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Mercedes’ F1 Team Made a Staggering £474m in 2022

The world of Formula 1 is not just about high-speed racing; it's also about high-stakes finances....

The world of Formula 1 is not just about high-speed racing; it’s also about high-stakes finances. Formula 1 is the pinnacle of motorsport and the team’s finances reflect that with Mercedes reporting an astonishing turnover of £474.6 million in 2022.

This figure is a substantial increase of £91.3 million compared to the previous year’s £383.3 million. But what does this turnover comprise?

Approximately 51% of this revenue stems from sponsorship and licensing. Another significant portion, accounting for 30%, comes from the F1 prize fund. The remaining 19% is attributed to other income sources, primarily from their Applied Science division.

Driving Force: Factors Behind the Growth

The substantial increase in the prize fund income can be attributed to the unique circumstances of 2022. The previous year, 2021, was heavily impacted by the ongoing COVID-19 pandemic, leading to the absence of several high-revenue flyaway races and crowd restrictions. In contrast, 2022 saw a return to a more regular schedule, resulting in a larger financial pie to be shared among the teams. As the reigning 2021 Constructors’ champion, Mercedes naturally claimed a lion’s share of the prize fund.

However, Mercedes is poised to face challenges in the 2023 season as the impact of their third-place finish in the 2022 championship trickles down.

Under the Hood: Costs and Profits

Credit: XPB/James Moy Photography

While revenue is a critical metric, cost management is equally crucial. The cost of sales, which represents the funds invested in racing operations, increased but to a lesser extent. It grew from £297.4 million to £350.8 million, reflecting the additional resources allocated to the W13 project for the new regulations in 2022 and the effects of inflation. Moreover, an expanded race calendar with more flyaway events added to the overall cost of running the team.

Profits after tax for Mercedes-Benz Grand Prix Ltd were £89.7 million, a notable increase of £20.9 million from the previous year’s figure of £68.8 million. However, there was a one-off tax situation in 2022 that significantly affected this number. Operating profit, a more accurate measure of the company’s performance, saw an even more substantial increase, surging from £71.9 million to £113.6 million.

A substantial dividend of £75 million was distributed equally among the three shareholders: Mercedes AG, Ineos, and team principal Toto Wolff’s company, MIL.

The success of a Formula 1 team is not just about the drivers and the cars; it’s also about the dedicated workforce behind the scenes. In 2022, Mercedes employed an average of 1,114 individuals, an increase of over 100 compared to the previous year. A large part of this growth was in design, engineering, and manufacturing, directly aligned with the cost cap.

Despite the increase in personnel, costs decreased from £109.0 million to £93.8 million. This was primarily due to Mercedes’ third-place finish in the constructors’ championship in 2022, which meant employees did not receive the success bonuses they enjoyed in 2021.

Investing in the Future

The 2022 season marked an important milestone for Mercedes, as they acquired ownership of the Brackley site they’ve called home since their British American Racing days in 1999. This acquisition resulted in a tangible asset increase of £30 million. Toto Wolff noted that this move will provide a more secure and autonomous business model for the future, enabling significant investments in cutting-edge, net-zero-carbon facilities.

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