Can a F1 team make a profit.
Discussion
I know for the manufactor teams they can spend whatever it takes to win.its taken out of their marketing budget,is tax deductable and in the grand scheme of their companies a relatively small amount of money.
I know normally F1 teams spend all their money and some they dont have that leads to the problems faced by Murussia and Caterham,also probably Force India and Sauber are in the same boat.
Could Manor make a profit.I dont know how much the new owner spent buying the team but the two major creditors were probably Ferrari and McLaren,did they write off the deby.take a reduced payment or take a percentage ownership if the team say 5%
The new owner says the budget is 60-60 million and they will get half back from Bernie for the last two years results so that leaves 30 million.Some of the investors who considered buying Manor now are interested in investing with the team.
Could the new owner sell 50% of the team to a couple of interested new investors for say 20 million a so that would leave the new owner having 50% of the team and only having to find 10 million to reach the budget.
Then there is sponsorship and with Justin King I am sure he can find some good sponsors.I know there are not the sponsors about these days to spend say 50 million sponsoring a Fi team but there will be quite a few that could sponsor for say 5 million bearing in mind Manor will be thought as a success story and have plenty of coverage particularly in Australia.If they could get 4 sponsors that would be 20 million.Can they attract a good driver who has sponsorship budget of 10 million to bring to the table.
If they could get new investors on board and some good sponsors that would leave the team at the end of the year if they kept to their budget a profit of 20 million.
It sounds simple but could they really make 20 million or more profit.
I know normally F1 teams spend all their money and some they dont have that leads to the problems faced by Murussia and Caterham,also probably Force India and Sauber are in the same boat.
Could Manor make a profit.I dont know how much the new owner spent buying the team but the two major creditors were probably Ferrari and McLaren,did they write off the deby.take a reduced payment or take a percentage ownership if the team say 5%
The new owner says the budget is 60-60 million and they will get half back from Bernie for the last two years results so that leaves 30 million.Some of the investors who considered buying Manor now are interested in investing with the team.
Could the new owner sell 50% of the team to a couple of interested new investors for say 20 million a so that would leave the new owner having 50% of the team and only having to find 10 million to reach the budget.
Then there is sponsorship and with Justin King I am sure he can find some good sponsors.I know there are not the sponsors about these days to spend say 50 million sponsoring a Fi team but there will be quite a few that could sponsor for say 5 million bearing in mind Manor will be thought as a success story and have plenty of coverage particularly in Australia.If they could get 4 sponsors that would be 20 million.Can they attract a good driver who has sponsorship budget of 10 million to bring to the table.
If they could get new investors on board and some good sponsors that would leave the team at the end of the year if they kept to their budget a profit of 20 million.
It sounds simple but could they really make 20 million or more profit.
Edited by btcc123 on Thursday 5th March 19:15
Although impossible to prove year upon year I am sure the Ferrari F1 outfit makes a profit, but through product licensing and TV money....not prize money and sponsorship. I forget how much Bernie pays them up front each season but they receive in excess of £30 million before the season begins from CVC.
DanielSan said:
They supply systems to a few different race reams and motorsport categories but I thought that was a separate business? Could well be wrong though.
IIRC Williams set up Williams hybrid power using technologies they developed where a flywheel was used as an energy store as opposed to batteries. The flywheel was difficult to package in an fl car but perfect for other applications.paolow said:
IIRC Williams set up Williams hybrid power using technologies they developed where a flywheel was used as an energy store as opposed to batteries. The flywheel was difficult to package in an fl car but perfect for other applications.
Correct. However, Williams sold that business to GKN last year.http://williamsf1.com/Investors/Investors-News/GKN...
Lets get the thread back on topic.
I am really looking at the smaller teams like Manor,Sauber,Force India and Lotus but the financial picture is a bit muddled with the last three teams as I an sure that are heavily in debt.
Manor are really starting from scratch financially and although the team is more or less the same as last year in my example on the first post do you think that they can make a profit,be sustainable and be on the grid for many years.
To get the speed and move up the grid its all depends the money but spending wisely,getting good sponsors and moving up the grid slowly can they still make a profit.
I am really looking at the smaller teams like Manor,Sauber,Force India and Lotus but the financial picture is a bit muddled with the last three teams as I an sure that are heavily in debt.
Manor are really starting from scratch financially and although the team is more or less the same as last year in my example on the first post do you think that they can make a profit,be sustainable and be on the grid for many years.
To get the speed and move up the grid its all depends the money but spending wisely,getting good sponsors and moving up the grid slowly can they still make a profit.
No, not small teams anyway
the small teams need to spend more money than the top teams to get to the same level of performance so any small team making a profit needs to reinvest this back into the car / staff for next year if they want to progress.
Larger teams can use F1 to make profit in other business areas like road cars but i don't believe any F1 team makes a profit purely on the competition and prize money generated through success. Merchandising can help massively, a top driver could work out cheaper as they will sell more merchadise.
Be interesting to see the relative merch sales figures for the top few drivers.
the small teams need to spend more money than the top teams to get to the same level of performance so any small team making a profit needs to reinvest this back into the car / staff for next year if they want to progress.
Larger teams can use F1 to make profit in other business areas like road cars but i don't believe any F1 team makes a profit purely on the competition and prize money generated through success. Merchandising can help massively, a top driver could work out cheaper as they will sell more merchadise.
Be interesting to see the relative merch sales figures for the top few drivers.
The question remains - how does the ROI compare to alternatives?
I can't see a compelling case for F1 offering a return on capital competitive with lower risk alternatives.
I'm sure ego & a passion for motorsport drives these investment decisions more than any clear-headed business assessment.
I can't see a compelling case for F1 offering a return on capital competitive with lower risk alternatives.
I'm sure ego & a passion for motorsport drives these investment decisions more than any clear-headed business assessment.
Penguinracer said:
The question remains - how does the ROI compare to alternatives?
I can't see a compelling case for F1 offering a return on capital competitive with lower risk alternatives.
I'm sure ego & a passion for motorsport drives these investment decisions more than any clear-headed business assessment.
As a business opportunity, owning and running an F1 team doesn't make much sense but apart from Lotus, I don't think that's why the teams do what they do - not directly at least. Mercedes and Ferrari want to sell more road cars and F1 helps them do this. Red Bull want to sell more Red Bull and F1 again helps in this regards. I think accountants call it 'displaced benefits' and where this works, it works very well.I can't see a compelling case for F1 offering a return on capital competitive with lower risk alternatives.
I'm sure ego & a passion for motorsport drives these investment decisions more than any clear-headed business assessment.
Williams strikes me as a team that strives to exist simply for the sake of competition. To a lesser extent, so does Sauber and I get the feeling that Manor are in this position as well. As such, the pursuit of profit is less important than generating what's needed to be competitive.
Gassing Station | Formula 1 | Top of Page | What's New | My Stuff