F1 Analysis: The Sport Fuelled By Money

Formula One racing and its host nations have a symbiotic financial relationship, brought into sharp focus by the latest events in Bahrain.

For six years Formula One and Bahrain had an uncontroversial partnership which benefited both the sport and the state.

In 2004 Bahrain became the first Middle Eastern country to host a motor racing grand prix, in a move overseen by the Crown Prince.

A brand new circuit was built at a cost of around £100m, and the event brought attention and prestige to the tiny but wealthy nation, which has a population of just 1.2 million.

Visitors who came to see the race could get a glimpse of what else Bahrain had to offer businesses, and they also brought in up to £200m to hotels, restaurants and shops.

Bahrain pays a hosting fee to Formula One, and though the contract is confidential, it is thought to be in the region of £25m. Such deals are vital to the sport which suffered a huge financial blow when tobacco sponsorship was banned, cutting off a prime source of revenue.

In recent years the search for new funding has taken Formula One to new parts of the world.

A look at the Formula One calendar from 1982 shows there were 10 races in Europe (Chicago Options: ^REURUSD - news) and 3 in the USA, plus Canada, Brazil and South Africa. The latter was still staging grand prix races even though most international sports boycotted the apartheid regime.

Now there are 20 races, but only 8 of them in Europe. Malaysia, China, Singapore, India and Abu Dhabi have joined Bahrain as hosts.

Mark Gallagher, who has been involved in the commercial side of motor sport for 25 years, told Sky News that there has been an enormous shift in the past decade.

"Governments and independent promoters pay a great deal of money to Formula One and that puts a total of about $550m (£340m) into the coffers of F1 each year from those race promoters.

"So it's a great deal of money and of course that is a vital lifeblood for the sport, to the teams, for the circus to fund itself.

"Bahrain has really used Formula One to promote itself and between 2004 and 2010 it did so very effectively. Unfortunately now they're seeing the downside of the global media attention."

Last year the race was postponed because of security fears in the midst of the Arab Spring uprisings. But this year it is going ahead because the Bahrain authorities have insisted it is safe and if the teams pulled out they would be breaking a contract, and would lose out financially.

Those who defend Bahrain's right to host the event point out that there were no protests about the Chinese Grand Prix last week, despite that country's poor human rights record.