Bernie Ecclestone had said in 2012, “A gentleman should not talk about money nor about last night” when he was dealing with the financial terms for the Singapore GP. Bernie, the chief executive of the Formula One Group which handles all the commercial aspects of the Formula One races, has always refrained from openly showing the commercial might of Formula One.It is however estimated, by Reuters, that the highest level of single-seated motorsport racing, Formula One, has a revenue touching $1.5 billion annually.

How much money do Formula One teams make?

Formula One is a very popular sport internationally which attracts more than millions annually, 600 million television viewership in 2008, mostly from the European region. In 2013, Bernie explained the part of the deal as he was getting ready to bring three new teams into the sports. He speaking to The Daily, he said the top ten teams get a part of the prize fund and other teams get a small portion however that was to change, “We pay the top ten teams, that’s what we do. For three years we did something different because we had an agreement with the FIA president, Max Mosley, but now on we will pay the top ten and that is it”.

As one can see, the Formula One team earnings depends a lot on its performance and how it fares in the entire season rather than just in a race or two. Hence it is important that the team continuously keeps pushing itself and stays alert to the threat which other teams pose over the entire season. Stakes have only risen over the few years with more teams and higher sponsorships.

It a famous un-kept secret, that Ferrari has a special deal with Formula One group that makes sure Ferrari gets around 2% of the prize money straight off the top regardless of its performance in the season. Ferrari is the oldest and the most prestigious team with maximum pedigree as compared to the other teams. Ecclestone goes out of his way at times to make sure he keeps the bosses at Maranello happy, the team that attracts maximum support and crowd as well during each season. Other teams which cry foul, given an instance that Ferrari earned $17.5 million in 2011 more than others just due to the above “understanding” with Formula One Group, can hardly do anything about it.

Many have questioned the sport’s financial structure after two teams, Marussia and Caterham went into administration last year. In a way, it is wrong to just single out Formula One with teams in financial trouble. Football for example, generates larger revenue still teams and clubs get into financial trouble. Big teams in Formula One like Red Bull and Ferrari spend close to $400 million in a season over design and testing for the new car while Mercedes and McLaren are estimated to spend in the region of $300 million annually. Other teams cannot afford more than $100 million on the development of the car. However, the amount of money spent annually on R&D is not an indicator of the performance of a team in the races.
The prize money which is calculated as a percentage of F1’s underlying profit, spiked in 2013 season, increasing the team’s share from 59.6% to63%. The problem with the Formula One teams is performance. Teams like Sauber, Force India, Williams, Lotus are all struggling currently but manage to keep themselves afloat by sponsorships, contracts and commercialising their technologies, rather than depending on Formula One prize funds. Thus, in the past too, teams like Jordan, Spykar, Midland, Brawn, Super Aguri all having done well for at some period, could never stick around for long and exited the sport after financial troubles like the recent Marussia and Caterham teams.

Tags: Bernie Ecclestone, Caterham, F1, Ferrari, FIA, Force India, Formula One, Lotus, Marussia, McLaren, Mercedes, Motorsport, Motorsports, Red Bull, Sauber, Toro Rosso, Williams