Going racing in Formula 1 isn’t a cheap affair. From logistics to trackside affairs, there are a lot of fiscal demands that have to be met by the teams, the stakeholders and the sport itself. A testament to this is the fact that despite Red Bull having seen a huge upturn in their revenue, the team can only boast of a paltry sum as profits given their extensive ventures in this sport. That’s right, while the team has recorded revenue jump n the ballpark of $49,187,000 in 2022, the increased rate of return on investment on the other hand stood only at approximately $861073 as per GPBlog.com.
But the Bulls needn’t despair. Under the auspices of the current Concorde Agreement, the 2023 Formula 1 Constructors’ champions would be receiving an unprecedented 14% out of the total prize pool, which is being evaluated at over $900,000,000. But along with them, Ferrari is going to be the highest earners as they are also entitled to a hefty ‘historical bonus’ for being a part of this sport since its inception.
🗣️ | Red Bull Racing notes that since their start in 2004, they have never had the sponsorship revenue and licensing royalties as they do now.
Christian’s goal is for RBR to become the first F1 team that could sustain itself solely off of sponsorships.
“We’re almost there.” pic.twitter.com/GPYBAZOLGT
— RBR News 🇳🇱🇲🇽 (@redbulletin) January 28, 2023
Its success in the sport has also come with allied sources of funds. Given their standing in F1 and a massive populace of fans, the team is a lucrative choice for sponsors. And the Milton-Keynes-based outfit has capitalized on that. In 2023, they’ve partnered with a whopping 38 sponsors with the top payers being Oracle, Bybit, Honda and Tag Heuer.
Red Bull have made and lost a fortune in Formula 1
If we are to compare the numbers, the Bulls have experienced a staggering $49,187,000 rise in their overall revenue in 2022. And though the profit figures may be small at $861073, it is a steep 51% rise as compared to the previous year.
The huge disparity in terms of revenue and profits is pretty apparent in a sport like F1. Millions and millions of dollars are spent each year on R&D and fabrication. On top of that, running costs, wages, logistics etc. take a huge chunk out of the revenue figure, too. Then, contingent costs such as damage repairs, penalties et al. are a big factor in accounting the end of the year earnings as well. All in all, while it may be a profitable venture, F1 saps a lot of cash out of even the very best of them all.
Estimates on the expenses for repairs of F1 teams had for crashes by each driver
Now you know why #AlpineF1team signed Esteban Ocon for 3 more years#AustrianGP pic.twitter.com/vIxmu24T9f
— Aston Martin F1 updates (@startonpole) June 23, 2021
But the fortunes of the sport are on the up, and there is no doubt about it. While the figures are definitely going to increase in the coming years, Red Bull isn’t the only financial success story that has been born out of this game.
The economics of F1 favor the brave
With the growing popularity and profitability of the sport, teams like Williams have also turned their fortunes around. Back in 2020, the team were on the verge of bankruptcy. But today, they’ve witnessed a whopping $55,831,350 rise in their own revenue.
The only thing we’ll say is that take these numbers with a pinch of salt, though. It isn’t uncommon in the wider sporting industry and the same is with F1; team valuations are often a bit inflated and aren’t the most accurate reckoners of the financial state of any entity.
But evidence on record is that the growth potential is real. With the sport in the right business hands of Liberty Media and fiscal efforts such as the cost-cap, F1 teams are finding themselves getting richer and richer by the day.
