Where does the money really come from?

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Conceptual
Conceptual
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Joined: 15 Nov 2007, 03:33

Where does the money really come from?

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With the BMW/Honda exits, I have to ask this question.

How much does the team spend of their own money, and how much comes from sponsors? I mean, with the talk of teams actually MAKING a profit, that would entail that the cost to the team itself is offset completely by sponsorship, does it not?

So, where does the money really come from?

1. Sponsors?
2. Exibitions?
3. FOM money?
4. Parent company?
5. Fan donations?

I don't really know what the percentages are, but I would really like to know!

If anyone has any "non-speculative" answers, please feel free to post them! Speculation is acceptable, but must be supported by some kind of logical process.

Thank you for your replies!

sunny1304
sunny1304
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Re: Where does the money really come from?

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what i understand that sponsors pay for the drivers salary (mostly or partly) as we see they move to different teams with the drivers. Car development money mosetly comes from the teams account. The spending on media coverage are also comes from the sponsors.

i think teams fix their spendings in different sectors....then they seat with the sponsors and fix whom will invest where.

for example the DDD devlopment money for ferrari or mclaren came from the their manufacturers' account.

i may b wrong ...but i think like this..

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WhiteBlue
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Joined: 14 Apr 2008, 20:58
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Re: Where does the money really come from?

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If you want the facts read formula money. If you don't have the cash to buy it you can get excerpts often by the author Christian Sylt. He writes for the financial times and for pittpass occasionally. His figures are the agreed wisdom in F1. Even Bernie talks to him and feeds him stuff.

Typically a third of all F1 revenue - well in excess of 1 billion € - have come out of the coffers of the mnufacturers in recent years. That is to change dramatically now. That may go down to 20% of what it was.
Formula One's fundamental ethos is about success coming to those with the most ingenious engineering and best .............................. organization, not to those with the biggest budget. (Dave Richards)

Giblet
Giblet
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Re: Where does the money really come from?

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Crap.

Ignore this post I can't delete I posted in error.
Before I do anything I ask myself “Would an idiot do that?” And if the answer is yes, I do not do that thing. - Dwight Schrute

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safeaschuck
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Joined: 23 Oct 2008, 07:18

Re: Where does the money really come from?

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Conceptual wrote:How much does the team spend of their own money, and how much comes from sponsors?
O.K. reasoned speculation.
It depends on the team,
I will speculate further using examples...

Williams: Probably do not put any of their own money in.
Reason: within a fairly short number of years they would fail to exist.
Background: Essentially an engineering firm with a marketing department, their chosen field of business, and one which they are talented and passionate about is motor sport, they require a profitable company in order to maintain their investment and keep up with the speed of development and essentially, the ever increasing costs of maintaining a foothold in the marketplace.

McLaren: As above obviously on a larger scale, they have little in the way of interests outside motor sport with which they could claw back any losses made within the sport.

Brawn: As above although as has been speculated on this forum, they may be sustained in the short term by a Honda 'golden parachute'

Red Bull/Torro Rosso: O.K. so they may make a loss within the sport.
Reason: Having recently acquired two existing teams they will be servicing a debt for some considerable time despite some of the savings that can be made from having a single chief designer, many shared parts and shared logistical and marketing responsibilities. This is unlikely to yield a profit as the teams main sponsor is itself, however this reasoning depends on how far you separate the racing side of the company from the rest of the business.
Background: We are talking about a company who believes (or wants to believe) that being involved in F1 sells more energy drinks (other energy drink brands seem to be beginning to think this may be the case) and if this is indeed the case then it could be said that they are making a profit (so long as they are selling more extra drinks than they are spending, but try and work that out) Red Bull has spent big on advertising long before it's entry into F1 and it got the company where it is today, that and some questionable ingredients. It will be strong competition and market saturation that ends up loosing this outfit money, not it's participation in F1.

Ferrari: Your guess is as good as mine, no one will ever know for sure.
My best guess is that several individuals highly placed within Ferrari, as well as Fiat, the Government and the Mafia are making out like absolute BANDITS whilst the company as a whole is haemorrhaging money and the whole exercise is funded to a large degree by the Italian taxpayer. And I'm sure if you presented these facts to the average Italian Taxpayer they would be quite happy with the situation, with a roll of honour such as theirs at least they are getting value for money. :lol:

As for the other 'manufacturer' backed teams I think you will find that encouraging them to participate is essentially a practical joke played on them by the rest of the motor sport community. Bernie is the ring leader having spent the last 15 years concentrating on making the sport look more attractive to 'big money'. Most long term participants have long since made the initial investment and are doing just fine for themselves one way or another thank you. However they occasionally like a large multi-national group to pump billions of pounds into the sport, bump up the Kudos for another decade, make a few breakthroughs and then roll over without leaving much of a dent in the reputation of those who remain. Oh, and they entice a few more sponsors in, sponsors thet can they be picked over after the teams departure.

Branson spelt it out loud and clear when he talked about the Brawn deal, sadly I cannot find the quote but essentially it was 'Formula 1 is a bottomless money pit and I would loose my shirt in this sport, I'm coming in under the proviso that the costs will be brought under control.

It seems they may not and it seems he is ending his association with Brawn at the end of this year, whether or not he buys Manor I don't know. Maybe he's done it by now, maybe someone else has. Maybe Manor will still be cost capped and allowed greater technical freedom as has been promised them all along, maybe they will use virgin biofuel and kers, I digress.

http://news.bbc.co.uk/sport1/hi/motorsp ... 111469.stm
http://www.autosport.com/news/report.php/id/73975

Dave Richards also pulled back from the brink a few years back, the Brink of an abyss that his well run and successful (though essentially cash poor when compared to the likes of BMW, Honda and Toyota) firm may have disappeared into never to return.
He had a choice, come on board and spend whatever we deem necessary (this may involve building you own chassis, and it may not) or stay out. A wise choice from a man who built his company rather than got hired to run it.

Force India remain a complete mystery, but good luck to them =D>



Whiteblue, I will endeavour to give Mr Sylt a read, hopefully it dosen't totally contradict what I said :?

Belatti
Belatti
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Joined: 10 Jul 2007, 21:48
Location: Argentina

Re: Where does the money really come from?

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safeaschuck wrote:
Ferrari: Your guess is as good as mine, no one will ever know for sure.
My best guess is that several individuals highly placed within Ferrari, as well as Fiat, the Government and the Mafia are making out like absolute BANDITS whilst the company as a whole is haemorrhaging money and the whole exercise is funded to a large degree by the Italian taxpayer. And I'm sure if you presented these facts to the average Italian Taxpayer they would be quite happy with the situation, with a roll of honour such as theirs at least they are getting value for money. :lol:
So Italian taxpayers have to pay for Ferraris debts, Schumachers obscene salary and Berlusconis hooker parties. Nice! :lol:
However, if I was an Italian taxpayer, I would protest unless I can drive a Ferrari or be in one of the prime ministers parties.
:D
"You need great passion, because everything you do with great pleasure, you do well." -Juan Manuel Fangio

"I have no idols. I admire work, dedication and competence." -Ayrton Senna

BreezyRacer
BreezyRacer
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Re: Where does the money really come from?

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safeaschuck wrote:
Red Bull/Torro Rosso: O.K. so they may make a loss within the sport.
Reason: Having recently acquired two existing teams they will be servicing a debt for some considerable time despite some of the savings that can be made from having a single chief designer, many shared parts and shared logistical and marketing responsibilities. This is unlikely to yield a profit as the teams main sponsor is itself, however this reasoning depends on how far you separate the racing side of the company from the rest of the business.
Background: We are talking about a company who believes (or wants to believe) that being involved in F1 sells more energy drinks (other energy drink brands seem to be beginning to think this may be the case) and if this is indeed the case then it could be said that they are making a profit (so long as they are selling more extra drinks than they are spending, but try and work that out) Red Bull has spent big on advertising long before it's entry into F1 and it got the company where it is today, that and some questionable ingredients. It will be strong competition and market saturation that ends up loosing this outfit money, not it's participation in F1.
Good rundown Nuts, I would only add that ANY advertiser does it because they are convinced it works for their particular goals,whether that is promoting new product, expanding market penetration, etc. RB have spent many years sponsoring F1, back to Sauber F1. Just having a team called Red Bull is a giant marketing coop. How many times during an F1 broadcast do you hear "Red Bull"? It's staggeringly more than any other advertiser. Much less the times you see Red Bull on the screen. I would venture that as advertisers RB gets more out of F1 advertising than anyone else, even the motor companies. RB is very shrewd in participating in F1 the way they do.

SpookTheHamster
SpookTheHamster
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Re: Where does the money really come from?

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Mclaren are much more than a bigger version of Williams.

There are several companies under the Mclaren umbrella, including the road car division and MESL.

The FOZ
The FOZ
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Joined: 07 Feb 2008, 23:04
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Re: Where does the money really come from?

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It may be plainly obvious to some, but as it wasn't spelled out so far, I'll do it.

Ferrari, Renault, and McLaren all produce customer engines, which helps offset the cost of producing their own, since the tooling and facilities are already in place, they are just increasing production volume.

In addition:

Williams builds the Formula-2 spec chassis.

Ferrari build the engine, and (I think) chassis for A1GP

Renault builds stuff for Formula Renault (you can see my knowledge is become increasingly fuzzy at this point)

I'm sure there's lots of other things I'm overlooking here...

xpensive
xpensive
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Re: Where does the money really come from?

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What money,the money stolen by MrE's wife? In the end from me and you of course, where else?
"I spent most of my money on wine and women...I wasted the rest"

ESPImperium
ESPImperium
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Re: Where does the money really come from?

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I have pretty accurate answers for the BMW Sauber team for sponsorshup from the May 2009 copy of SoprtsPro Magazine as they dod a article on each team, and the BMW Sauber Sponsorship budget was arround $348 million in cash and $38.9 in non cash, so a total of $386.9 million.

The breakdowns were as follows:

BMW Group: $220m Cash
Petronas: $42m Cash
Intel: $20m Cash & $20m Non Cash
T-Systems: $18m Cash
Puma AG: $600,000 Non Cash
Bridgestone: $2m Cash & $6.5m Non Cahs
FX Pro: $5.5m non Cash
Dalco: $1m Non Cash
Certina, Ansys Fluent, Walter Meier AG, NGK, ZF Sachs, Wurth: $600,000 Non Cash
Cadence Systems: $500,000 Non Cash
Oerlikon Balzers, Mitsubishi Electric, Brutish/Ruegger: $300,000 Non Cash
OZ Wheels, Sika: $200,000 Non Cash
FOM TV: $46m Cash

Comparison per team:

Scuderia Ferrari Marlbro: $404m
Vodaphone McLaren Mercedes: $377.45m
BMW Sauber: $386m
ING Renault F1 Team: $265m
Panasonic Toyota Racing: $329.7m
Scuderia Toro Rosso: $112.5m
Red Bull Racing: $264.55m
AT&T Williams F1 Team: $137.2m
Brawn GP: $146.5m
Force India F1 Team: $119.95m

Top 10 Sponsors in 2009:

1) Red Bull = $257m
2) Toyota Motor Corp = $224m
3) BMW Group = $220m
4) Marlboro = $200m
5) Mercedes-Benz = $142.5m
6) Renault = $105m
7) Bridgestone = $92.8m
8) Vodaphone = $75.5m
9) Honda = $75m (Compensatory, thus is whay the Brawn car has to stay mostly white this year, with the team logo on the engine cover)
10) ING = $54m

Last 10 years total expenditure by all teams each season:

(Figures in billions)

2000: $1.465,12
2001: $1.728,275
2002: $2.187,525
2003: $1.965,405
2004: $2.027.00
2005: $2.029,23
2006: $2.685,85
2007: $3.139,85
2008: $3.096,60
2009: $2.543,75

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safeaschuck
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Joined: 23 Oct 2008, 07:18

Re: Where does the money really come from?

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Belatti wrote:So Italian taxpayers have to pay for Ferraris debts, Schumachers obscene salary and Berlusconis hooker parties. Nice! :lol:
However, if I was an Italian taxpayer, I would protest unless I can drive a Ferrari or be in one of the prime ministers parties.
:D
Oh I'm not so sure. I can't claim to be schooled in Italian ways of thought but cars in general and Ferrari in particular seem to have a pretty special place in peoples hearts over there. As for Hooker parties, the man is still in power. Incredible. "you know I am no angel" and that's all he says on the subject. If it that was Gordon Brown his own party would scratch his eyes out before ejecting him from power.
I imagine Max, Bernie, Luca and Silvio have had a good few laughs together over the years.
A One Hundred Million Dollar fine for McLaren! HAHA, At least I know why the FIA issue press releases, try keeping a straight face when you say that.
SpookTheHamster wrote:Mclaren are much more than a bigger version of Williams.

There are several companies under the Mclaren umbrella, including the road car division and MESL.
Yes. They are an engineering firm large enough to make it look like some of their departments are separate companies. Their catering department is big enough to sub-contract out, so we can assume they do not eat from the snack wagon as Williams employees may do, and their marketing department is SO good that they have managed to convince more than a few people that they are more than just a large engineering firm. Yes, I know they go to races, but they are not the only company who demonstrate their product for the benefit of it's customers.
The FOZ wrote:It may be plainly obvious to some, but as it wasn't spelled out so far, I'll do it.

Ferrari, Renault, and McLaren all produce customer engines, which helps offset the cost of producing their own, since the tooling and facilities are already in place, they are just increasing production volume.

In addition:

Williams builds the Formula-2 spec chassis.

Ferrari build the engine, and (I think) chassis for A1GP

Renault builds stuff for Formula Renault (you can see my knowledge is become increasingly fuzzy at this point)

I'm sure there's lots of other things I'm overlooking here...
Yes. And these ventures will be a way to increase turnover and hopefully profit, not a way of paying off the debts incurred competing in F1.
ESPImperium wrote:1) Red Bull = $257m
2)
3) BMW Group = $220m
Ouch! BMW spent almost as much as red bull for half the cars and drivers!
Pity their 'Efficient Dynamics' didn't spin off into 'Efficient Finances'
What was that quote someone uses round here for their sig, about the genius is the guy who can do the same thing for half the price.
To be fair to BMW, Their P.R. people did craft a beautiful excuse about F1's fuel hungry future, it read like poetry, I think for half an hour after I read it, I still beleived they had been slighted by F1 as a whole when all they wanted to do was lower emissions :cry:

Dr. Norbert Reithofer, BMW board chairman , said "Of course, this was a difficult decision for us. But it's a resolute step in view of our company's strategic realignment. Premium will increasingly be defined in terms of sustainability and environmental compatibility. This is an area in which we want to remain in the lead.

"In line with our Strategy Number ONE, we are continually reviewing all projects and initiatives to check them for future viability and sustainability. Our Formula 1 campaign is thus less a key promoter for us."

It's SO SAD. :(

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safeaschuck
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Re: Where does the money really come from?

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I have sort of edited within a quote here, any errors therefor will be mine rather than ESP's, great fact finding by the way ESP.
ESPImperium wrote:I have pretty accurate answers for the BMW Sauber team for sponsorshup from the May 2009 copy of SoprtsPro Magazine as they dod a article on each team, and the BMW Sauber Sponsorship budget was arround $348 million in cash and $38.9 in non cash, so a total of $386.9 million.
The breakdowns were as follows:

BMW Group: $220m Cash
Petronas: $42m Cash
Intel: $20m Cash & $20m Non Cash
T-Systems: $18m Cash
Puma AG: $600,000 Non Cash
Bridgestone: $2m Cash & $6.5m Non Cahs
FX Pro: $5.5m non Cash
Dalco: $1m Non Cash
Certina, Ansys Fluent, Walter Meier AG, NGK, ZF Sachs, Wurth: $600,000 Non Cash
Cadence Systems: $500,000 Non Cash
Oerlikon Balzers, Mitsubishi Electric, Brutish/Ruegger: $300,000 Non Cash
OZ Wheels, Sika: $200,000 Non Cash
FOM TV: $46m Cash

So total Cash sponsorship from outside sources = $128m, comparable to Brawn, Williams and Force India (see below).

Of the other sponsors I recognise.
We all know Puma do apparel, or 'Clothes' as I like to call them.
FX Pro I believe = software, as does Ansys Fluent.
NGK = Spark plugs, leads and associated electrical hardware,
Sachs = Clutches and other powertrain components not supplied by gearbox manufacturers or made by the engine supplier.
Wurth = as any one who has worked in a garage will know make brake cleaner, although BMW either use a LOT of brake cleaner (it is expensive) of Wurth supply other consumables too.
Oerlikon Balzers = I know of them from the world of specialist coatings, they may do other things too, but Anodizing, Ti-Nitriding etc and poss. ultrasealing of castings etc is my best guess.
Mitsubishi Electric = Machine tools i.e. your huge 5 axis Machining centres.

Most of these firms would have an interest in supplying the wider BMW group where they can make their money back, so it is fair to assume that Brawn, Williams, Force India and Probably Red bull/STR do not get these sorts of kickbacks from their suppliers.

Comparison per team:

Scuderia Ferrari Marlbro: $404m
Vodaphone McLaren Mercedes: $377.45m
BMW Sauber: $386m
ING Renault F1 Team: $265m
Panasonic Toyota Racing: $329.7m
Scuderia Toro Rosso: $112.5m
Red Bull Racing: $264.55m
AT&T Williams F1 Team: $137.2m
Brawn GP: $146.5m
Force India F1 Team: $119.95m

Giblet
Giblet
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Re: Where does the money really come from?

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I don't see the extra coin on there that Ferrari gets for being Ferrari.

What was it, 40 million extra or 80 million?
Before I do anything I ask myself “Would an idiot do that?” And if the answer is yes, I do not do that thing. - Dwight Schrute

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WhiteBlue
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Re: Where does the money really come from?

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So 2009 the automotives were still spending in excess of 1 bil$. And this is excluding what Ferrari pumped from their road car and merchandizing departments into the F1 team.
Formula One's fundamental ethos is about success coming to those with the most ingenious engineering and best .............................. organization, not to those with the biggest budget. (Dave Richards)