The historical Monaco Grand Prix takes place today. It is one of three prestigious Triple Crown races along with the Indianapolis 500 and 24 Hours of Le Mans. Lawrence Barretto of the BBC said “They call it the jewel in the crown of Formula 1, they say every driver wants to win, they believe it’s one the rich and famous are afraid to miss.” Despite being the only race to not pay a hosting fee, which averages $28 million dollars, and retaining all trackside revenue, the Automobile Club de Monaco rarely turns a profit on its yearly $35 million investment. Why continue the Grand Prix then? Because it is very good for local businesses, and most importantly, it builds on Monaco’s global brand as a unique and luxurious Mediterranean city.
Christian Slyt of Formula Money said “The race keeps the principality in the public eye, which attracts tourists and business conventions.” The Grand Prix is one of the best-known sporting event in Formula 1, and in Monaco with 900 hours of live television coverage and 1.2 billion viewers. Sponsorship deals and ticket sales are the event’s primary source of revenue. There are 37,000 official spectators who pay between $196 and $6,300 for two-day tickets, but closer to 200,000 unofficial attendants watch from hotel rooms, terraces and yachts. The price of a room with a view of the track cost about $24,000, and a place on a yacht with prime views of the race is about $150,000. It is estimated that the race brings around $120 million to the principality, making the government’s $7 million subsidy one of the best investments in sports.
The race is just as good for Monaco as it is for Formula 1. Monaco’s historical appeal as the symbol of wealth has inspired luxury companies such as Tag Heuer to name their racing watch after the city. It also attracts the rich and famous from all over the world, from European royalty to Hollywood celebrities such as George Lucas and Will Smith.
The branding and attraction of the city and the Grand Prix itself makes it ideal for sponsors and investors. This year, Monaco is offering corporate packages where investors can view the race from the casinos and yachts as well as from Les Caravelles Hotel, where you can see 70 percent of the race. It is easy to see why Formula 1 waves Monaco’s racing fee even though the fees are the single biggest source of income for Formula 1.