Start, Albert Park, Melbourne, 2019

The cost of F1 2019: Team budgets analysed – part one


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Like Formula 1 drivers, team bosses are, by their very nature, a highly competitive species who exist not only to win, but by as large a margin as possible.

The nature of this sporting business means that for every constructors champion there are a number of also-rans for whom the challenge lies in achieving the best possible performance over a full season within the constraints of their respective budgets.

Thus, the true measure of any team’s effectiveness is not its eventual championship classification, but the ratio between the number of points scored during a season and the particular team’s overall budget, effectively its Bang for Buck.

The first component is easy to obtain, being available once the championship classification is declared ‘final’; the second requires voluminous research – whether into financial records or via interviews – plus good old-fashioned sleuthing.

Companies House returns are available for all UK-based teams, and thus the financials of Mercedes, Red Bull Racing, McLaren, Renault, Racing Point and Williams are all (eventually) in the public domain – albeit up to nine months in arrears. Although these returns provide a solid basis, they need to be purified, for not all operations are dedicated solely to F1.

The financial records of non-UK domiciled operations – Ferrari and Toro Rosso (both Italy), Sauber (Switzerland) and Haas (international) – are not publicly accessible, and thus best guesstimates have been applied where teams have been uncooperative for whatever reasons.

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Then, Ferrari does not split its finances – either within the group or within Gestione Sportiva – as does Mercedes’ F1 team, which operates separate engine and chassis operations. Fortunately, though, there are contacts willing to divulge – either on- or off-record – their teams’ financials for reasons best known to them. Then there are folk who migrate to other team, and take useful knowledge with them.

Start, Yas Marina, 2019
F1’s front-runners out-spend the rest
The imposition of regulatory budget caps from 2021 onwards will, of course, make it easier to track team finances, but there are still expected to be fairly substantial variances between the spends of the ‘haves’ and the ‘have-nots’, while the list of exclusions – which includes driver retainers – and the ability to ‘fudge’ marketing and executive salaries is such that up to 50% of total spend could remain hidden.

The biggest ‘haves’ – Ferrari and Mercedes – spent over $400 million each (without engine costs) in their quests for championship glory in 2019, in the process each employing 1,000 heads to field two cars for two hours on 21 Sundays. Add in engine departments, and these numbers swell by up to 50%.

Equally, Red Bull blew almost a billion dollars on fielding its two F1 teams – with ‘free’ Honda engines for both outfits on top of that – while at the other end of the spectrum ‘have-not’ Haas, which operates to an out-sourcing model, spent $150m to end ninth. Tail-ender Williams had a similar spend despite having a full manufacturing facility – neatly demonstrating the vastly different business models adopted by teams.

Gene Haas, Shanghai International Circuit, 2019
Is Gene Haas happy with what he’s spending on F1?
These numbers, more than any others, highlight both the costs of F1 and disparity across the grid, yet they also underscore F1’s global appeal, for ultimately whatever the different spends by teams and/or sponsors, such sums are approved by hard-headed businesses on the basis of tangible returns on investment. Simply put: were F1 not an effective marketing tool, no companies would be onboard and there would be no F1.

Significantly, team budgets crept up by an average of 10% despite the number of races remaining stable at 21. However Racing Point, rebuilding after plunging into bankruptcy as Force India last year, recorded the largest increase at 30%, followed by Haas (25%) and restructured McLaren (14%). Of the trio, only the latter improved its championship position. Haas slipped four places…

Until 2021 (at least) the sport will – in all likelihood – continue to be dominated by the ‘Big Three’, who collectively share a quarter of the sport’s prize fund in return for simply turning up on Sundays. Indeed, during 2019 Ferrari received $90m in performance-linked revenues, and an attendance bonus of $115m.

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Still, Liberty Media, three years into its custody of F1’s commercial rights, must have done something right, for all major metrics are pointing in the right direction, albeit some marginally so. For example, based on official figures, average race attendance is up 1.85% at 202,000, while Liberty’s FWONK share price climbed from $29 to over $45 – a growth of over 50%, thus disproving the sentiments of naysayers.

Formula 1’s revenues are disbursed according to a complex formula as outlined in the bilateral agreements – euphemistically, but incorrectly, referred to as ‘Concorde Agreements’ – as entered into between the CRH and teams individually. The basic prize fund is made up of 47.5% of F1’s earnings after deduction of all the sport’s operating expenses before income tax, depreciation and amortisation (EBITDA).

The prize ‘pot’ amounts to approximately 66.6% of EBITDA, so around $1 billion disbursed in 2019 – with Liberty retaining the rest ($480m) to settle whatever loan and shareholder obligations the company has. The ‘pot’ is disbursed to teams in ten monthly tranches between March and December, save where a team has entered a cessation event (bankruptcy).

The basic fund, worth $700m, is distributed according on two “columns”, with all teams to be classified in the top ten of the FIA constructors championship at least twice over the previous three years receiving an equal share of ‘Column 1’, while ‘Column 2’ is disbursed based to a sliding scale table.

In addition, selected teams continue to receive bonuses: Constructors’ Championship Bonuses (CCB) for titles won before 2013 by Ferrari/Red Bull/McLaren, a Long-Standing Team (LST) award for Ferrari, multiple championship payments to Mercedes for titles won since 2013, and $10m heritage bonus paid to Williams. In 2019 these bonuses total a projected $300m, taking the ‘pot’ up to a billion bucks.

Still, unlike previous years, all 10 teams made it through the year without visits from bailiffs, and this situation is expected to continue through 2020, with the subsequent new era promising all change and heralding improved stability for all.

After three seasons under Liberty and one to go before current covenants expire and F1 casts off the shackles imposed by previous rights holder CVC Capital Partners and former F1 tsar Bernie Ecclestone, F1 is finally heading in the right direction. It still, though, requires steady hands at the wheel, and that poses Liberty’s biggest challenge in 2020: maintaining this new-found stability while preparing for massive changes.

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2019 F1 team budgets: Part one


1) This report is split in two: places ten to six in the championship, with the top five teams coming under scrutiny next week. In addition, next week will include our unique financial indices, which not only examine performance relative to budget (‘Bang For Buck’), but also the costs of lap time improvements over 2018.

2) Team budgets exclude engine divisions where applicable, with the assumption made that the FIA’s guideline charge of approximately $25m for an annual two-car supply is applied internally. However, tyre charges of $1.5m for a season’s two-car tyre supply are included in overall budgets.

3) Variances may exist between 2018’s projections and actual comparisons a year later – these are in any event minor, and due to ‘firmed up’ numbers being released after the previous report was published.

3) Currencies have been converted from Euro (Ferrari/Toro Rosso), Swiss Francs (Sauber) and Sterling (others) to US Dollars simply as Brexit has played havoc with rates, particularly given that most sponsors contracts are US$-based, with Liberty dispensing prize monies in the US currency. For ease of comparison the rates used are: $1 = €0.90/SFr1.00/£0.80


Williams budget 2019

Robert Kubica, Williams, Suzuka, 2019
It was a grim season for Williams
If 2018 proved torrid for Williams, this season was doubly so. The FW42 was late and proved slower than its predecessor, while whispers suggest the severance payments made to Paddy Lowe, the former chief technical officer who was shown the door during the season, dented an already tight budget hit by substantial reductions in F1 revenues due to a 10th-place finish in 2018.

But it was not all doom and gloom on the financial front: Orlen upped its spend to place Robert Kubica in a race seat, while the team snared enthusiastic support from Rokit. That said, Williams was close to agreeing terms with Rich Energy.

Unilever provided additional income, although they and Orlen depart this year, with the Kubica-linked petrochemicals firm being replaced by Rokit’s drinks brand. A major share in Williams Advanced Engineering is due to be sold as this is written, in turn writing down debt but reducing future cross-subsidies.

Williams F1 recorded an estimated loss of $25m for the year, partially off-set by WAE income. But it is well-placed for F1’s new era, when budget caps restrict team’s ‘performance’ spending to $175m. The imperative is to survive 2020.

The team says

Our financial results reflect our finishing position in last year’s constructors’ championship and consequent reduction in prize money. There was an overall reduction in partnership income compared to [2018], although we secured major new partnerships with Rokit and Orlen.

Note: As a listed company Williams stresses that information provided is indicative, and does not constitute projections.


Haas budget 2019

Haas Rich Energy logos, 2019
Haas’s Rich Energy deal fell apart
Machine tool magnate Gene Haas uses F1 as marketing platform for his products, relying upon frugality and out-sourcing for cost-effectiveness. Thus the team’s assets consist largely of two contracts: Dallara for listed parts, and Ferrari for powertrains, non-listed parts and wind tunnel usage. Modest facilities in Banbury provide a race base.

Although Haas progressed rapidly during its first three years and achieved a best-yet fifth in last year’s constructors’ championship, 2019 provided reality checks. Car problems hampered performance, in turn affecting 2020 income. Equally, spats with Rich Energy resulted in the title sponsor’s exit after half a season, hitting income by an estimated $10m.

The team retains drivers Romain Grosjean and Kevin Magnussen for another year, but needs to acquire significant sponsorship deals or risk losing its owner’s patronage, for he is surely tiring of underwriting heavy bills. Poor 2019 results mean next year’s FOM revenues alone are likely to dip by $15m.

That said, with 2021’s regulations encouraging out-sourcing and parts sharing, Haas’s business model is fit for future purpose, while operating at well below budget cap levels means Haas has headroom for future growth.

The team says

If you lose out on big money like this, you have to put your thinking hat on how not to waste money next year. It’s not an existential problem and for sure it’s not like ‘Yeah, it doesn’t matter’. It’s something between – we need to manage it, it’s never a nice thing to manage [on] less money.

Alfa Romeo

Alfa Romeo budget 2019

Alfa Romeo, Interlagos, 2019
Alfa Romeo brands Sauber’s F1 team
Swiss-domiciled Sauber falls under Islero Investments – itself owned by Swedish-controlled Longbow Finance – and forms part of a motorsport conglomerate consisting of the race operation and a supplier of motorsport engineering services, referred to internally as ‘third-party business’. The latter cross-subsidises the team.

This year, the second full season under team boss Frédéric Vasseur, saw the team again place eighth in the championship. Yet behind the scenes further progress was made at its Hinwil base. A chassis name change to Alfa Romeo from Sauber – a deal said to run to the end of 2021 – increased the brand’s presence and contribution, enabling headcount to grow a further 10% and funding a new simulator.

Shell came in as fuel branding partner in a single-year deal linked to Alfa parent FCA, with Latin American mobile company Claro, Singha (beer), Richard Mille (watches) and a raft of secondary sponsors providing additional support. Shareholders underwrite deficits as part of Longbow’s long-term investment strategy.

The relative strength of the Swiss Franc, though, poses an external challenge, as does the country’s labour costs. These factors will only be partially addressed by 2021’s financial regulations, and thus Sauber’s immediate challenge is to improve on, rather than consolidate, eighth place.

The team says

We did a strong job to improve income from sponsors. Compared to two years ago it’s a huge step forward and if we continue in this direction, we are in a good position.

Racing Point

Racing Point budget 2019

Sergio Perez, Racing Point, Sochi Autodrom, 2019
Though outwardly similar, much has changed at Racing Point
Although still F1’s ‘pink team’, much changed at Racing Point after a consortium headed by Canadian billionaire Lawrence Stroll last year saved the team from bankruptcy. Headcount grew 15% and installations and facilities have been upgraded and/or renewed. Having previously used Toyota’s wind tunnel in Cologne, in May the team switched to the Brackley facility operated by power unit supplier Mercedes.

These were substantial changes but the biggest is yet to come. The team recently acquired a 27-acre ‘green’ site upon which to expand with planning permission currently in process. This 10-fold increase in surface area is a further sign of its intentions.

Given that FOM revenues remained stable from 2018 – although there is a dispute (see below) – budget growth was fuelled mainly by sponsorship. BWT remained as primary backer, with betting company Sport Pesa joining as title sponsor (as we revealed in January) and a number of other brands, such as JCB and Bombardier, transferring with driver Lance Stroll. Sergio Perez’s loyal Mexican backers continued their support, thus reducing shareholder exposure.

Year-on-year comparisons are distorted by the circumstances surrounding Racing Point’s change of ownership, while a concern is the dispute with Liberty/Haas over a right to so-called ‘Column 2’ money – up to $60m is at stake – which is expected to be arbitrated late next year.

The team says

What makes us optimistic is knowing where we sit in the midfield, and knowing what’s coming in the future to enable us to get back to the fourth place that we’re used to.

Toro Rosso

Toro Rosso budget 2019

Pierre Gasly, Toro Rosso, Interlagos, 2019
Toro Rosso will change names next year
Toro Rosso exists as a finishing school for Red Bull’s cadre of development drivers, and maintained its policy of rotating drivers on behalf of the main team. Undertaking Honda’s development work in 2018 paid off this year. A pair of massive, though arguably fortuitous, points hauls in Germany and Brazil propelled the team to sixth place in the championship, equalling its previous best finish 11 years earlier.

This bode well for its 2020 income which is projected to rise by $15m, rebounding from the dip caused by its travails with Honda last year. Its other three sources of income are Red Bull and associated brands (who will rename the team Alpha Tauri next year), Honda (power units and cash), Moose (a Thai cider linked to Alexander Albon, subsequently promoted to the main team following his seat swap with Pierre Gasly) and long-time backers Casio and Acronis, the latter linked to Daniil Kvyat.

The team’s headcount increased marginally over 2018 in both Faenza and at its Bedford aerodynamics base despite (or due to?) 2021’s regulations placing greater emphasis on component and technology sharing. The team already draws transmissions and sundry components from the main team and through Red Bull Technologies, with this trend expected to continue in future.

The team says

[The Big Three] operate with budgets of up to €500 million; we have less than a third of this, and are simply not in a position to compete against these teams. This is also not the target of Toro Rosso.


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18 comments on “The cost of F1 2019: Team budgets analysed – part one”

  1. Great insight, and just shows how Williams are not exactly underdogs… they have enough resources to at least perform as well as the other midfielders.

  2. with 2021’s regulations encouraging out-sourcing and parts sharing, Haas’s business model is fit for future purpose

    Based on the numbers this is no the case.
    Haas might have less staff but they spend as much as (or just $5M less than) the other teams here.
    And it’s not that they are reaping any sporting benefits from their different business model.

    I wonder what they did with the extra $20M budget in 2019.

    1. Don’t forget that the regulations also restrict capex, which Haas would not incur to the same extent. Equally, as a new team they are currently ramping up on certain facilities, which is where investment is going.

  3. I hope racefans writes one article which contains all the financial details of all teams in one article. These partial grid articles are nice but when you google this earning data afterwards (say during summer next year) you only tend to find these articles which only show few of the teams when the info I was looking for is a comparison of all teams in one article so I can instantly see where sauber, ferrari or racing point are in relation to others. Which means I just read an article on some other site which has all the numbers of all teams in one article than piece together all the teams from 3 or 5 separate articles on this site.

  4. Ferrari spends more on catering than Williams has altogether. Money is a problem. That’s probably why we can’t get Porsche to anti-up to the table.

    1. Porsche won’t joining because VW isn’t going to spend anymore money on ICE racing.

      I think it makes sense for more F1 teams to follow McLaren to IndyCar as they did very well financially running just the Indy 500 last year. Looks like they’ll do even better for the full season per Zak.

      1. Good point. Running an Indy car means many more eyeballs on the cars, and thus sponsors. Not so long ago F1 teams got most of their income from sponsors. Now they are hostage to Liberty. The result? You can easily buy tickets to the Japanese GP – impossible in the 90s. Other races too. Reducing your audience, year on year, at the races and on TV, is the royal road to disaster. That is why Liberty need 25 races – an effort to keep the subscribers happy – even though we pay a little more each year.

        I bet we lose some classic circuits over the next few years.

        F1 must be on FTA TV or it will remain a contrived spectacle like TV wrestling.

    2. @sunnchilde, Porsche has participated in F1 in the past, but some of its projects did go rather poorly and seem to have put Porsche off from future participation.

      The development of the 3512 in 1991 was an incident that Porsche spent a lot of time trying to live down, as that was a terrible engine. It was badly overweight – the legend goes that it was built by bolting two of the old V6 turbo engine blocks together, making it far too heavy as the blocks were much thicker than they needed to be – and underpowered, of dubious reliability, ran well behind schedule and was underdeveloped when it was finally used.

      Now, to be fair to Porsche, it didn’t help that the car it was fitted to – the FA12 – was itself not a particularly good car, and Footwork’s lack of sponsorship meant the budget for developing the 3512 was rather limited. Even so, it says a lot that the team thought the engine was so bad that they didn’t even wait until the end of the season to get rid of it – not to mention that the engine was so overweight that, even with a 100mm aluminium spacer in the back to support the DFR that replaced it, the drivers commented the handling was better by dint of not having such a heavy engine in the back that spoilt the weight distribution of the car.

      That incident say Porsche basically being laughed out of the sport, and it seems that Porsche was, for a long time, really reluctant to return to the sport when it had been so publicly humiliated, preferring to stick to sportscar racing instead.

  5. Is Williams spinning out WAE something to be concerned about for them? Seems like they’re liquidating to cover costs.

    1. Perhaps not. They could be selling the growing WAE business to refocus on F1. They’ve retained a stake in WAE but allowed investors with much deeper pockets to take the reins, if the new investors can allow the company to grow with increased capital then WilliamsF1 could be better funded in future, as well as having a management with the distractions of running a seperate business alongside.

  6. It is not entirely correct that economic info about Italian companies are not public. Every Italian company has to fill a quite detailed balance report yearly. This report can be then fetched by everyone interested, submitting a request to the proper office, called something like Trades Chamber. To avoid too much requests there’s a small fee to pay, fee euros.

  7. Question for Dieter; Do you believe with the increased investment from Honda this year we’re looking at an RBR Honda team with a billion dollar budget?

  8. You hit it on the nail rsp123, the lack of sponsorship revenues direct to the teams has warped the midfield. Now teams rely on Liberty and they have limited options to grow revenue (basically try their hardest to get more points).

    Capping costs is at best a short term fix. F1 needs growing viewership, fan engagement, and stability. Hopefully the latter will come with the cost caps, but the other issues still need a lot of work. Fix those and the advertisers will follow. The EPL has gobbled up billions of foreign investment and global advertising. F1 used to do the same.

    1. Olaf, the thing is, in recent years it has been noted that some of that investment into the EPL is starting to stall as well, and the most recent round of bidding for the live broadcast rights to the EPL surprised many when they fell in value (the first time in years that the broadcast rights have fallen in value).

      Even series such as the EPL have been reporting changes in how people watch that series – they have also begun reporting a decline in live broadcast figures too, with interest now shifting into cheaper streaming services that offer highlights packages instead.

      It seems that most people just propose the same solution, which is putting F1 on free to air channels – but is that necessarily the right way to approach the situation now when the way in which most people now watch sports events has shifted over the past couple of decades?

    2. I bet you cannot grow viewership / fan engagement with more stability.
      It needs more ACTION, HYPE & DRAMA which can never be achieved as long as public noted companies own a franchise and / or have a big say (Daimler, FCA, Renault, Honda). These must seek for safety, stability & predictability = the principle of the minimum; whereat in sports, it’s exactly about the other principle.

  9. Hi @dieterrencken

    I see that PU costs are not included. Is there any chance of determining what the team costs would be if you applied the 2021 formula for excluding the other costs?

    It would be interesting to see how they compare to the proposed Budget cap, especially for the top end spenders.

  10. More mystification.

  11. Dieter, My mouth is watering for a peice on Paddy Lowe and Williams. This was one of the biggest mysteries in 2019 that no website seems to illuminate yet!

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