In 2023, Mercedes F1 achieved a groundbreaking revenue of £500 million. Despite capped spending, their innovative strategies and market expansion contributed to this financial success, even with increasing costs.
In F1, spending is capped, but thankfully not revenues! This creates a very positive scissors effect for the sport, which has never been as financially attractive.
During inflationary periods, it’s not surprising to see team revenues increase. That’s how Mercedes F1 became the first F1 team to generate over 500 million pounds (585 million euros) in annual revenue (in 2023), a jump of almost 80 million euros from 2022.
For comparison, Red Bull Technology reported revenues of 385 million pounds in 2022.
It was particularly sponsorship revenues that increased for Mercedes F1, which attracted no fewer than 7 new partners last year.
“In 2023, the team welcomed seven new commercial partners and introduced a world-class hospitality offering at the Las Vegas Grand Prix, to meet the increased demand for attending VIP races as F1 continues to expand globally,” the team celebrated.
However, 2023 was a less prolific year for Mercedes F1 in terms of media exposure: the team finished 2nd in the constructors’ standings (up from 3rd in 2022), but achieved fewer podiums, meaning less media exposure.
“The team’s share of TV coverage slightly dropped to 14.7% for 2023, reflecting the fewer podiums compared to 2022,” notes the official Mercedes F1 report.
“The cumulative Advertising Value Equivalent (AVE) remained high for commercial partners and shareholders, with coverage estimated at $5.3 billion. The team continued to grow strongly on social media, with a cumulative following of 36 million (+15%) and a total of 465 million engagements (+9%).”
Mercedes F1 remained highly profitable in 2023: with nearly 84 million pounds in profits (though in 2022, it was even better with 89.7 million pounds in profits).
The reasons include cost inflation as well as increases in taxes and duties, notes Mercedes F1.
It is also noteworthy that the budget allocated for car development at Mercedes F1 increased from 41 million pounds in 2022 to 52 million last year. Indeed, for a F1 developed in 2023, Mercedes F1 almost started from scratch and thus had to develop a new chassis and a new gearbox (the gearbox and suspensions are also supplied to Williams F1, but the amount is deducted from the capped budgets).
Curiously, even in a period of capped budgets, Mercedes F1 also managed to increase its total number of employees, from 1114 in 2022 to 1289 last year.
Wages (including larger performance bonuses for 2nd place, paid in 2023) increased from 111 million pounds in 2023, compared to 82 million in 2022.
A team worth almost 4 billion
Despite this inflation, Mercedes F1 ensures that it adheres to the capped budgets and financial regulations.
“The financial regulations continued to be effective in controlling the cost base in 2023,” notes Mercedes F1.
“Following the FIA audit process, it was confirmed that the team fully complied with the financial regulations of 2022.”
In 2024, investment expenses in Brackley are expected to reduce profits, notes also Mercedes F1.
This should not diminish the value of the team, which Forbes had recently estimated at 3.8 billion dollars.
Mercedes F1 Hits £500M Revenue Amid Rising Costs. Mercedes F1 Hits £500M Revenue Amid Rising Costs
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