Expenses. Currently the top spenders are Ferrari and Mercedes. Both spend somewhere around $330 million (US) per year (and Mercedes has spent a total of $1.4 billion over the course of these current engine regs developing their car -- that's just development, not race expenses.). This is a beyond insane figure, but it's worth it to them for the marketing. Meanwhile smaller teams -- the teams you need to actually fill out a grid so there's actual racing to watch -- are probably around the $100 million/year mark.

F1 is almost purely play-to-win, to use a modern coinage. The aerodynamics involved have been so insanely optimized that teams spend millions per year to employ some of the best aerodynamicists in the world to eke out another 0.005 secs/lap over the competition.

The performance gap between the top and the rest is fairly proportional to the spending gaps. In recent years it's been Mercedes winning every championship, with Ferrari winning a share of races and Red Bull stealing one or two. Those top 6 cars are often a full minute ahead of the pack after just a dozen laps or so. The rest of the cars have no chance at all. This year it's even worse as Ferrari got caught doing something illegal so their engine has been nerfed. Mercedes just drive away at the start and are almost never remotely challenged. Now in this environment, how many sponsors/car companies want to spend hundreds of millions per year just to tool around multiple minutes behind the Mercedes cars? It's just not a good investment.

And many good ideas to counteract this (reverse-grid sprint races on Saturday to decide starting order on Sunday, as opposed to traditional qualy, at select tracks) are lampooned by the fanbase for being untraditional. Unfortunately if the sport continues like this there won't be any traditions left to uphold at all; I understand their complaints but it's a delicate balance.

The latest attempt to restore some modicum of balance is spending caps. The only chance F1 has to survive long term is to encourage new teams to the sport and discourage current ones from leaving, and that means (a) limiting spending across the grid, and (b) not allowing the top engine manufacturers free reign over the formula. Unrestricted research/testing would hasten its demise because it's just another opportunity for the rich teams to spend more. And point (b) above is what killed the LMP1 class; engine manufacturers exercise political sway to make it harder for other manufacturers to enter/win/compete, but then the grid starts dying and those manufacturers pull out, leaving a set of ossified regulations that make it almost impossible for new engine manufacturers to enter.