I'm going to divulge into what makes an F1 car go....however, this article has nothing to do with Fuel.
We have all heard about the impending regulations for the 2009 season. One of the most important changes, and one which is to have the greatest impact on the sport, is of course, the planned introduction of Budget Capping.
But how much does a Formula One team spend, and where does this money go? If you have ever wondered, I will try my best to give you an insight into the accounts of the 20 teams who spend on average a combined £1.5 billion ($2.9 billion).
First of all, let's look at the budgets each team had in the 2007 season:
Team - Budget - Cost Per Point:
Toyota - £220m ($418.5m) - £16.9m
Ferrari - £212m ($406.5m) - £1.03m
Mclaren - £210m ($402m) - £1.03m/£0.9m*
Honda - £198m ($380.5m) - £33m
BMW Sauber - £186m ($355m) - £1.8m
Renault - £170.5m ($324m) - £3.3m
Red Bull - £132m ($252m) - £5.5m
Williams - £102m ($195.5m) - £3m
Torro Rosso - £42m ($80m) - £5.3m
Spyker** - £39.5m ($75m) - £39.5m
All figures are fairly accurate estimates. * Mclaren points without penalty. ** Now Force India, with budget of £75 million.
The budgets paint a fairly accurate image of how competitive each team is, with the exception of Toyota and Honda. If you compare this with the points scored in the 2007 season and how much each point cost the team you can compare how efficiently budgets are spent, and how budgets effect competitiveness.
So we now know how much the teams spend each year, now we need to look at how this is broken-down and what these vast amounts are spent on.
1. Engines
Engines are the most expensive item on the F1 itinerary. Mclaren Mercedes spends around £100 million on engine development and production. Mercedes supplies Mclaren with an average of 12 Mercedes-Benz FO 108V, 2.4 litre engines over a season (can differ with reliability).
This is a similar amount with Toyota, Ferrari, Honda, BMW Sauber, and Renault. Teams roughly spend 45-50% of their budget on engines—some teams like Torro Rosso buy Ferrari Engines at a cost of about £18 million ($37m). Again, this is 50% of their annual budget.
2. Employee Wages
Formula One teams employ vast amounts of staff, ranging from engineers to promotional staff, catering, mechanics, drivers, racing bosses, etc. A top team such as Mclaren, Ferrari, or BMW Sauber employs about 1,000 employees.
An annual wage bill is about £70-85 million—however, a large portion of this (around 50%) is taken up by team bosses and drivers. Smaller teams who have a much smaller budget, such as Williams, employ a team of about 600 people. With drivers' wages being lower at mid-field teams, employee wages stand at around £40 million.
The top five paid drivers on the grid are: *(estimates, basic salaries not including points bonus)
Alonso £28 million ($56m)
Raikkonen £25 million ($50m)
Button £14 million ($28m)
Hamilton £10 million ($20m)
Massa £6 million ($12m)
3. Manufacturing
The third largest bill for an F1 team comes in the form of actually designing and constructing a competitive Formula One car.
About 12% (£24 million for a top team) of a Formula One team's annual budget is actually spent on manufacturing the car. This is materials, machinery, and hydraulics, which account for 3.8% of the total parts bill. This figure does not include research and development costs, which stand at an extra 8%.
This brings the total manufacturing and research costs for a top-five team to £40 million for an entire season, and £20 million for a bottom-five team.
4. Misc Costs
These costs include travel to and from tests, races, catering for the team, capital expenses, rent, bills, sponsor chasing, running wind tunnels, fuel, and corporate events.
So Formula One is certainly expensive. I hope this gives you a small insight into what kind of bank balance it takes to run an F1 team over a season.
I’ll take a look at how F1 teams make money in the next part of F1 Info Guide (Pt.2) Money, Money, Money.
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2 months ago
All very interesting. If your figures are correct Jensen Button should wear a mask and shout "Stand and deliver" when he collects his money. Not that I'm biased!
from 2 months ago
I know, who'd of thought that finishing in the bottom 6 at most races, would demand such a high salary, the 3rd highest on the grid, amazing. But he is in demand and Honda are having to pay up to keep him, plus he had a win in 2006 which boosted his salary.
2 months ago
Those salaries are from last year. I think Raikkonens has gone up to £25mil and Alonso is currently the highest earner on around 30mil.
from 2 months ago
Cheers Jane, I just checked and your right, Alonso's and Raikkonens are from 2007, the others are from 2008, so i have now amended it. Thanks again.
The Money is crazy, especially Buttons wage.
from 2 months ago
I'll say, Buttons wage is ridiculous, considering he's currently doing worse than his team mate.
2 months ago
Ryan, this is one of the best articles I've read on B/R, of course, with me and my interest in Formula One money and all that :-)
5 stars indeed!
from 2 months ago
Thanks Saraswathi, really appreciate the 5 stars. I thought it'd be a nice interesting subject to cover, as money is so important in Formula One. Its great to hear from you that its a good article, as I have always enjoyed reading your articles.
from 2 months ago
Thanks Ryan, looking forward to Part 2 and any other parts you might come up with on F1 money. You have written a very valid piece and it deserves the best compliments.
2 months ago
Interesting stuff mate ... Looking forward to part 2 ... 5 goldies for you ... Get it on there !
Oh to be rich hey ! ... Im going to put the lottery on, back soon, ha ha !
2 months ago
Ha ha, the amount of times iv'e bought a lottery ticket, grrr, waste!
Cheers for the stars ben, much appreciated.
2 months ago
rich gits eh? 30 million a year for Alonso? Now, I know that he is risking his health every time he goes out on the circuits, but that is a wee bit too steep.
nice article mate.
P.S. Jenson on that much??? For what?!?! He has won one Grand Prix, had two good seasons at the most, and regularly finishes outside the points. amazing to see that someone as successful as David Coulthard is not on the top earners list.
from 2 months ago
I know, unfair or what! Dream job and dream salary!
I think Alonso demanded a high salary to temp him back to Renault, cause lets be honest, who'd rather drive for Renault over Mclaren, even if u wer miserable and hated!
And Jenson was a real shocker, when I was researching I expected Raikkonen, Massa, Hamilton, Coulthard, Alonso, never thought Jense would even be in the top 10 let alone 3rd.
2 months ago
love the pic though, absolutely brilliant.
from 2 months ago
Haha thanks, im trying to spice up some of my articles with funny pics! Maybe draw a bit of extra attention, not sure if it works.
2 months ago
That picture says it all about Bernie :)
Great article there! Very good breakdown of what it takes to run an F1 team. Makes me more motivated to run an air racing team :)
from 2 months ago
It does, the money grabbing little man!
I'd love to run an air race team, im off to the london leg on the 2nd August. I can't imagine its cheap either, but probs less than £20 million.
2 months ago
Always interesting to know more about the economics behind F1. Great read. 5 Stars and POTD. Nice Pic!
from 2 months ago
I'd hope it'd give a small insight into how F1 teams run, and the sheer amount of money it takes. Cheers for the stars and POTD Siddharth, its greatly appreciated.
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