Each year, Formula One seems to become a bigger and more exclusive event. Unlike football or rugby, only the rich and famous tend to get close to the drivers in the pit lane, with the ordinary man forced to wait in the stands. As a result, sponsors are keen to associate with the sport, meaning that more and more money is ploughed into it. Some of this money will go to Bernie Ecclestone, the billionaire president of the ruling body, whilst the rest is divided among the teams. Naturally some will reach the most important cog in the system, which is our current crop of drivers.

There is a huge disparity between the wages of the men millions watch every fortnight. Fernando Alonso’s reward for winning two consecutive titles was a bumper pay rise at Mercedes Mclaren. He is now earning an eight-figure salary, one hundred times more than someone starting out at a smaller team. Salaries for top drivers like Alonso have rocketed since an important rule change in 2005. This limited the engine size in the hope that smaller teams with a lesser budget would be more competitive. Before this teams tended to spend half their budget on the engine. The Federation Nationale de L’Automobile (FIA) had the intention of reducing the $400 million budgets of teams like Ferrari and Toyota, giving a chance to the likes of Super Aguri, who have to survive on a measly $50 million. Unfortunately, the plan has not worked out because of the reason mentioned previously – the best drivers just get paid more. In economic terms, the teams were, pre-2005, forced to choose between two main substitutes for their budget, the engine and the drivers. Now that they no longer need to spend on the engine in the same way, demand has risen for the drivers. The elimination of a substitute has also made the Price Elasticity of Demand (PED) for drivers more inelastic. Essentially this means that any time a driver retires or becomes injured (a drop in supply), the wages for the proven driver rise substantially.

Edward Gorman, the Sunday Times’ Motor Racing Correspondent, claimed in an article written on 3rd June 2007, that he expected rookie sensation Lewis Hamilton to be the greatest beneficiary on the wage boom, maybe even reaching a $100 million salary. He did however add that he felt Hamilton to be “a bit of a special case”, given his background as an Afro-Caribbean and also his sound work ethic. This has made him a sponsor’s dream, so much so that he has hardly had a day without a corporate engagement in the past few months. In contrast to other sports, Formula One teams hold the image rights to their drivers, another possible reason for the rise in wages. Gone are the day of James Hunt, the British champion of 1976 who would often turn up for formal events drunk and in bare feet. Modern drivers know their responsibilities much better, and so industry giants like Shell and Vodafone are happier to continue their investment.

The only real knock to the financial side of Formula One taking place, is the banning of tobacco advertising. The UK passed the bill in 2002, the same time as Malaysia and Canada. With more countries implementing the law each year, it is simply not worth the hassle of removing adverts for specific races in the year. As a result, many teams have lost some of their funding. Tobacco firms have been synonymous with Formula One in the past, with Rothmans having a strong link with Williams, and likewise Marlboro with Ferrari.

It is a near formality that drivers will receive a greater reward for their endeavours in future seasons, given the law changes and the renewed interest in the sport. Some will argue that nobody deserves to be paid millions for doing something they love, a pleasure others would pay substantial amounts for. Others would say that it is simply the free market working as it does best.