Monaco GP: The $100M Financial Details

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Friends,

Competing in a sport that has historically rewarded those willing to spend the most money, Mercedes-AMG Petronas has dominated Formula 1 for most of the last decade — winning the Constructors Championship for 7 straight seasons.

But now, they appear to be gearing up for their largest challenge in years.

Red Bull’s Max Verstappen won the 2021 Monaco Grand Prix yesterday, becoming the first non-Mercedes driver to lead the World Drivers Championship standings since 2018.

Here are the current driver standings:

1. Max Verstappen (Red Bull): 105 points

2. Lewis Hamilton (Mercedes): 101 points

3. Lando Norris (McLaren): 56 points

4. Valtteri Bottas (Mercedes): 47 points

5. Sergio Perez (Red Bull): 44 points

Furthermore, here are the current team standings:

1. Red Bull: 149 points

2. Mercedes: 148 points

3. McLaren: 80 points

4. Ferrari: 78 points

5. Aston Martin: 19 points

Rather than dissect the details of yesterday’s race (I’ll leave that up to the professionals), I thought it would be fun to run through a few interesting money-related items around Formula 1’s most famous race — the Monaco Grand Prix.

Let’s get right into it.

A staple in Formula 1 since 1929, the Monaco Grand Prix attracts the world’s most prestigious drivers and most glamorous spectators.

With elegant casinos, beautiful weather, and a lack of capital gains, income, and inheritance tax, not only do multiple Formula 1 drivers call Monaco home, but it’s become the most recognizable circuit in Formula 1 history.

As a result, while most races on the Formula 1 calendar — think Texas, Singapore, Mexico, Abu Dhabi, and others — pay between $25 million to $35 million annually for the right to host their respective races, Monaco pays a fraction of that.

The actual is fee is unknown and was rumored to be nonexistent until recently, but most experts suggest it might be around 10% of what a normal location pays. That enables Monaco to keep most of the $100 million-plus in economic activity they see during race week for themselves.

My favorite stat? At $5 million to $10 million annually, billionaires pay roughly the same amount of money for helicopter rides into the city as Monaco does to host the prestigious race. Now that’s wild.

Next up, the cost to attend.

Despite Monaco being just 299 acres in size — about the size of New York City’s Central Park — the Western European city on the French Riveria has become one of the most desirable places to live in the world.

Rumor has it that even some of AS Monaco’s players — the local football club competing in the French Ligue 1 — choose not to live in the city due to the uncommonly high cost of living.

With apartments, condos, and homes trading hands for almost $6,000 per square foot, Monaco has become one of the world's most expensive real estate markets.

Still don’t believe me?

Here’s a wild stat: Monaco has a population of about 30,000 residents, with about 12,000 (40%) of them classifying as millionaires.

That unique combination of limited real estate supply and high-income residents, to go along with the aforementioned beautiful weather and status as a tax haven, has resulted in the Monaco Grand Prix becoming the most expensive race on the Formula 1 calendar to attend.

Even worse, with just 37,000 tickets available for the event each year, it also has the smallest capacity of any race on the calendar — driving prices even higher.

About 22,000 people will watch from the grandstands, with an additional 15,000 tickets sold for general admission and another few thousand attendees watching from boats in the harbor (Source).

In total, although only 37,000 tickets are available for the event each year, more than 100,000 people will gather in the city on race day to catch a glimpse of the event from side streets and apartment balconies.

For context, around 100,000 people might show up on race day, but it’s estimated that roughly 200,000 people will travel to Monaco to experience the festivities throughout race week — that’s almost 7x the city’s normal population of 30,000 (Source).

Looking to attend the race next year? Here’s how much the cheapest two-day ticket package will cost you…that’s without travel, food, hotels, and more (Source):

• General Admission: ~$250+

• Grandstand Tickets: ~$600+

• VIP Packages: ~$1,200+

But if you’re interested in watching from or bringing your own mega yacht for the week, rather than renting one, buying a grandstand ticket, or watching for free from an apartment balcony, the price to attend drastically increases.

A single ticket to watch the race from a boat in the harbor can run you $4,000+, including food, alcohol, and more. But if you bring your own boat — depending on the size — you would be looking at an additional fee of ~$6,000 for a small 20-foot boat or $160,000 for a 450-foot mega-yacht.

Sure, that gives you access for 7 days, but you get the point — it’s extremely expensive.

Here’s the 2019 pricing chart for boats:

With 1.2 billion viewers and more than 900 hours of coverage broadcasted across various cable networks each year during race week, the Monaco Grand Prix has become one of the most desirable circuits in racing history.

After missing out on ~$100 million in local economic spending last year when the race was canceled due to COVID-19, Formula 1 and Monaco authorities worked together to ensure the race was a success this year.

It was, and with a win for Max Verstappen and Red Bull, Mercedes now appears to be gearing up for its most significant title fight in almost a decade. That’s going to be fun to watch.

Have a great day, and we’ll talk tomorrow.

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