26 replies to this topic

[Jhope]

Report: Toyota tops F1 budget list
(Feb 21) tsn.ca - Toyota is sparing no expense as it prepares to contest the upcoming Formula One season.

According to figures released by the German magazine Auto Motor und Sport, the Japanese manufacturer has budgeted $400-million in its inaugural F1 season. Even the most optimistic Toyota executives say the best they can hope for this year is qualifying in the top 10. They are not expected to reach the podium let alone win a race.

Toyota's budget is almost double what Ferrari will spend to defend its Formula One title. The Maranello-based team has reportedly budgeted $250-million this year, the same amount being spent by French automaker Renault, which has renamed the former Benetton team in 2002.

McLaren-Mercedes is set to spend $220-million to try and wrestle the championship away from Ferrari and Michael Schumacher. However, McLaren employs the most individuals in its F1 program - 850 compared to 600 who work for Toyota. Ferarri reportedly has 750 people in its stable.

BMW-Williams, BAR Honda, Jaguar and Jordan are all believed to be making due with a budget of $200-million.

Sauber, which finished fourth in the constructors championship last season, are doing more with less. The Swiss-based team, which is not aligned with any major car manufacturer, will have to get by on just $60-million.

Bringing up the rear, in terms of money spent, are Arrows and Minardi. Arrows have a budget of $35-million while Paul Stoddart's team will make due with $30-million.

As a group, Formula One teams will spend a total $1.5-billion dollars contesting the world championship this season.

www.tsn.ca

The amount spent developing a racing vehicle is absolutely insane. I cannot get over it.

[Ross Stonefeld]

BAR reportedley spent 420mil between their formation and the French GP 1999 (at which point they went massively overbudget)


So if thats startup costs include I beleive 400mil, otherwise it must be in CDN $. Toyota have admitted to pledging 1bil for either 4 or 5 years (I cant remember which or if one of those years includes the test year)

[Williams]

Are those operating costs ? If not, then their budget cannot be compared to those of other teams. I wouldn't be surprised if some of that $400M is capital outlay just to get started.

[Scoop]

Originally posted by Williams
Are those operating costs ? If not, then their budget cannot be compared to those of other teams. I wouldn't be surprised if some of that $400M is capital outlay just to get started.

yes.. considering toyota has a very sohpisticated facility set up recently...

[Melbourne Park]

Originally posted by Scoop

yes.. considering toyota has a very sohpisticated facility set up recently...

Quite a lot would be capital costs. For instance they expanded their buildings by 40%, and re furbished much of the old buildings. The made a wind tunnel. The put in various computer and communication technologies. They bought transport equipment. Autoclave equipment, materials technology, new machinery equipment. etc etc etc.

As to the tax issues, one would imagine that it would benefit Toyota to write expenditures off as quickly as they can, since they are profitable, it makes sense to try and expense capital items. They may even have a budget for entertaining local Toyota staff etc. for each place they visit. This would be good public relations and moral benefits for local Toyota personnel, with all the countries visited it would be possible to spend a lot on those. Plus advertising budgets to publicise the F1 program, could cost a very large amount if the F1 team picked up any of those bills.

IMO the best way to roughly judge the annual cost is by numerating the personnel, and then add a factor for some of the hi tech hardware items. It seems to me that McLaren spends most, followed by Williams (not forgetting their motor friends). The it sounds like Toyota and Renault are also big spenders. BAR would then come in. Then I suppose Jaguar might follow and a further downward sloping gap to the rest.

[MN]

12,000,000,000,000yen gross sell last year, debt free company can spend even more if they need to.
Toyota's main sponser Panasonic other hand are planning to cut 1300 jobs but still not a problem for Toyota.
Fuji speedway Toyota bought is now under construction to suit F1 as well.
We will see what money can buy in F1 next few seasones.
I don't like Toyota.

[tinman]

From your figures, that makes Mclaren the team with the highest budget on the grid. Ferrari's budget includes the cost of designing and building their engines. Mclaren's budget on the other hand does not include Mercedes' expenses. People tend to forget this and always refer to Ferrari as big spenders when comparatively, they're not.

[BuonoBruttoCattivo]

originally posted by tinman

From your figures, that makes Mclaren the team with the highest budget on the grid. Ferrari's budget includes the cost of designing and building their engines. Mclaren's budget on the other hand does not include Mercedes' expenses. People tend to forget this and always refer to Ferrari as big spenders when comparatively, they're not.

Thank you tinman, this is seldom taken into account by observers but that reflects the real truth about team budgets vis-a-vis engine manufacturing and development

[Rene]

The figures for BAR do not in any way reflect the number Reynard filed with the NYSE when he planned to take his company public at the beginning of last year, where he reported that BAR had a budget of $75Million US per year (not including engine costs which were supposedly close to that figure for Honda).

(given the current exchange rate, its still not close to $200 Million Canadian dollars for BAR)

I also remember an article in one of the F1 mags, where it says Jordans budget was close to 75 Million as well (a shade less than BAR's if memory serves)

With all of the conflicting rumours, we can only rely on a few 'facts' when dealing with any of the teams as it concerns budgets, that would be that Reynard had to be factual in his application to the NYSE, and the financial reports released by various major sponors (like BAT which claimed to have reduced funding for BAR this year to $60 Million, from $70Million which it gave the year before).

But who knows for sure??

[Ross Stonefeld]

Yeah but yearly budget is different from startup. I got my numbers from a BAR employee

[sanat]

The $200 mln figure for Joran's annual budget does not make sence either.
I believe that in 1999 their budget was way below $100 mln. Their budget could not have increased by that much in two years.

[KenC]

Originally posted by Rene
The figures for BAR do not in any way reflect the number Reynard filed with the NYSE when he planned to take his company public at the beginning of last year, where he reported that BAR had a budget of $75Million US per year (not including engine costs which were supposedly close to that figure for Honda).

(given the current exchange rate, its still not close to $200 Million Canadian dollars for BAR)

I also remember an article in one of the F1 mags, where it says Jordans budget was close to 75 Million as well (a shade less than BAR's if memory serves)

With all of the conflicting rumours, we can only rely on a few 'facts' when dealing with any of the teams as it concerns budgets, that would be that Reynard had to be factual in his application to the NYSE, and the financial reports released by various major sponors (like BAT which claimed to have reduced funding for BAR this year to $60 Million, from $70Million which it gave the year before).

But who knows for sure??

Thank god someone posted some real info. I too, read Reynard's SEC filings way back when, (probably still available at edgar.com) when they were planning to go public. They even sent me an investor pack. And, my recollection is similar to Rene's. The figures are much much smaller than most people imagine.

As for Ross's insider at BAR, just recall, there is no reason for Reynard to hide the true figures of his investment in BAR to the SEC. Though accountants have gotten a bad name, recently, I still would take their certified info over the hearsay of a 3rd party.

As for Jordan, I would think $75million would be about right, and with the current situation, perhaps a touch on the high side.

And, didn't in the off-season, we get a report that Williams GPE had filed a corporate tax report, where their turnover, which would include sponsorship, as well as engineering consultancy work, was less than $100million?!? They had a small profit, so wouldn't that make it clear that their budget was something less than $100million?

Besides the Reynard figure, the Williams number has to be a hard number as well, and not one made up by some magazine.

[Megatron]

I am not sure that those figures are entirely correct. I can't imagine Jordan having a total of 200 million with a blank rear wing, and Minardi have 50 million in 2000 so I can't imagine it going down. Also, Arrows's orange deal was worth about 33 million a year for three years and I think Red Bull is still in as well as some other sponsors, so I assume it will be higher. Sauber's too seems a little low.

[30ft penguin]

Originally posted by BuonoBruttoCattivo
Thank you tinman, this is seldom taken into account by observers but that reflects the real truth about team budgets vis-a-vis engine manufacturing and development

Don't forget that Ferrari's budget not only includes their own engine development (vs. McLaren/Williams who get their engines from somebody else), it also includes the people necessary for the Sauber engines.

[Melbourne Park]

Originally posted by KenC

And, didn't in the off-season, we get a report that Williams GPE had filed a corporate tax report, where their turnover, which would include sponsorship, as well as engineering consultancy work, was less than $100million?!? They had a small profit, so wouldn't that make it clear that their budget was something less than $100million?

The sales/turnover figure of Williams and their small profit may not indicate how much money their F1 effort involves. That would depend on the structure of the overall enterprise that one of use would call Williams; such a structure could be quite complex. The engine example: free engines supplied - is but one example of an expenditure that doesn't get reflected in the books.

[taran]

I do believe the original article has been misquoted....or the journalist didn't know the hell he was talking about .

In the original article, the budgets of all the manufacturers excepting Asiatech (rumoured to be $50m) are listed. Although not official, they were computed after sifting through tons of paperwork.

The amounts listed is the complete budget and for some factories include the engine & chassis, other only the engine. If only the engine, the (operational) budget from the team itself was not added. That means that McLaren-Mercedes would have 120m euro + sponsorship, while Ferrari has a total of 285m euro....


Toyota 460m euro (engine & chassis & start up costs)

Ferrari 285m euro (engine & chassis)

Renault 280m euro (engine & chassis)

Jaguar 230m euro (engine & chassis)

Honda 160m euro

BMW 140m euro

Mercedes 120m euro



Toyota employee Tomita also mentioned that the new construction work had cost them 120m euro.
All of this was from their yearly budget and the start-up costs are also to be paid for from their yearly budget.


The operational budgets from 2001 (i.e. excluding engine budget) were:

1 Ferrari $ 186.7m

2 McLaren $157.6m

3 Williams $122.5m


4 Jaguar $100.35m

5 Benetton $100.15m

6 Jordan $77.95m

7 BAR $74.5m

8 Arrows $61m

9 Sauber $55

10 Prost $42m

11 Minardi $38m


Certain teams had to lease their engines. Prost had an effective budget of $7m to run the team after getting Ferrari engines & gearboxes.



But I have to agree with Jhope, "The amount spent developing a racing vehicle is absolutely insane."

[HSJ]

This Toyota budget is only to get them started, it probably includes the costs to build (renovate) the factory etc. But apparently the budget Toyota will have normally will be more like the one Williams, or possible McLaren, have, not Ferrari class let alone above it.

When was the last time that a team (not starting up) had a bigger budget than Ferrari?

[Rene]

Taran, good post

[Ross Stonefeld]

BAR and Reynard are seperate companies though. So if for some reason Reynard's SEC Filing including BAT's sponsorship figures per year, he sure didnt list their startup costs.

[Jhope]

Taran, you make an excellent point. The article is flawed because it refuses to acknowledge the start up cost of an F1 team.

[Rene]

Originally posted by Ross Stonefeld
BAR and Reynard are seperate companies though. So if for some reason Reynard's SEC Filing including BAT's sponsorship figures per year, he sure didnt list their startup costs.

You are of course correct Ross, that figure did not include the start up costs for BAR, which were signficant, since they built a factory, and wind tunnel etc....the figure which Reyanrd had to file (since he is part owner of BAR) was the budget projections of the coming year, coupled with the budget for the previous season.

[KenC]

Originally posted by Ross Stonefeld
BAR and Reynard are seperate companies though. So if for some reason Reynard's SEC Filing including BAT's sponsorship figures per year, he sure didnt list their startup costs.

Of course BAR and Reynard are "separate companies". That goes without saying. But as was noted, Reynard is/was part-owner of BAR, and their financial involvement was detailed. As for startup costs, there was some mention, as the startup budget was exceeded, and thus Reynard, as part-owner, footed some of this liability. This is as best as I can recollect.

Here's a link to Reynard's SEC filings:

http://www.edgar-onl...ynard&date=1994

You can read them for free for two weeks by signing up.

[KenC]

Originally posted by Melbourne Park

The sales/turnover figure of Williams and their small profit may not indicate how much money their F1 effort involves. That would depend on the structure of the overall enterprise that one of use would call Williams; such a structure could be quite complex. The engine example: free engines supplied - is but one example of an expenditure that doesn't get reflected in the books.

If one subscribes to the Bernie Ecclestone school of company structure, you are absolutely correct. However, my understanding is that Frank's company is not so complex. If anything, Frank's company adds in their outside consultancy work, as part of Williams Grand Prix Engineering, such as designing the BMW LMP racecar project. As for free engines, I presumed that everyone here could tell the difference between teams that include engine development in their budgets like a Ferrari, and those that have an engine partner who foots the bill like a Williams.

[Jhope]

That's the misperception most people have. They tend to lump Williams and McLaren in the same boat as Toyota, Ferrari and Jaguar, all of whom have budgets which include engine development.

In the 200 million$ Williams has for an annual budget let's say, we look at that and say "...Wow! 200$ million to develop a chassis." Not exactly. That money goes towards running the company. In this case, part of the 200$ million is allocated to the car and it's development. Another part towards paying the vast amount of employees, another part towards the marketing of the team. So in reality, the team has more or less 90$ million - at most - for the chassis development, another 50$ million for salary, and let's say ~60$ million for merchadise and marketing costs.

The example I gave may not be the exact numbers WilliamsF1 uses, but I used these numbers for examples sake. There is probably more money being spent on the factory, as well as upgrade of the equipment used by the team.

[FredF1]

Todays Sunday Times has Eddie Jordan saying that, this year, the team is operating on 70% of last years budget.
Going by Tarans figures - That puts them in Sauber territory money-wise for this year. Not a good position to be in if they wish to reclaim their 'Best of the rest' status.

[Jhope]

Why? Sauber were the "best of the rest" with the budget they have. Plus, they have to pay for the engines, whereas Jordan don't pay anything.

[FredF1]

Granted.

But, reading between the lines, much of Jordans current funding appears to be performance related.
Another season like last year and things could turn nasty.

It's going to be a lot harder for the team to operate on a reduced budget.
Especially if the other teams are going to be spending more money.
Economies are going to be forced on the team whether they like it or not.
Testing and R&D are going to be affected as well.