Formula 1

Financial Struggles No Longer A Concern for F1 Teams

Published

1 month ago

02/03/2023

Financial Struggles No Longer A Concern for F1 Teams

According to the F1 bosses, the financial struggles of the sport’s teams are no longer a concern as they claim that the teams’ value has significantly risen.

The assertion is based on the recently published financial data for the end of 2022, revealing a rise in revenue of $400 million for the Formula 1 Group. The teams were allotted $1.157 billion of the total income, which was nearly $2.6 billion.

This outcome signifies yet another profitable outcome on the investment that Liberty Media made when it acquired the sport six years ago.

For the teams, this underscores an astonishing reversal of fortunes from their position in the late 2000s and throughout the previous decade when several teams ceased to exist.

Liberty Media is anticipating future conflicts with the teams concerning their respective share of an ever-expanding pool of revenue.

However, as per the President and CEO Greg Maffei, he has clearly stated that Liberty aims to collaborate with the teams to guarantee that their portion of the revenue pool increases even more as more revenue flows into the business.

During an investor call following the announcement of the recent figures, which was obtained by F1Lead, Maffei stated, “One of the things that Formula 1, with the assistance of Liberty, has been attempting to achieve is fostering a mentality – which I will credit the NFL for – that if we profit, then everyone profits.”

“While the teams fiercely compete on Sundays, on Mondays, we must concentrate on expanding the whole ecosystem,” added Maffei.

He also emphasized the importance of having robust teams for a prosperous league and ensuring that even the teams at the back of the grid have the potential to earn money, which is critical for the league’s success. “It was crucial for us to have healthy teams to have a healthy league, and it was also critical that they had the opportunity to earn money – even the teams at the back of the grid – so that we could have a chance to earn money,” Maffei stated.

“The teams have witnessed a substantial increase in their value, and we have also experienced a significant rise in our value, but our focus is on playing the long game,” said Maffei.

“However, that does not imply that we will not have differences of opinion with the teams on how much of the pie belongs to us and how much belongs to them,” Maffei added.

“Nonetheless, our objective is to instill the notion that when one of us benefits, we all benefit, and vice versa, and that we are committed to playing the long game,” Maffei concluded.

Regarding the upcoming negotiations on the next Concorde Agreement, which will take effect in 2026, and in which the teams are expected to receive a larger portion of the revenue, Maffei stated, “I believe that we will have a stronger position in that matter.”

Maffei clarified that they do not intend to use an authoritative approach but rather communicate their commitment to increasing the teams’ value and wanting to witness a substantial growth in their team value.

F1 President and CEO Stefano Domenicali expressed his complete concurrence with Maffei and emphasized the significance of the teams acknowledging their present position in contrast to where they stood a few years ago.

Domenicali reiterated that having financially stable and robust teams is critical for the entire system’s survival and development, along with a strategy to engage more with fans and partners. Domenicali stated that financially robust teams are essential to maintain the strength of the entire system and to attract more fans and partners.

“This will indirectly impact the growth and strength of the business itself,” Domenicali further explained.

Domenicali reminded everyone that not too long ago, the teams were struggling, and F1 was there to provide financial support to them. “We must not forget that only a few years ago, the teams were undergoing financial difficulties, and it was F1’s responsibility to provide them with financial assistance,” said Domenicali.

Domenicali strongly believes that the more value given to the teams, the more value will be returned to the system and the entire business. “That is why we are convinced that by providing more value to the teams, we are indirectly benefiting the system and the entire business,” Domenicali concluded.

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