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the true insanity of F1 financing is shown by this article


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#1 mariner

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Posted 11 November 2014 - 10:43

The Uk Independent newspaper has published an analysis of the 2013 Red Bull Racing accounts. It shows that the Red Bull drinks company, its owner, paid only £13M towards its costs despite deriving vast global sponsorship benefits.

 

If the article is correct Red Bull spent £196M in 2013, up 30% in 5 years to employ 675 staff. However oustide sponsorship, but much more importantly prize money, covered all but £13m of that cost.So Dietrich Mateschitz spends only £13M of his companies' money or just 5 times the crowdfunding needed to get Caterham on teh back of the grid for one race.

 

That £13m is apparently down by £54M or 80% from 2012.

 

No wonder Christian Horner shouts so loudly about not giving up any money to the smaller teams, his boss is getting a virtually free ride in F1 despite employing 675 people.

 

 

 

 

 

 



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#2 Elba

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Posted 11 November 2014 - 11:09

Just like Ferrari Red Bull seem to have effective participation in this game called F1 down.

Good for them!!



#3 Nonesuch

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Posted 11 November 2014 - 11:16

I think it's not too controversial to say that the distribution of FOM funds might need some adjusting, but why is running a good business insanity?

 

Red Bull makes great cars, wins races and prize money and does a good job using that success in marketing campaigns that others want to be a part of. Why wouldn't they?

 

Red Bull probably invested a lot more through their early years. It wasn't until the regulation changes of 2009, their fifth year, that they escaped the lower midfield.


Edited by Nonesuch, 11 November 2014 - 11:21.


#4 noikeee

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Posted 11 November 2014 - 11:20

Include the ownership of Toro Rosso in your maths - which I suspect is a key factor in their success - and the math starts looking very different.



#5 tmekt

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Posted 11 November 2014 - 11:21

What are you trying to reach with this? Are you saying Red Bull should spend less, or more, or that they shouldn't be given as much prize money as they're receiving now?

The two last ones are just gonna increase the 13m loss so they're not going to willingly agree to do either of those. As I've understood, changing the way prize money is distributed would in turn need also the top teams' approval and they have no reason to do so if they are losing money even now. Basically, the situation is comparable to the engine unfreeze dispute.

Changing the prize money distribution might not even be good for the sport. Teams like Mercedes and Red Bull are not going to stay here long if they are forced to increase their losses, they're not in the sport out of the sheer joy of competition.

#6 trogggy

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Posted 11 November 2014 - 11:21

The Uk Independent newspaper has published an analysis of the 2013 Red Bull Racing accounts. It shows that the Red Bull drinks company, its owner, paid only £13M towards its costs despite deriving vast global sponsorship benefits.

 

If the article is correct Red Bull spent £196M in 2013, up 30% in 5 years to employ 675 staff. However oustide sponsorship, but much more importantly prize money, covered all but £13m of that cost.So Dietrich Mateschitz spends only £13M of his companies' money or just 5 times the crowdfunding needed to get Caterham on teh back of the grid for one race.

 

That £13m is apparently down by £54M or 80% from 2012.

 

No wonder Christian Horner shouts so loudly about not giving up any money to the smaller teams, his boss is getting a virtually free ride in F1 despite employing 675 people.

I'd have hoped that a team winning 4 world championships on the trot should be able to more or less balance the books. 



#7 Rob

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Posted 11 November 2014 - 11:33

Changing the prize money distribution might not even be good for the sport. Teams like Mercedes and Red Bull are not going to stay here long if they are forced to increase their losses, they're not in the sport out of the sheer joy of competition.

 

If you force the really big spenders out of the sport, the budgets will come down.



#8 Gorma

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Posted 11 November 2014 - 11:41

So even the most successfull team of the last couple of years has made 67 million GBP of losses during 2012-2013. 



#9 balmybaldwin

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Posted 11 November 2014 - 12:03

Er... this isn't about RBR making a loss, it's about how much funding they get. 

 

Does anyone really think that much Redbull sponsorhip on an F1 car would only cost £13m? On any other car it would cost more like £60-100m therefore the team are effectively tuerning a profit of £45m.  However, they are of course the most deserving team of funds this year having won 4WDC and WCC's on the trot and therefore not a very good example.

 

I'm sure they could of course reduce their costs further without impacting on-track performance etc if they reduced their marketing spend etc.

 

The real issue is what big teams get when they don't perform - e.g. Ferrrari appear to be getting more money than RBR for producing rubbish cars. This is fundamentally unfair.

 

OK, so there is an argument that F1 would be nowhere with out ferrari but I don't buy that, in fact I wonder where Ferrari would be without F1?



#10 apoka

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Posted 11 November 2014 - 12:16

Link to the article we are supposed to be talking about?

 

 

It is not a problem that F1 teams make a small amount of loss - heck, they could even be profitable. There are a lot of cost related problems in F1 though, but from the opening post it is not really clear to me what kind of discussion we should have here.



#11 F1ultimate

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Posted 11 November 2014 - 12:25

So even the most successfull team of the last couple of years has made 67 million GBP of losses during 2012-2013. 

 

It would be silly to make a big profit as an F1 team. Why would you want to stack paper when you can invest that money into winning and getting a bigger cut out of the prize money. 



#12 Gorma

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Posted 11 November 2014 - 12:26

Er... this isn't about RBR making a loss, it's about how much funding they get. 

 

Does anyone really think that much Redbull sponsorhip on an F1 car would only cost £13m? On any other car it would cost more like £60-100m therefore the team are effectively tuerning a profit of £45m.  However, they are of course the most deserving team of funds this year having won 4WDC and WCC's on the trot and therefore not a very good example.

Red Bull have invested a **** load of money on two F1 teams and has run them at a loss for the past 10 years. They are not getting away cheap.

 

http://news.bbc.co.u...one/4012381.stm

 

 

 

No financial details were released but Ford were reported to have asked for a symbolic $1 if the new owners guaranteed to invest $400m into the team over the next three Grand Prix seasons.


#13 tmekt

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Posted 11 November 2014 - 12:58

It should also be pointed out that they do actually invest the £196m, not just the £13m, so to speak. Costs and revenue don't just magically appear at the same time, the costs come first.

The revenue will be less this year anyway as they won't win the championship

Edited by tmekt, 11 November 2014 - 12:58.


#14 RedBaron

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Posted 11 November 2014 - 13:05

I'd have hoped that a team winning 4 world championships on the trot should be able to more or less balance the books. 

 

RedBull are rather unique, nearly every other team would have a car covered in sponsors paying to be there, which almost certainly generating more than £13 million.

 

For the exposure RedBull gets from the teams name and from the livery I'm sure £13 million is well worth the price.



#15 bonjon1979a

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Posted 11 November 2014 - 13:07

The Uk Independent newspaper has published an analysis of the 2013 Red Bull Racing accounts. It shows that the Red Bull drinks company, its owner, paid only £13M towards its costs despite deriving vast global sponsorship benefits.

 

If the article is correct Red Bull spent £196M in 2013, up 30% in 5 years to employ 675 staff. However oustide sponsorship, but much more importantly prize money, covered all but £13m of that cost.So Dietrich Mateschitz spends only £13M of his companies' money or just 5 times the crowdfunding needed to get Caterham on teh back of the grid for one race.

 

That £13m is apparently down by £54M or 80% from 2012.

 

No wonder Christian Horner shouts so loudly about not giving up any money to the smaller teams, his boss is getting a virtually free ride in F1 despite employing 675 people.

Does this include the money given to them by Red Bull inc who will write it off as Advertising revenue?



#16 427MkIV

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Posted 11 November 2014 - 14:00

If the tax laws in Austria are the same as the US, I'm sure whatever Red Bull spends on all its motorsports ventures are written off as advertising.

 

Which makes me wonder, do F1 teams and drivers have to pay taxes in every country where they win money? If so, that would mean they would also have to pay state taxes in Texas. For comparison, PGA Tour golfers in America have to pay federal income taxes on their winnings and state income taxes in every state where they win money (if those states have income taxes). I would think that would be an accountant's dream come true, with all the fees.



#17 F1matt

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Posted 11 November 2014 - 15:01

If the tax laws in Austria are the same as the US, I'm sure whatever Red Bull spends on all its motorsports ventures are written off as advertising.

 

Which makes me wonder, do F1 teams and drivers have to pay taxes in every country where they win money? If so, that would mean they would also have to pay state taxes in Texas. For comparison, PGA Tour golfers in America have to pay federal income taxes on their winnings and state income taxes in every state where they win money (if those states have income taxes). I would think that would be an accountant's dream come true, with all the fees.

 

 

 

Its unlikely that the race promoter pays any prize money otherwise the prize money would have been leaked, its more likely to come from or via the FIA in Switzerland and paid to teams or CVC/ Bernie.



#18 Nathan

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Posted 11 November 2014 - 15:16

I wonder how much Dietrich has invested in Red Bull/Torro Rosso since 2003............

Free ride..... :down:
 

I guess it doesn't matter now that is has paid off.
 



#19 redreni

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Posted 11 November 2014 - 15:25

There are many insane things about F1, but this isn't one of them. At the time of the last financial crisis Fiat was posting losses all over the place, and its wholly-owned subsidiary Ferrari was turning a profit and subsidising its parent, which is of course even better value for them than what DM is getting from his involvement through Red Bull.

 

If a £13m loss is the reward for well over a decade of massive bankrolling of two teams, you can see why F1 struggles to attract serious people to take up the vacant slots on the grid...


Edited by redreni, 11 November 2014 - 15:26.


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#20 Imateria

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Posted 11 November 2014 - 16:16

Link to the original article?

 

Dieter Renken made an article on this for all teams only 2 weeks ago in Autosport and put Red Bull's budget at closer to £240.



#21 mariner

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Posted 11 November 2014 - 17:26

firstly my apologies for leaving out

the link, here it is.

 

http://www.independe...ty-9852378.html

 

Secondly the real problem is how some people in F1 can manoveur things to make it a profitable business for their own pockets. For sure Dietrich Mateschitz put a lot of company money into Red Bull Racing for years but he got vast markeing / advertising benefit for his money.

 

Now he is getting , as somebody pointed out , maybe £100M of sponsorship coverage for just £13M.

 

That is indeed good mangement but the reducing cost to RB seems to be coming from grabbing a bigger and bigger share of the fixed CVC prize fund, just like Ferari.

 

Being a smart businessman is quite OK but the basic question is whether a SPORT ( run by a sports authority- the FIA) should let smart businessmen manipulate a free ride for their other , larger busineses.

 

BTW the US tax question is good one. IIRC there was nearly a drivers strike at the Detroit GP one year because the US uses , almost alone among countries, the concept of " worldwide income" for income tax. So apparently the IRS turned up asking the drivers for their TOTAL w/wide income including sponsorship etc. and said they would be taxed on 1/12 th that for the one US GP in twelve not just on direct US GP prize money. The driver's very very unhappy !


Edited by mariner, 11 November 2014 - 17:31.