: Building an Empire and the 100-Year Contract

1987: The Emergence of FOPA

The Concorde Agreement was FOCA's victory, but the fruits of that victory gradually concentrated into Bernie Ecclestone's hands. Around the time the second Concorde Agreement was signed in 1987, Ecclestone stepped down from his role as Brabham team owner to establish FOPA (Formula One Promotions and Administration), his personal company. The revenue distribution structure created by FOPA demonstrated Ecclestone's business acumen. FOPA took 49% of TV rights revenue and distributed prize money to teams from this share. The FIA received 50%, while teams directly received 1%. Additionally, FOPA directly collected all hosting fees paid by race promoters.

FOPA later changed its name to FOM (Formula One Management), and this company would reign as the absolute authority governing all commercial activities of F1 for decades.

2000-2001: The Deal of the Century

Through a series of contracts spanning 2000-2001, the FIA led by then-president Max Mosley approved a contract granting Ecclestone's FOM exclusive lease of all F1 commercial rights until the end of 2110 - a 100-year period. The price for this unprecedented 100-year contract was a mere $360 million. This was an absurdly small amount compared to the actual value of F1's commercial rights.

This deal was possible due to the special relationship between Ecclestone and Max Mosley. Mosley had been Ecclestone's longtime friend, legal advisor, and most importantly, political ally since the FISA-FOCA war. Crucially, there was no public bidding or competitive process for these enormously valuable rights.

The EU's Paradoxical Role

The most bizarre aspect was the role of the European Union Executive Committee. In the late 1990s, the EU launched a major antitrust investigation, questioning the monopolistic position of FIA and Ecclestone. The EU's core concern was the conflict of interest structure where FIA simultaneously served as both the sport's regulatory body and commercial beneficiary.

Ecclestone and Mosley packaged the '100-year contract' as a solution to EU demands. The logic was that by FIA 'selling' commercial rights to FOM for the ultra-long term of 100 years, FIA would remain as a pure regulatory body no longer involved in F1's commercial operations. As a result, the EU's antitrust investigation, which could have dismantled Ecclestone's empire, paradoxically became the decisive justification for legitimizing and solidifying his 100-year monopoly system.

2017: The Dawn of the Liberty Media Era

Bernie Ecclestone's 40-year absolute reign came to an end in 2017. American media giant Liberty Media completed its acquisition of Formula One Group on January 23, 2017. The corporate value reached $8 billion, with equity valued at $4.4 billion. Ecclestone stepped down from his CEO position to receive the symbolic title of 'Chairman Emeritus.' His position was replaced by a new leadership triangle: Chase Carey as Chairman and CEO, Sean Bratches as Managing Director of Commercial Operations, and Ross Brawn as Managing Director of Motorsports.

2017-2025: The Fan-First Revolution

Digital Transformation

Liberty Media's strategy was fundamentally different from the Ecclestone era. They redefined F1 not as a B2B product but as a B2C entertainment product. Liberty immediately embraced digital and social media, which Ecclestone had extremely guarded against. The results were explosive. F1 became the fastest-growing sports brand with social media followers surging 54.9% in 2017 alone.

The Drive to Survive Phenomenon

Netflix's collaboration in 2019 produced "Formula 1: Drive to Survive," a 'game changer' that transformed F1's history. This series focused on the human drama behind the grid, drivers' personalities, and intense competition between teams rather than race results. As a result, it attracted new viewers worldwide who had never known F1.

The fandom transformation was proven by various indicators. The average age of F1 fans decreased, and the proportion of female fans doubled. According to a 2023 YouGov survey, 46% of "Drive to Survive" viewers were women, and 26% of viewers were 'completely new fans' who had no interest in F1 before watching the series.

Budget Cap and Fair Competition

Liberty Media determined that enhancing the competitiveness of racing itself and ensuring financial sustainability were essential for F1's long-term success. Through cooperation with the FIA, they introduced F1's first-ever budget cap starting in 2021. The budget cap was designed to start at $145 million in 2021 and gradually decrease. This was intended to prevent reckless spending by top teams, reduce gaps between teams, and create an environment where smaller teams could compete without financial pressure.

The new Concorde Agreement signed in 2020 and valid from 2021 to 2025 massively reorganized the revenue distribution structure. It aimed to alleviate the extreme financial imbalance of the Ecclestone era and pursue more equitable prize distribution.

The American Dream

One of Liberty Media's core strategies was expanding influence in the massive American market. They added the Miami Grand Prix (first held in 2022) and Las Vegas Grand Prix (first held in 2023) to the calendar alongside the existing US Grand Prix in Austin. These two events were planned as massive entertainment festivals spanning a week, beyond simple races.

Liberty Media Effect: Key Indicator Changes

Two Eras, One Giant

Formula 1's commercial history is divided into two starkly contrasting eras. The Bernie Ecclestone era and the Liberty Media era. These two eras were nearly opposite in approach and philosophy, but each fulfilled their historical mission and became essential processes in creating today's F1.

Ecclestone was a ruthless and visionary pioneer who elevated a chaotic, fragmented amateur playground to the era of professional sport. He formed FOCA to unite teams' power, concluded the Concorde Agreement after fierce war with FISA, and centralized F1's commercial rights. It was the pinnacle of absolute control and business model. In chaotic times, Ecclestone's dictatorship might have been a necessary evil.

Liberty Media, which emerged in 2017, was the standard-bearer of modernization that flung wide open the doors Ecclestone had firmly shut. They recreated F1 as a B2C entertainment brand. Through innovative content like "Formula 1: Drive to Survive," they introduced F1's human appeal to the world. As a result, F1 absorbed new fan segments previously excluded, such as younger generations and women, entering a second golden age.

The two eras played different but equally important roles in F1's evolution. If Ecclestone built the powerful 'machine' that is F1, Liberty Media taught that machine the 'language' to communicate with the world. On the solid commercial foundation built by one dictator, modern marketing strategies of a media company were added, allowing Formula 1 to be completed as the multi-billion dollar global spectacle we know today.

Can Liberty Media's fan-centric strategy completely replace Ecclestone's ruthless efficiency?