Nine of the 11 teams file publicly available accounts, and research by The Daily Telegraph shows that they had combined net losses of £127.5m last year. Unlike most businesses, profit is not the hallmark of success for an F1 team. Instead, their benchmark is victory on the track, as this increases their prize money, which in turn raises the value of the team itself. This gives the owners a payout when they come to sell up, and it increases the team’s ability to bring in more money from sponsorship since brands are prepared to pay more for association with a winner. Emerging markets are queuing up for a F1 race to put themselves on the sporting map. Recent signings include Azerbaijan and Mexico, and under F1’s business model, they will cover all the race-hosting costs. It gives F1 high-octane margins, and in 2013, underlying profits came to $530.7m. Last year, it paid a $332m dividend, with the largest share going to F1’s controlling shareholder, the private equity firm CVC, which was paid $116.2m, in line with its 35pc stake. Since taking over F1 in 2006, CVC has made $4.4bn from the business, despite the economic downturn and departure of a total of seven teams. With more teams at risk, it seems the only racing certainty is that the fortunes of CVC and Mr Ecclestone will continue to accelerate.
Posted on: Mon, 08 Dec 2014 01:06:21 +0000