The Mercedes F1 results have been published in recent days and much has been made of a loss for 2015 of £22.3 million. From where I am sitting, this seems like a real bargain. Very few have written about actual sums spent by the team, which amounted to £239 million (which translates to $292 million, unless the Pound falls further by the end of this blog post). This is basically the money Mercedes spent running its race team in Brackley. However, to this one must add the money that has been spent at Mercedes AMG High Performance Powertrains Ltd (MAHPP) up the road in Brixworth, where the power units are designed and built. This operation turned a profit of £6.1 million on a turnover of £151.8 million, which means that Mercedes Benz’s F1 activities (not including advertising and local expenditure) was in the region of £390 million, including engine R&D spending of £79.7 million.
However, the accounts also show that Mercedes is making back most of the money from sponsors, prize funds and engine fees. If one adds the £6.1 million profit from MAHPP to the £22.3 million loss of the race team, plus a MAHPP dividend of £13 million paid to its parent company, one can see that the entire 2015 season cost Mercedes around £3.2 million, which is a pretty decent price to pay the technology developed and for the publicity that F1 brings to the company.
Is it any wonder that Mercedes wants to continue in the F1 game? Admittedly, getting to this happy situation has cost Mercedes a lot of money in terms of investment, but this is now paying off handsomely.
The biggest gain between 2014 and 2015 was an increase of £66.3 million in the race team’s turnover, thanks to higher sponsorship and more prize money. The team employed an average of 765 staff in 2014 but this rose to 807 in 2015, while MAHPP went from 538 to 550 people. Overall, therefore, the F1 programme now has staff in excess of 1345.
These are, of course, broad brush comments on financial figures about which we know only what we are told, but they are a good indication of how a successful F1 project can cost a car manufacturer very little, once the initial investment has been made.
Still, the word from Italy is that Ferrari’s F1 programme actually makes money for the company…