There is a lot of rubbish written about Formula 1 on the Internet, sometimes on websites that might seem quite reputable. The sad truth is that these websites are too lazy or too cheap to do the work themselves and buy in cheap crap from the bottom-feeders of the sport, who have little understanding of what they are writing about, but enjoy customers who do not care about quality.
The financial details of the sport are not easy to find and tend to be shrouded in unnecessary mystery. One thing that everyone thinks they know is that it is only the top 10 teams that get the big rewards. This is not actually the case.
The fact that Marussia finished 10th in 2013, rather than 11th, is not perhaps as significant as some think it is.
The F1 prize fund is based on the amount of money that the sport generates in a year – and that changes from one year to the next. If one assumes that the prize fund is $700 million (we do not yet know for 2013) the structure is simple enough. There are three prize funds: known as Columns 1, 2 and 3.
Ferrari has a special deal which means that the Italian team takes a small percentage of the prize money straight off the top. This is believed to be two and half percent, but may have increased. If there is a prize fund of $700 million (after the Ferrari payment), this will be divided into two: the Column 1 and Column 2 funds each being $350 million. Column 3 is paid directly by the Commercial Rights Holder.
The Column 1 money is divided amongst the top 10 teams on an equal basis: ie $35 million per team. However the top 10 is not established based on the results of a single season, but rather on the results in two of the three previous seasons. In other words, if Marussia is 10th again in 2014, it will be eligible for Column 1 money, but that is not currently the case. Thus Caterham, which was 10th in two of the last three seasons, will still be paid $35 million in Column 1 money for 2013.
The Column 2 fund is $350 million as well, but this divides up differently based on a scale of percentages, based on the results for 2013 alone. The 10th placed team gets four percent, the 11th gets zero percent. So in real terms, in 2013 Marussia will get $14 million of the Column 2 fund (four percent of $350 million). Caterham will get nothing.
However, there is also Column 3, which provides for a payment of $10 million to each team outside the top 10 but nonetheless competing in the World Championship. This means that Caterham has lost $14 million, but will be paid $10 million, so the overall loss as a result of finishing 11th is just $4 million. If the same thing happens again in 2014 it will be a lot more painful. If Marussia is 10th again it will qualify for Column 1 and thus will gain $35 million a year. Caterham will lose the same figure. Thus, Caterham needs to up its game and finish 10th to save the day…
joeblogsf1 
Joe, what about the claim that Red Bull, McLaren, Mercedes and Willliams also get a Ferrari-style ‘bonus’ for their contribution to the sport?
No, I believe that they all got one-off payments.
So, if both Marussia and Caterham can raise their game to the extent that a third team is 11th on occasion, then theoretically all 11 teams could be entitled to Column 1 money from time to time? In such case, would any of the other teams object to getting a smaller share?
Thanks Joe. Really interesting to know how this works . its not all doom and gloom for 11th place after all.
I smirked at “cheap crap from the bottom-feeders”.
Anyhoo, am I right in thinking that the top 10 teams get transportation costs covered and those outside of that don’t?
If so, 10th must be worth several million over 11th for this alone.
I’m honestly not sure on this.
No, all 11 get money towards transportation.
Ah, thanks Joe.
A brilliant insight and explanation, Joe.Than you.
I hate when folks just chime in to say “good job” but this is the first I’ve read anything remotely related to this. So, good job. NBC Sports’ Steve Matchett (whose enthusiasm I actually love) goes on endlessly about the zero-sum game at the back of the grid. Nice to know it’s not so all-or-nothing for those folks.
Thanks for this post. It makes stuff pretty clearer.
Fascinating. So all that jumping up and down was really for just a couple of shillings when you look at the teams overall budgets?
Fantastic blog post – explains the situation beautifully and concisely, as is the usual case, which is why I read this blog. But why preface it with the dig at other sites & reporters? Seems unneccessary to me, when the information stands up on its own.
Still wouldn’t 4 million mean alot to Marussia? it would be nice to see them come in 10th in 2014 so they at least have a change to make some headway. Caterham seems to be more financially stable.
Except for not knowing the total price fund (yet)…it all sounds quite simple to me. Is this ‘publicly’ accessible knowledge regarding the percentages & eventual price fund? The 2 out of 3 years results for column 1 money I read in more places. The column 2 percentages are new to me (as in the actual numbers not the principle). Or did you learn these through contacts/leaked documents?
I am trying the assess the total scale of stupidity of the other parrot websites…. 🙂
It is not publicly accessible information. It is tightly protected.
Thanks, as always, for the clarity of your succinct words!
Hi Joe. What do you think about the idea of eight teams, each have three cars, makes altogether 24 cars field?
I think ti would undermine the manufacturing base of F1 and that is not good. The most factories there are the stronger the sport is.
In a perfect world yes, yet unfortunately it’s not like this…
You initially wrote $35 million for Column 1 money. Then, you later wrote $350 million. I’m guessing that’s a typo?
nevermind, my mistake. That’s per team.
$350 in total, $35 per team
As usual, thanks for the insight! Previously I thought if you finished out of the top ten you got nothing.
thanks for this post, will have to believe its accuracy and only you can tell us how accurate it is given the non transparent dealings of F1. Seems to me column 3 is in existence if there are more then 10 teams, something Bernie is not keen on anyway and I hear he and others are trying marussia and catheram to merge again or ideal for both to disappear in favour of a manufacturer.
Might I just suggest you name those you think have got their facts wrong so I might learn from that? Or is it simply put down as some scare tactic to have me read no other source on the evil internet?
In theory, on the basis of coming in the top ten in “results in two of the three previous seasons”, there can be more than ten teams that qualify for Column 1 money. For example if the current 11 teams take part in 2014, and Marussia and Caterham finish in the top ten in 2014, then all eleven teams will satisfy the criteria to share Column 1 money.
That being the case it would still be 10.
But which two years counts?just like season 2013,use the data of 2012&2013 or just two best seasons of the 3?
The last two
I knew you had written about that a long time ago and I am really happy that you explained it again. I knew it was a two of three year requirement, based on your previous posts about this issue. Last time i dont think you took the time to explain all three factors. Thanks again for being the only truely reputable source for info about this sport we all love.
Superb Joe!!!
I’ll be referencing this blog post of yours for future reference.
That is such a convoluted system, only a man like Mr E. could come up with a system like that.
Joe, are you able to shed light on why it’s set up like this and not simply based on the current season just gone? I’d be very interested in the reasoning and logic (if any) behind it, and who it was desgined to benefit/protect.
Many thanks
I also thought that the column 3 payment to the start up teams was only for 3 seasons, this would be the 4th so will Caterham still get the 10mill payout for 11th place, I was lead to believe from other sources that this was another reason for wanting 10th place, as you say Marussia will get 14mil but if the finished 11th they would have got zero as the ‘special payouts’ were no longer available.
Interesting article by the way.
Marussia got paid $10 million this year
Sorry my mistake, still, I had been led to believe that the column 3 was only for 3 seasons, which would mean it’s been extended am I right to think this or was the 3year thing wrong to start with
Can you put a number on how much Felipe’s drive-through cost Ferrari with regards to constructor’s bonuses/monies, or did it not hurt them? I cannot make sense of the numbers…
Not today!
I wrote out a nice long, clear response to this, but I think my computer ate it rather than sending it to Joe – so I’ll be brief.
Based on Joe’s estimates both on the prize fund of $700M and the percentages in a reply to Nino below; the answer is about $10.5M
Ferrari get $80.5M + their special bonus
Mercedes get $91M
If we assume the Ferrari 2.5% has already come off the top of the prize fund, the original amount was about $718M, the extra $18M goes straight to the Italians and they earn $98.5M.
There are many, many hypotheses in all that but the Ferrari special bonus percentage is the key – it pretty much keeps the folks in Maranello richer than the folks in Brackley no matter how but the prize fund gets. For a 2.5% “special bonus”, Ferrari earn about 8% more than Mercedes, but double it to 5% and the Italians rake in 28% more despite finishing a place behind.
Thanks for explaining how that works Joe. Why do the masters controlling F1 insist on being so secretive about the financial matters in Formula 1? Do you think it’s because they don’t want people to know how much cash disappears out of the sport?
Joe, what is the situation regarding the past two years (2011 and 2012) in that 2013 was the first year the first 10 teams participated, the past two was when it was the first 11 teams?
Nothing much has changed.
Joe,
Do you have any insight into the Marussia Sauber merger rumour currently doing the rounds? Given the attempt with Caterham last year I guess there could be some truth in the story.
I’d rather see 10 teams capable of challenging for points than an 11th team running around 2-3 seconds a lap off the pace.
This is the latest in a set of rumours about mergers.
do you think this is anymore than a just another rumour?
On which topic : given that Ferrari are so keen to run more cars, why don’t they just buy another team?
Hi Joe, it is not entirely off topic but sort of is, what do you think the chances are of a three tier championship based on engine badges next year? Could the Mercedes or Renault engines be so much better that it could catapult a team like Caterham over midfield cars with worse engines?
We will have to see
Thank you for the insight into this murky side of the sport. Transparency really is dismal. Very informative explanation.
Joe many thanks for this useful clarification of the “smoke and mirrors” that is FOM’s prize fund distribution.
In another life Mr E would have given Clive of India a lesson in “Divide and Rule”
ps Am I really the only comment & if so you must have been so succinct that you rendered your audience speechless for the first time ever ?!
HAHAH i OTHER GOOD
Joe If 10th gets 4% of Col 2 fund what do you think the other places get ?
I cant believe with all this prize money the teams are still struggling to balance their books. Certainly “not very good businessmen” as you said in you previous blog on a budget Cap.
1st 19.00%
2nd 16.00%
3rd 13.00%
4th 11.00%
5th 10.00%
6th 9.00%
7th 7.00%
8th 6.00%
9th 5.00%
10th 4.00%
So presumably, given the structures you have outlined here and in this excellent post, given that Williams GPH’s accounts are now a matter of public record, when they are released it should be possible to reverse engineer the total prize fun sum? Or would the commercial confidentiality aspect of this mean that the sum was buried inside some other amount, or split between others?
I’m not a business brain so I just thought I’d ask if this sort of thing can be done?
You do not need to reverse engineer the fund.the Formula One group has to put in financial records. It is included in these.
Hi Joe
Great to hear a more in depth answer to the prize fund. There is a new Concord Agreement / framework plus new commercial deals for each of the teams, have these changed the way the prize fund is divided up? If so, do you know how it has changed?
I do not believe the prize fund has changed.
What’s worrying for Caterham is that for teams with zero points, F1 championship rankings are essentially a medal system where a single lucky result is enough to decide who comes 10th and who comes 11th.
The format means that it pays to have a driver with a cool head who’ll bring the car home in high-attrition races (so in the wet mainly) or one who qualifies well on tracks like Monaco where overtaking is so difficult.
Kovalainen and Trulli anyone?
hii joe really a nice article like it vy much
and cn u gv a update on force india drivers for 2014
No, I cannot because things are still in motion.
My brain hurts.
Presuming $700m Prize Fund for 2014
$350m $350m
2013 Teams Special COL 1 COL 2 COL 3 TOTAL $m
1 Red Bull 35 19 66.5 101.5
2 Merc 35 16 56 91
3 Ferrari 17.5 35 13 45.5 98
4 Lotus 35 11 38.5 73.5
5 McLaren 35 10 35 70
6 Force India 35 9 31.5 66.5
7 Sauber 35 7 24.5 59.5
8 STR 35 6 21 56
9 Williams 35 5 17.5 52.5
10 Marussia 4 14 14
11 Caterham 35 10 45
Correct?
You did the sums. You have to add Ferrari’s extra dosh on top, but the assumption is that the fund is 700mion when it could be 750…
Assume that for Caterham next year that a Paid driver who can deliver 10th would be worth more than a pay driver who contribultes a little
Thank you for a very interesting article but I am not sure that your solution to turn F1 teams into profit making businesses is the right solution. You mention some UK Football teams being owned by rich Americans, forgive me if I am wrong but do not most of the football fans utterly hate these fat-cat foreign owners and regard their sport/team as being somehow stolen from them?
I can easily imagine a similar reaction from F1 fans if they think their ‘pure sport’ is being hijacked purely for profit, at the moment F1 is a bit like Science activities, those with engineering skills are pushing the automotive boundaries in further unexplored directions to the eventual benefit of carkind, it is just a shame that they are not allowed to incorporate sophisticated anti-lock brakes, traction control and advanced stability software (and all these refinements should eventually be compulsorily released into the public domain after 2 seasons of use in F1).
Once you allow the fat cats to operate F1 teams on the basis of profit then expensive innovation will be thrown out of the window (because there will be a strong imperative for the teams to agree on a freeze to a standard spec to maximise ‘the show’ and reduce costs) the emphasis then will be on the charisma/attractiveness/heart-throbbiness of the drivers like a million other TV entertainments.
I cannot see that a situation like this would be attractive to Honda, Mercedes etc as they need a platform to display their engineering excellence, I suggest they are less interested in providing a ‘show’.
At present too much F1 money is spent on aero tweeks which are an automotive dead end, venturi tunnels underneath the car would be a better solution as they provide downforce without being unduly disturbed by turbulence from the car ahead, wings and winglets should be banned, with all F1 cars being required to have a smooth outline, we might then have a return to machines that look beautiful even when not in motion.
In conclusion, at the moment the F1 teams almost bankrupt themselves in an honest endeavour to produce the best car, so the main worry is that some teams may not survive, your alternative is to let the fat-cats rule to maximise income and profit, put starkly what do you think the fans will prefer; honest endeavour of fat-cats?
Thank you for all your articles they provide a more accurate insight into F1 than all the other commentators put together.
British football fans’ attitudes to overseas fat cat owners has tended to depend on 1) whether said owners show any understanding and appreciation for the culture of the respective club or not, and 2) whether they’re putting funds in to the club or using it to leverage debt elsewhere.
My second last paragraph should have an OR in it not OF, it should read: Honest endeavour OR fat-cats.
First time I’ve ever seen the prize money broken down in this way. Like anyone who doesn’t have access to the figures, I had always believed last place meant that team was financially finagled. Not so then.
I’m going to keep a screen grab of the financial breakdowns because they provide useful reference material. Although we knew Lotus would have benefitted, by finishing higher up, we didn’t know by how much. Now we know what was at stake for each team in financial terms. This information will add interest to watching next season progress.
Nice work Joe. Perhaps you would be so kind as to update these figures, if you find out they have changed?
How many other unknown ‘special deals’ are there ? How can a sport have ‘special arrangements’ with the teams. Typical FIA/FOM/F1 intransparency, if that’s a word ?!
One might say that all the deals are side deals because there is no central Concorde Agreement, simply a series of bilateral financial agreements. However, as I understand it (and it is impossible to know given how tightly controlled the literature on this is) that the terms of the Columns are unchanged. Some teams got signing-on fees, others got nothing.
No team can receive a column 3 payment if they are eligible for payments from either column one or two so under your example Joe, Caterham will only receive column 1 money not 1 + 3. The 2.5% to Ferrari is correct. For clarity I’m commenting on Schedule 10 to the Concorde agreement which expired December 2012 relying on the assumption that the new Concorde agreement leaves the prize allocation unchanged.
If you have access to the Concorde Agreement and are at liberty to publicly give details then I do not doubt you.
Joe. I do have access to the Concorde. I was FD at Marussia in 2010/2011. But, I’m not going to publish it here verbatim.
Splendid. Feel free to send me a copy. Not that you can under Section XXX Confidentiality. I can see the logic in not allowing any Column 3 money if a team was eligible for Column 1 or Column 2. So that would mean Caterham will take a drop of $14 million, but still hold on to the $35 million from Column 1. That is a blow but still not as bad as people think.
I wonder how long it will take FOA (?) to shut this little exchange down. They’re pretty quick with videos! Ha ha ha
I find it very hard to believe a copy of the CA hasnt been leaked out somewhere in this day and age.
some websites ( may be those which were mentionned in your last post) wrote today that Marussia could merger with Sauber in order to face their mutual economical issues. Thanks to their common new stakeholders from russia. Do you think that can de true or possible for 2014?
I di not think it will happen. The idea of a merger is being flogged around by FOM at the moment because it does not want to have to deal with 10 teams. We have heard rumours about Marussia-Caterham, Caterham-Sauber, Williams-Sauber and now Marussia-Sauber. I think it is all bull.
Talking of signing on bonuses, this even extends to sponsor’s practices.
GSK, a major sponsor of McLaren has caused some disquiet, not to mention outrage, amongst it’s supplier base by demanding not only future discounts but also retrospective bonuses against business already concluded.
http://news.sky.com/story/1174953/glaxo-sparks-fury-over-sign-on-bonus-demand.
GSK need to ensure that they do not crush their suppliers out of business. (As Ford did to some suppliers who were eventually taken over) This kind of practice does not endear the company to the public and of course the suppliers will be looking for alternative more lucrative business. Still of course we do not see “GSK” on the side of cars and they have sold the Lucozade brand. (No idea whether that included “Burn”)
Burn belongs to Coca-Cola
Can you spell “scam?” As in BernieScam?
It is a kind of camera, no?
A constant feed just watching Bernie during a grand prix would be fascinating to watch.
Are these breakdowns still relevant for the 2014 season? Still thankyou for an insightful read.