83 replies to this topic

[Zoetrope]

So Red Bull has a turnover of EUR 4.253 billion but they spend $630 million on F1? I doubt that.

There are more sponsors to the team than just Red Bull

[CrucialXtreme]

So Red Bull has a turnover of EUR 4.253 billion but they spend $630 million on F1? I doubt that.

Red Bull Racing got 93.1 Million in FOM prize money and 67 Million from sponsors so that only leaves 470 Million which is definitely not out of Red Bull GmbH's reach.

[CrucialXtreme]

And maybe my intentions are being misconstrued. I don't care if Red Bull Racing or Red Bull Technology spent 800 Million in 2011 or 2012 for that matter. Makes no difference to me. Same goes for Ferrari or McLaren. If you have it, can spend it, reach the goals you want and still make a profit, go for it.
But those thinking it's out of the question for RB to spend that kind of money is being naive. Heck the chartered a private jet to fly half way around the globe to deliver one front wing.

If I was here to dog RB I would have brought up RB's fight on having the RRA policed. Again I really don't care how much they or any team spend. Honestly. But it's rather naive to think that any of the big teams don't have clever tricks they impose to get around some things. To suggest otherwise just isn't being realistic.

[Kyo]

They spend most of their money on marketing, the product costs almost nothing.

I know that, but F1 would need make them sell something like 700+ million extra cans of Red Bull to be a profit operation. I don't think F1 has visibility enough that justifies such amount of spent money.

[johnmhinds]

I know that, but F1 would need make them sell something like 700+ million extra cans of Red Bull to be a profit operation. I don't think F1 has visibility enough that justifies such amount of spent money.

http://www.redbull.c...d=1242937556133

They sold 4.631 Billion cans of Red Bull in 2011.

Whatever they are spending on marketing it's clearly going to be covered by the huge profits they are making.

When you consider companies like Coca Cola spend US$3 Billion+ on advertising a year Red Bull's sport advertising doesn't seem like much for the amount of impact it makes.

[Kyo]

http://www.redbull.c...d=1242937556133

They sold 4.631 Billion cans of Red Bull in 2011.

Whatever they are spending on marketing it's clearly going to be covered by the huge profits they are making.

When you consider companies like Coca Cola spend US$3 Billion+ on advertising a year Red Bull's sport advertising doesn't seem like much for the amount of impact it makes.

I know they sold this much, what It doesn't sound plausible is that 700+ million were thanks to F1 marketing. They could very well spend this money ( approximated $ 450 million) sponsoring McLaren, Ferrari and Lotus together with personal sponsorship to Vettel, Hamilton, Alonso and Kimi and would probably still left some money. Just doesn't make sense spending this much.

Edited by Kyo, 01 December 2012 - 01:55.

[SpaMaster]

Well it's Ferrari who have the extra FOM money and tobacco sponsorship, which is income unavailable to their competitors. They set the standard for buying success.

So when RBR are criticised for buying success, there's no way you can avoid bringing Ferrari into it.

I have to acknowledge this point. It is somewhat a smart idea to have Marlboro sponsorship when the tobacco advertisement was first banned. But you can now realize that no other team or tobacco manufacturer would be able to replicate that. It is a very unique case and no other team would be able to replicate it and that is tonne loads of money. It is unfair funding.

Same with the $80 million or so extra money they get every year from FOM. Now, I think all teams are trying to bargain some money based on arguing their worth and I have no doubt who would get the largest amount. What happened earlier is not far off from bribing. Williams and McLaren don't get nearly that much granted money. And this was a crooked attempt by FOM to stop Ferrari from leaving them for a breakaway series.

Yes, considering how much extra the big three teams spend compared to other teams, they all are buying success compared to the others. May be between them they are competing for success. This is a classic case of big boys bullying to not lose their status. Unlike NBA, the governing body cannot simply impose a rule that it thinks is fair for all teams and good for the general welfare of the sport. That's why I always have a bit of regard for teams like Sauber and Lotus that add more punch to money spent.

[skinnylizard]

the costs if true/correctly gauged will be offset also by sponsors and concorde money..

[r4mses]

The linked NZZ-article states NOWHERE that RBR or anyone else spend $630m on F1 in 2012. NOWHERE. Not even close. They're talking about "Umsatz" which actually is business revenue.

[sailor]

I think you're being a bit naive here.

For all we know, RBR could have paid RBT $10 for Adrian's services.

Look at the way Starbucks, Google or Amazon manipulate payments between their companies (for tax avoidance purposes, but it's the same principle).

May be .. But then if RBT pay Adrian 10 million , they will have to show that as costs while only adding $10 as revenue on RBT. Efectively making a loss and everything will be on the books.
Also there is no motive to do that. They arent breaking any laws, they have the money and hey are spending it to make even more money.

Problem i have here is that we are assuming the 630 mill number by adding the RBR budget ( top limit of expense or costs ) with RBT turnover ( or revenue) which is simply double counting of the same spend.

[sailor]

I know they sold this much, what It doesn't sound plausible is that 700+ million were thanks to F1 marketing. They could very well spend this money ( approximated $ 450 million) sponsoring McLaren, Ferrari and Lotus together with personal sponsorship to Vettel, Hamilton, Alonso and Kimi and would probably still left some money. Just doesn't make sense spending this much.

Its simple.

If They are spending 700 mill ( in your example, but its simply not true) , it doesnt mean that they are not getting back even more in terms of revenue.

Prize money, FOM money and sponsorship will abount to a sizable 300 odd millions which easily covers their 250 million ( as opposed to 700) spend and leaves them a 20 % return on costs.

All the RBR energy drink marketing and hype they get is basically free.

[stanga]

The linked NZZ-article states NOWHERE that RBR or anyone else spend $630m on F1 in 2012. NOWHERE. Not even close. They're talking about "Umsatz" which actually is business revenue.

There are alot of misunderstanding of accounting concepts in this thread. So to help out, I dug out the accounts of Red Bull Racing and Red Bull Technology Limited.


Red Bull Racing

Accounting information is from the accounts filed for the year ending December 2011

Revenue £177,000,000
Pre-tax Profit £640,000

Essentially they spent £176 million on operating costs in 2011 - this doesn't include capital expenditure. This is an 11% increase on 2010, 25% on 2009.

Now, RBR is a subsidiary of Red Bull Technology which owns 100% of RBR. Red Bull Technology only has one subsidiary, RBR - it is the holding company for RBR and is itself wholly owned by Red Bull GMBH.

Red Bull Racing's financials will be consolidated into RBT's numbers - Newey etc will be in those numbers too and recharges out to RBR will cancel out in those numbers.


Red Bull Technology


Accounting information is from the accounts filed for the year ending December 2011.

Revenue £215,000,000
Pre-tax Profit £4,000,000

• Essentially they spent £200 million on operations, adding back depreciation.
  
• Of this amount, £51 million was on employee wages, £1.5 million on director remuneration (Horner, Marko etc).
  
• Looking at their fixed asset investments, they spend £5.1 million on office and workshop equipment.
  
• R & D accounted for £70million, a 37% increase on 2010.
  
• Interestingly, they received £110 million from their Austrian parent (including sponsorship), but their cash reserves remained static. This is consistent with the level in the previous year.

So the €630 million number for spending in 2012 would represent a massive increase on the 2011 numbers.

Edited by stanga, 01 December 2012 - 10:55.

[Kyo]

Its simple.

If They are spending 700 mill ( in your example, but its simply not true) , it doesnt mean that they are not getting back even more in terms of revenue.

Prize money, FOM money and sponsorship will abount to a sizable 300 odd millions which easily covers their 250 million ( as opposed to 700) spend and leaves them a 20 % return on costs.

All the RBR energy drink marketing and hype they get is basically free.

Sorry but i couldn't keep up with your taught here.

I considered Red Bull spent $ 630 million but had $180 million back from prizes and sponsorship. so it leaves a $ 450 million deficit. If they have a profit of $ 0.65 per can sold they would need to sell 700+ million cans to make it profitable to Red Bull. Now lets suppose they spent $ 330 million instead. it leaves a $ 150 million deficit, so they should sell 230+ million cans what begins to make it viable.

I believe stanga post summarized the situation pretty well.

[wrcva]

I believe stanga post summarized the situation pretty well.

+1

I was trying to look-up the same info for Ferrari from the Fiat 2011 Annual report (page 111) looks like they don't line item F1 racing or related R&D activity. I guess all F1 operations related numbers are buried within these numbers mixed with the road car operations and revenue...

Ferrari Highlights
(€ million)															2011	   2010
Net revenues															2,251	 1,919 
Trading profit/(loss)													 312	   303
Operating profit/(loss) (*)											   318	   302
Investments in tangible and intangible assets							 231	   239
	of which capitalized R&D costs										 94	   102
Total R&D expenditure (**)												143	   148
Type-approved vehicles shipped to the network (units)				   7,001	  6,573
Employees at year end												   2,695	  2,721
(*) Includes restructuring costs and other unusual income/(expense)
(**) Includes capitalized R&D and R&D charged directly to the income statement

[boldhakka]

There are alot of misunderstanding of accounting concepts in this thread. So to help out, I dug out the accounts of Red Bull Racing and Red Bull Technology Limited.


Red Bull Racing

Accounting information is from the accounts filed for the year ending December 2011

Revenue £177,000,000
Pre-tax Profit £640,000

Essentially they spent £176 million on operating costs in 2011 - this doesn't include capital expenditure. This is an 11% increase on 2010, 25% on 2009.

Now, RBR is a subsidiary of Red Bull Technology which owns 100% of RBR. Red Bull Technology only has one subsidiary, RBR - it is the holding company for RBR and is itself wholly owned by Red Bull GMBH.

Red Bull Racing's financials will be consolidated into RBT's numbers - Newey etc will be in those numbers too and recharges out to RBR will cancel out in those numbers.


Red Bull Technology


Accounting information is from the accounts filed for the year ending December 2011.

Revenue £215,000,000
Pre-tax Profit £4,000,000

• Essentially they spent £200 million on operations, adding back depreciation.
  
• Of this amount, £51 million was on employee wages, £1.5 million on director remuneration (Horner, Marko etc).
  
• Looking at their fixed asset investments, they spend £5.1 million on office and workshop equipment.
  
• R & D accounted for £70million, a 37% increase on 2010.
  
• Interestingly, they received £110 million from their Austrian parent (including sponsorship), but their cash reserves remained static. This is consistent with the level in the previous year.

So the €630 million number for spending in 2012 would represent a massive increase on the 2011 numbers.

Interesting to see which of the posters were quick to uncritically believe the original article and post (the original post even got the year wrong)

[Kelateboy]

There are alot of misunderstanding of accounting concepts in this thread. So to help out, I dug out the accounts of Red Bull Racing and Red Bull Technology Limited.

Red Bull Racing

Accounting information is from the accounts filed for the year ending December 2011

Revenue £177,000,000
Pre-tax Profit £640,000

Red Bull Technology

Accounting information is from the accounts filed for the year ending December 2011.

Revenue £215,000,000
Pre-tax Profit £4,000,000

+1
If Red Bull really spend USD630mil last year, they must have been involved in creative accounting.

[CrucialXtreme]

I'm prefacing thie following by saying I'm not saying they're in thw wrong, they're just doing what F1 teams do, exploit loop holes!



Red Bull technology have a turnover of 350 million from supplying Caterham and STR And a few bits and bobs to Red Bull racing. Thats a third party supplier with a higher turnover than any current F1 team....If you think that's on the up and up, more power to you.

Now, Mercedes Benz HPE employ around 450-500 people and supply KERS and Engines which are far more expensive than hydraulics and gearboxes, or nuts and bolts that Red Bull Technology supply RBR, Caterham & STR and their turnover comes in at £97,559,000.


But there is an elephant in the room. And this elephant is called Red Bull technologies, it's dubious purpose and the smallish matter of it's 350 million turnover.
Do you really think it's plausible for a 250 million dollar team to have a 350 million dollar supplier?

Let's just all call a spade a spade and congratulate Red Bull on bending the rules once again, Red Bull technologies is a cover for Red Bull racing and supplies it with Extra-RRA developments covered by the RRA.
It's exploiting loop holes which is what F1 is all about and it's rather clever as I've mentioned before. Kudos to them. But lets not a t like its something it isn't.

Edited by CrucialXtreme, 02 December 2012 - 03:37.

[packapoo]

A friend sent me this link.

http://www.nzz.ch/nz...nanz-1.17757702

Any thoughts?

It would show that Red Bull's use of Red Bull Technologies shows how useless the RRA really is. Spending $630 million on both Red Bull and Red Bull Technologies for the 2012 campaign is incredible.

I'm thinking about having a yawn...............There. I've done it.

[Kelateboy]

Red Bull Racing

Accounting information is from the accounts filed for the year ending December 2011

Revenue £177,000,000
Pre-tax Profit £640,000

Red Bull Technology

Accounting information is from the accounts filed for the year ending December 2011.

Revenue £215,000,000
Pre-tax Profit £4,000,000

stanga,

Need further information. Does the figures you gave above for Red Bull Technology is at the company or group level?

If it is at the company level, it has yet to incorporate RBR's figures. If it is at the consolidated group level, then it has taken RBR's financial statement into account, which means that its own revenue would be a meagre £38m (£215m - £177m).

[SpaMaster]

I'm prefacing thie following by saying I'm not saying they're in thw wrong, they're just doing what F1 teams do, exploit loop holes!



Red Bull technology have a turnover of 350 million from supplying Caterham and STR And a few bits and bobs to Red Bull racing. Thats a third party supplier with a higher turnover than any current F1 team....If you think that's on the up and up, more power to you.

Now, Mercedes Benz HPE employ around 450-500 people and supply KERS and Engines which are far more expensive than hydraulics and gearboxes, or nuts and bolts that Red Bull Technology supply RBR, Caterham & STR and their turnover comes in at £97,559,000.


But there is an elephant in the room. And this elephant is called Red Bull technologies, it's dubious purpose and the smallish matter of it's 350 million turnover.
Do you really think it's plausible for a 250 million dollar team to have a 350 million dollar supplier?

Let's just all call a spade a spade and congratulate Red Bull on bending the rules once again, Red Bull technologies is a cover for Red Bull racing and supplies it with Extra-RRA developments covered by the RRA.
It's exploiting loop holes which is what F1 is all about and it's rather clever as I've mentioned before. Kudos to them. But lets not a t like its something it isn't.

There are no rules. RRA is not in F1 sport book at all.

[H2H]

There are some good post in this thread and the issue would worth a in-depth look. It is important to keep in mind that we have just a very limited insight into the accounts of the various teams. The different organisational structures make it very hard to compare the scuderias and relative easy to obscure or to manipulate the "true" picture, if there is anything like that in accounting. In the end accounts must follow legal rules but not necessarily present the "right" view from a business point of view...

[V8 Fireworks]

Yes in simplistic terms but the problem is RBT 's sole client is RBR and all the revenue for RBT is direct spending for RBR.

STR and Caterham (gearbox) are also clients of RBT!

It doesn't surprise that Red Bull push RRA to the max.

Mercedes do not push the RRA, they are not determined to win, therefore they get what they deserve. Red Bull are determined to win, so they push it to the max to make it actually happen.

[V8 Fireworks]

+1
If Red Bull really spend USD630mil last year, they must have been involved in creative accounting.

Yes for clarity the official 215m pounds is 350m USD.

[Atreiu]

Im glad they were able to find that money.

[StefK]

stanga,

Need further information. Does the figures you gave above for Red Bull Technology is at the company or group level?

If it is at the company level, it has yet to incorporate RBR's figures. If it is at the consolidated group level, then it has taken RBR's financial statement into account, which means that its own revenue would be a meagre £38m (£215m - £177m).

The RBT financials are consolidated figures. The Investment in in RBR is a 100% subsidiary and so all transactions are eliminated on consolidation. In laymans (and there are a few here) that means no double counting!

Total RBT expenses were GBP185M... around EUR300M. RBT received around GBP100M in sponsorship funding from the parent company.

Unfortunately no story to see here, not to say they aren't spending more but it isn't happening in this corporate group.


Pretty staggering how quick people are to jump on a news story to suit their agenda.... I'd suggest learning how to interpret financial statements before jumping on the bandwagon!

(stay away from the stock market kids)

[boldhakka]

I'm prefacing thie following by saying I'm not saying they're in thw wrong, they're just doing what F1 teams do, exploit loop holes!



Red Bull technology have a turnover of 350 million from supplying Caterham and STR And a few bits and bobs to Red Bull racing. Thats a third party supplier with a higher turnover than any current F1 team....If you think that's on the up and up, more power to you.

Now, Mercedes Benz HPE employ around 450-500 people and supply KERS and Engines which are far more expensive than hydraulics and gearboxes, or nuts and bolts that Red Bull Technology supply RBR, Caterham & STR and their turnover comes in at £97,559,000.


But there is an elephant in the room. And this elephant is called Red Bull technologies, it's dubious purpose and the smallish matter of it's 350 million turnover.
Do you really think it's plausible for a 250 million dollar team to have a 350 million dollar supplier?

Let's just all call a spade a spade and congratulate Red Bull on bending the rules once again, Red Bull technologies is a cover for Red Bull racing and supplies it with Extra-RRA developments covered by the RRA.
It's exploiting loop holes which is what F1 is all about and it's rather clever as I've mentioned before. Kudos to them. But lets not a t like its something it isn't.

Stop digging. You're way out of your depth on this one.

[stanga]

stanga,

Need further information. Does the figures you gave above for Red Bull Technology is at the company or group level?

If it is at the company level, it has yet to incorporate RBR's figures. If it is at the consolidated group level, then it has taken RBR's financial statement into account, which means that its own revenue would be a meagre £38m (£215m - £177m).

As an accountant by profession I know the difference between company and group accounts, As Steffk says, these are the latter. It's a shame that RBT is not listed on an exchange. If they were, they would have had to file interim results for the first half of the year and we'd maybe have a little more information.

By the way, RBR and RBT are good for credit.

If I had more time, I'd look at McLaren and Mercedes in the same light.

[BoschKurve]

Thanks for posting stanga!

Good information, and that is what I was hoping to get from posting this topic-- hence the question mark in the title.

[stanga]

Thanks for posting stanga!

Good information, and that is what I was hoping to get from posting this topic-- hence the question mark in the title.

No problem. I actually found it interesting...


... That may be hard to believe.

[Kelateboy]

As an accountant by profession I know the difference between company and group accounts, As Steffk says, these are the latter. It's a shame that RBT is not listed on an exchange. If they were, they would have had to file interim results for the first half of the year and we'd maybe have a little more information.

By the way, RBR and RBT are good for credit.

If I had more time, I'd look at McLaren and Mercedes in the same light.

Thanks Steffk and stanga for the clarification. It means that figure of USD630mil bandied around is ridiculous, and made no sense whatsover against the companies' accounts.

As a comparison, the Company House's figure had Mercedes GP spending last year at around USD190mil.

[corf]

Don't know about that, but Red Bull Racing apparently gave 10,000 pounds bonuses for all staff members... I know where I would like to work

This is true, its for the constructors title - They also had a wicked end of season party party on Saturday with Kasabian playing.

[sailor]

Sorry but i couldn't keep up with your taught here.

I considered Red Bull spent $ 630 million but had $180 million back from prizes and sponsorship. so it leaves a $ 450 million deficit. If they have a profit of $ 0.65 per can sold they would need to sell 700+ million cans to make it profitable to Red Bull. Now lets suppose they spent $ 330 million instead. it leaves a $ 150 million deficit, so they should sell 230+ million cans what begins to make it viable.

I believe stanga post summarized the situation pretty well.

Thats why I said the $700 m is not true.

And my example is based on a more realistic figure of $250 m spend.

In my example - they claw back $300 m so as an entity they make profit of $50m.

So your contention that RB are pouring $700m (which first of all is not realistic as proven by above company statements by some helpful posters) for marketing is not true.

RB is a business case in not spending on marketing in the traditional ways like TV ads but invest in sports to create and promote the brand. And in the process some lucky ventures like in F1 - they make a healthy return on costs and get the marketing and hype almost at zero cost.

Edited by sailor, 03 December 2012 - 11:42.

[jimbox01]

Looks like the person who wrote the article basically cocked up, simply added together Red Bull Racing and Red Bull Technology's turnover, and failed to take into account the fact that RBR is a subidiary of RBT, which means the accounts for RBT are consolidated - i.e. they include RBR's turnover.

The actual turnover figure that should have been used/quoted is £215M / $345M, but what they appear to have done is add the turnover for both companies - £215.23M (RBT) + £176.84M (RBR) = £392M / $630M

In terms of what they spent, Red Bull's group costs/spending for the period ended 2011 were £211M, which is significantly higher than any other UK based team, but nothing like the sensationalist figures quoted in the article, and does include an element of cost relating to the supply of gearboxes to Caterham and the supply of good and services to Toro Rosso.

By contrast, the overall costs/spending for other UK based teams in 2011 were:
McLaren Racing Limited - £151M
Lotus F1 Team Ltd - £134M
Mercedes-Benz GP Ltd - £126M
Williams GP Engineering Ltd - £96M
Force India Formual One Team Ltd - Not pulished yet / Overdue (£74M in 2010)
Caterham / 1Malaysia Racing Team (UK) Ltd - Not pulished yet / Overdue
Marussia / Manor GP Racing Ltd - £67M


* These figures are taken from accounts published at Companies House and should give a fair and accurate picture of the companies finances - they don't necessarily tell the whole story though...
** out of interest, Red Bull GmbH (the drinks company) paid £108M to the team/group in 2011, roughly 50% of turnover, the rest of their income came from other sponsors and supply contracts.

[wrcva]

This blog post has a nice summary of RRA and some figures as well.

http://thejudge13.co...t-to-be-joking/