The glitz. The glamour. Wait—what do you mean the circuit costs $270 million to build, plus around $18.5 million per year in maintenance fees, and an “entry fee” of $15–50 million per race?

Firstly, cities that host F1 races are extremely dependent on ticket and tourism revenue. Once the cars cross the finish line, local promoters get to keep ticket sales and local sponsorship deals, but all the big broadcast and global sponsorship money goes to F1/Liberty.

Even then, many races barely break even – India’s 2013 race lost $24 M, Korea’s 2012 race lost $37 M, and both were soon taken off the racing calendar.

So why bother?

Well, there’s the tourism windfall for one. Big races pull in fans (and their wallets) by the busload.

Austin’s Circuit of the Americas is a good example here: in Oct. 2023 about 450,000 spectators came to watch cars go in circles for two hours, generating roughly $900 million in local economic benefit. Similarly, Singapore’s night race brought in about $1.4 billion into the city.

These visitors fill hotels, restaurants and shops, boosting jobs and tax receipts. For instance, Mexico City sees a 12% jump in luxury hotel stays on Grand Prix weekends, while Austin’s race-friendly ecosystem sustains nearly 9,100 local jobs. Furthermore, Global TV coverage in more than 200 countries brings priceless publicity to the host city.

But there may be some long-term issues here. Cities sink public money into infrastructure, hoping the payoff lasts because projects like this are supposed to generate positive externalities, with such benefits spilling over into higher property values, more business activity, and a broader tax base, even if the city never sees a direct cash return. But if those spillovers don’t materialize — say tourist dollars “leak” to outside corporations or the track never books other events — the investment can quickly lose value. Basically,, hosting F1 is a high-speed (pun intended) gamble, pitting huge upfront costs vs. the chance of big tourism gains and global exposure.

Public Money, Private Gains?
Many races are subsidized by governments, but the biggest financial winners are often private: F1 (Liberty Media), international hotel chains, and global sponsors. That’s fine if local economies see real returns, but controversial if benefits “leak” away.

Not All Tracks Are The Same
Permanent circuits (like Austin) can host events year-round. Street circuits (like Monaco or Las Vegas) require expensive, annual rebuilds. While this improves their iconicity, these street circuits are more likely to incur higher costs.

Long-Term Branding > Short-Term Profit
Even if cities don’t turn a direct profit, F1 can function like a flashy billboard to the world. One race can make Singapore seem that bit more sleek, global, and worth visiting. Those intangible ROIs are harder to measure, but very real.

Works Cited
Siddharth Mehta, “Is Hosting an F1 Race Financially Feasible?” Michigan Journal of Economics (Apr. 29, 2024)sites.lsa.umich.edusites.lsa.umich.edusites.lsa.umich.edusites.lsa.umich.edusites.lsa.umich.edu.
Ben Avison, “The benefits of hosting Formula 1” Host City (Oct. 18, 2018)hostcity.comhostcity.com.
“Need for Speed: Formula 1 Is Driving Billions to American Cities” Urban Land Magazine (Oct. 2023)urbanland.uli.org.