Ferrari deny report of £250m F1 budget as “fantasy”

2013 F1 season

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Ferrari have denied a three-month old report claiming their F1 team has a budget of a quarter of a billion pounds.

The team used its anonymous ‘Horse Whisperer’ column on its official website to refute the figure.

“When the championship finishes, the moment arrives to take stock,” said the article. “If it’s enough in sport to look at the points standings, in business some trust in summer valuations, even if they are carried out under a parasol.”

“For that reason, months later, a reconstruction of the budgets of Formula One teams developed by an Autosport colleague has transformed itself into journalistic fact. It’s a pity that the cited figures are largely fantasy and they can draw even distinguished newspapers into conclusions that are wildly erroneous.”

However Ferrari refused to confirm the true cost of their F1 operations: “It would be easy to deny the figures with facts but the truth about business matters has to stay confidential: this too, like technology, is a crucial factor in competition.”

Ferrari appear to be referring to a figure estimated by Dieter Rencken in August*. His article claimed Ferrari had the largest budget of any team, around £15m higher than Red Bull’s and £90m more than any other team.

Ferrari ended the 2013 season third in the constructors’ championship behind Red Bull and Mercedes.

*Paywall link

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Keith Collantine
Lifelong motor sport fan Keith set up RaceFans in 2005 - when it was originally called F1 Fanatic. Having previously worked as a motoring...

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39 comments on “Ferrari deny report of £250m F1 budget as “fantasy””

  1. Think the “distinguished newspapers” referred by the Horse Whisperers is this NYT piece by Brad Spurgeon

    1. I’m especially impressed by them citing Autosport without linking to the article in question.

      And by ‘impressed’, I mean the exact opposite.

  2. I guess it might have been only 12 million more than RBR and only 85-95 more than any other team. It still shows how bad the sport is doing when creating a level playing field for a sporting competition.

    Getting angry at it is really doing nothing but bringing it to our attention once again.

  3. Ferrari sure deny report of £250m F1 budget as “fantasy”. It is too little :-)

    1. @raddie One thing is certain, Ferrari could never declare to spend have spent 250m. According to the books they couldn’t afford that, Ferrari isn’t a mass producer.

      1. That should not be the point. Ferrari is member of Fiat group with 2012 profit 1,411 million EUR and turnover in billions EUR.

  4. Interesting, but the figures I have seen reported for 2012, that I always write in the forums, are as follows:

    Red Bull 605 staff $344m
    Ferrari 600~ $240m
    McLaren 600~ $240m
    Mercedes 550 $225m
    Lotus 4-500? $190m
    Williams 4-500? $145m
    Sauber 300 $104m
    Force India 300 $100m
    Toro Rosso 300 $110m
    Caterham 260 $96m
    Marussia 175 $105m

    Things of note: It’s been said Red Bull now have 620 staff. Also they use their holding company ‘RB Technology’ to circumvent the RRA. Ferrari’s ‘£250m/$400m budget’ could thus include engines as well. Mercedes have been reported to boost funding in 2013, perhaps to meet the levels of Ferrari and McLaren – or just to make sure their engine for 2014 gives them a good advantage. Renault’s engine spend is separate and also unknown.

    Marussia is definitely the smallest team, some of their budget here may be the banking loans they had accrued a massive debt with until this season – now written off by their Russian Oligarch-type owner. Caterham have a smaller operation than the rest of the midfield, and hence have struggled to make that last jump and latch on to the midfield. If not for such extra things as the blown diffuser, and coanda exhaust they never got a hang of, like Williams, you have to feel they would be closer than they eventually got.

    Williams’ 2012 car and funding was greatly helped by Maldonado and PDVSA, and without the coanda similarly they would have been right there in 2012. No wonder Maldonado is now fuming about 2013! They were last of the midfield all year! Sauber and Force India do well to compete on such a small budget – they are efficient with spending money (Force India and Marussia now buy in performance from McLaren), and this puts Sauber’s 2012 car into full perspective.

    Red Bull and Newey freely admitted recently they copied a lot of things from Sauber during the 2012 season. Toro Rosso can almost match them or sometimes beat them, which is where they are at now with RB help (I’m guessing the Minardi days were more like Marussia type struggle to get by on budget and staff). RB’s collective spend of $454m if I have gotten this right, on both RB and TR, must surely be more than the 3 constructors and engine manufacturers spend on top outfits/engines?

    I’m not sure on what degree of crossover there is between RB and TR there, so that one could be a fudge. I’ve seen rough engine spends before and can’t remember the numbers. But $160m on Ferrari engines sounds quite a lot, unless it’s mainly just initial development costs with these engines soon ‘frozen’? They are looking to recoup costs and running 2 customer teams at say $20m a year means it’ll be quite a while before those costs are recouped. I’m more confident here on the well reported customer cost than the projected manufacturer spend.

    1. And the argument usually brought forward for cost reduction is basically ‘why can’t everyone do a Sauber?’ – be independently competitive on 300 staff and a budget of $104m. If the top 6 teams cut budget and got as efficient as Sauber, then they would all be a lot more profitable, with the racing probably much closer amongst the top teams. We might even see Hulkenberg as WDC then…

      The other side of the argument is for teams to receive more of the money that F1 generates (estimated at over £1bn profit per year, on revenues of £1.5bn). This means that they could also expand, and with a more equal distribution of money would allow the tail-enders to catch up and challenge the midfield, with the increased jobs and spend that would entail, while allowing all the teams to be financially secure and not need to take pay drivers as a necessity to survive (anyone up to Lotus usually considers it). A twelfth and thirteenth team could also be added if it was agreed/there was enough money to go around (there would be). Wouldn’t it be great to have a Japanese/French/German/Spanish team?

      1. sauber got a huge injection of funding, staff, facilities and support during the bmw days, that’s why. Other teams would need to spend hundreds of millions to get sauber’s wind tunnel, manufacturing facilities and supercomputing cluster, and then they’d have to spend huge sums supporting and maintaining them, which is Sauber’s current problem.

        1. Correct me if I`m wrong, but the whole infrastructure, windtunnel and “Albert” the supercomputer were all ready before BMW times. Those were actually things that got BMW interested in Sauber.

    2. @fastiesty

      the figures I have seen reported for 2012

      According to who?

      1. Joe Saward.. think I saw it about 9 months back on his blog. Not totally sure it’s 2012 either, could be 2011, the post may not have specified a year but just looked at the rough goings on at each team. Maybe it’s a spillover from his Business of Motorsport newsletter.

        1. @fastiesty So you just posted random numbers without having any idea what exactly do they mean or where they come from?

          Not particularly reasonable, wouldn’t you agree?

          1. Not necessarily, I was just trying to provide some more data to go with the article as posted. I’ve not seen an estimate of the team budget and engine spend etc. combined, so was wondering if it sounds logical, which I think it is. I should have stated that the numbers were from Joe’s blog, and here’s his analysis on it further down the line:

          2. @fastiesty Where does he say what team spends which amount?

    3. I’m almost certain marussia are the lowest budget team on the grid, and read some where that they operate on 1 million pounds a week, so around 52 million, half what you recon they have.

      1. Pretty sure Marussia’s team size indicates its the smallest funded team on the grid, with Caterham second smallest. So $52m doesn’t seem out of the woods to me. I remember seeing something mentioning their huge debts (over $100m?) from the accumulated years so far only receiving the $10m from Bernie, and thankfully that’s been wiped now by their Russian owner.

    4. All the numbers we are looking at are extremely speculative, be it yours, Autosport, Formula Money or whoever publishes anything. We don’t even really get to know what figures we are looking at. Are those revenues, is this some figure that tells us the total amount spent in the year, are those numbers taken from P/L, are those cash flows, how much of that has been spent before the actual year (teams start developing the cars massively a quarter in advance and they possibly don’t always spend the same amount). Without taking a look at their balance sheets and P/L we will not have a clear picture and even then, if for regulatory reasons they found different companies to do seperate parts of development, organization and whatnot and they don’t have to consolidate balances even those figures might be irrelevant. In a company as big as Mercedes they probably have a very exact number internally as to how much they have spent but even that mustn’t be perfectly correct for some reasons stated above.

      1. Yeah I think it’s just a best guess from back-researched information. Even Williams doesn’t have an exact amount, and it’s now a publically traded company on the Frankfurt Stock Exchange, so technically anyone can have a look at its company accounts. I think it’s a yearly money amount, not sure which one though. I just thought of it as yearly team budget. But I trust these journalists can research and give us at least a picture of what the situation looks like.

      2. Also keep in mind companies like Mercedes, Ferarri, Honda and Renault have as part of their everyday business R and D departments focused on developing engines so it is impossible to calculate how much of the expenditure is exclusively F1 and how much is purely commercial.

        1. @hohum – And that is one big reason why pursuing team budget caps is such a folly.

          1. @bullmello, it is also part of the reason so many of these design restrictions and homologations fail to save any real money, as Mario Illien was recently reported to say that he could build a hundred engines for the amount of money a team now spends on engines, put simply most of the cost of a racing engine is in the design, development and setting up the production run and these expenses have to be amortised over the total number of engines produced.

      3. Also keep in mind the rumored Ferrari “just show up and get paid” contract they have with Bernie. That is supposedly incremental to points payout. With that said look at how much relative dollars RBR is getting outside the F1 pocket book!

    5. There’s annual report one can buy called Formula Money which typically runs about $400 or 249-279 sterling pounds (can’t find the symbol) .

      It’s not surprising that Red Bull would go on spending binge as it has to get the results they want, to them it’s marketing and anything for the win.

      However, next year there’s a complete deviation from the emphasis on aero and a reversion back to mechanical grip which was the leading reason in 1980s/1990s for the performance of the cars. Limiting wind tunnel , aero undoubtably restrict Redbull’s ability to perform certain things in 2014. It is for that reason they kept bringing in newer and newer parts all the way to the end of the season, even though they were over a 1 second faster than everyone else.

      I believe i speak for everyone when I say, I’m looking forward to 2014 as 2013 effectively died/ended back in July 2013 after Pirelli reverted the tire construction to the 2012 spec allowing the red bulls to run away .

  5. You can be pretty sure that if Dieter Rencken publishes an article, it is meticulously researched and as factual as humanly possible. Unlike the nonsense which regularly drops out of the back end of the Horse Whisperer.

    Basically, if Dieter is prepared to put his name to it, as far as I’m concerned it’s true unless clearly demonstrated otherwise.

    1. Yet most will never know who he cites, or what research he’s done, because the article is paywalled.

      1. Also – journalists who reveal their sources tend not to have good sources for long. But Rencken has a very long and well established career in motorsports journalism and is one of the most professional out there. His articles especially are the things which keep me paying an Autosport subscription every month.

      2. Although to be clear, in this instance he makes it clear that the figures for most teams would be based in large part on the information released by Companies House, since most are UK based, with relevant adjustments made for the fact the data from CH is usually about 18 months out of date. For those outside of the UK he simply cites a “variety of sources” none of which are (understandbly) expanded upon in any great detail. So absolutely, there is a far greater margin of error when you look at Ferrari’s figures compared to, say, RBR, so if you wanted to play devil’s advocate, you could reasonably argue that Ferrari are right to call into question the accuracy of the figure. Though I would assume it’s a reasonable ballpark figure and fairly representative. Which is as much as the article ever really says anyway.

    2. Basically, if Dieter is prepared to put his name to it, as far as I’m concerned it’s true unless clearly demonstrated otherwise.

      +1. His credibility is beyond reproach and he’s an actual full-time journalist, unlike many of the english-language bloggers who write about F1 as a hobby…

  6. “That figure you’ve got is way off the mark but we ain’t going to tell you what the right figure is so please feel free to keep guessing so that we can laugh about your guesses again.”

    Perhaps F1 journalism would improve if teams acted in a more transparent way and did tell fans something really interesting themselves instead of issuing press releases, which reveal that turns 10 and 11 at BIC are really challenging.

  7. I’d very much prefer “the horse whisperer” to actually be someone. It’s easy to say things like that in the shadow, no one knowing who’s behind the keyboard.

    If they can laugh at the guesses, why are they making such a big fuss about it? surely they don’t want their sponsors to know that they spent more than their rivals, yet scored half the points. And that’d not be far from truth – I doubt Ferrari has saved money in the last 5 years…

    1. @fer-no65 … … and you add one world champion more, some of the best engineers on the market, a new wind tunnel, a new engine, … :)

  8. OmarR-Pepper (@)
    26th November 2013, 17:44

    Just imagine how much it can be, regarded that Ferrari has the “tradition bonus” aside from the constructors’ place prize and the revenues by TV rights. And having the largest fanbase in the world, they also sell tons of expensive caps, shirts, etc. So they are certainly not short to (misuse) spend 250 million pounds on the F1 project, even if it doesn’t pay back with at least one of both WDC and WCC. When I say misuse, I mean that the target they are looking for slips through their hands year after year.

  9. Does it really matter how much money teams spend? McLaren have proved that they can spend nearly as much as the other wealthy teams to end up with poor mid-pack results. Budget caps on team spending won’t really work. The wealthy teams find ways to fudge and hide expenses. Plus, there are differences in engine building teams and engine customer teams that make for difficult straightforward cost analysis and application of spending caps.

    That is why F1 wealth distribution in a more fair manner across all teams is a better answer. Less greed by F1 ownership and more wealth to the teams providing the talent to the show. Ferrari, McLaren and Red Bull can outspend all the other teams, but there is bound to be a point of diminishing returns. Lotus have proven to have better results without spending as much. Application of resources and talent is the key, not how much is spent.

    Marussia was able to build a more reliable car than some of the wealthy teams with one of the smallest budgets in F1. With a larger investment from F1 profits I’d be willing to wager they can find more speed too. How would budget caps help the smaller teams while they would still be struggling to find pay drivers just so they can stay in business and operate with continued disparity to the wealthy teams? F1, share the wealth!

    1. Budget caps on team spending won’t really work. The wealthy teams find ways to fudge and hide expenses.

      @bullmello – budget caps would only not work if you refused to enforce them and audit the teams/companies involved. If you actually enforce the limits, they work fine.

      1. @joepa – When tried in the past the budget caps were a failure. There was no teeth in the enforcement and there is no practical way to get a true audit figure that all the teams, the appointed commission and the FIA could to agree to. As @hohum pointed out above, manufacturers like Mercedes, Ferrari, Renault and Honda make it difficult to distinguish how much of their engine R&D is actually devoted to F1 or for commercial use. That is only one aspect of what kind of policing would be required of a commission or the FIA itself to crack the books on all teams. In a perfect world the budget caps might be an answer. In reality, I think the budget caps would be extremely counterproductive and still not eliminate the disparity between the haves and have nots.

        The only thing that makes sense is to reward results in a more equitable way than what exists now.

      2. @joepa, we already have computer companies sponsoring and assisting teams, how would you cost that in ? What if Boeing or Airbus formed an alliance with a team, how would you cost their technical assistance?

      1. +1 is to @bullmello, not me.

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