The Formula One Team Red Bull, who owns sister team Torro Rosso (soon to be AlphaTuri) has revealed precisely how much it costs to keep the wheels of one of its Formula One teams turning, even down to the amount it spends on buying the material to build the cars and the stickers that appear on them.
As explained by Forbes Sports Money, unlike teams in some other sports, F1 outfits disclose a great deal of financial information and there is good reason for this. Seven of the ten teams are based in Britain and are private limited companies which, ironically, have to file publicly-available annual financial statements. This requirement applies to any private limited company in Britain with more than $11.4 million (£10.2 million) of annual revenue and over 50 employees so it covers all the F1 teams based there. Their financial statements itemise certain costs like salaries and investment in fixed assets but the bulk of the spending is split into production costs and administrative expenses. In contrast, private limited companies in Italy have to disclose far more information including a detailed analysis of their revenue and costs. It lifts the lid on the finances of one of the F1 teams in particular.
The three outfits based outside Britain are Switzerland’s Alfa Romeo, Italy’s famous Ferrari squad and Red Bull’s junior team Toro Rosso. Swiss companies aren’t required to file public financial statements so that puts the brakes on analysis of Alfa Romeo’s finances. Ferrari’s F1 team is just a division of the auto maker so it doesn’t need to disclose detailed financial results. However, Toro Rosso is the exception.
The team’s sister outfit is Red Bull Racing which is also owned by the Austrian energy drinks giant and both teams are private limited companies but Red Bull Racing is based in Britain whereas Toro Rosso is located in Italy, which means it has to file detailed financial statements that are around 50% longer than the ones for its counterpart in Britain. However, the documents are in Italian so have largely remained under the radar. Until now, thanks to Torro Rosso’s aerodynamics departments being in Britain which then led it the team having to establish a UK office brand. Basically what his logistics manoeuvre means is that all financial statements have to be translated into English, which Torro Rosso has been doing since 2011, however over the last 18 months the filings of accounts have accelerated and they include three years of backdated financial statements which reveal precisely what it takes to keep the team ticking over.
The team’s single biggest source of revenue is Red Bull itself which plasters its logos on the sides of Toro Rosso’s cars as well as on their front and rear wings. In the year to 31 December 2018 Red Bull poured $82.9 million (€74.4 million) into the team in return for this exposure. Then comes $30.3 million (€27.2 million) from sales and services and, according to the financial statements, that “includes revenues from sponsorship and from the sale of materials and spare parts of €733,000 [$0.8 million].”
Next up is $59.7 million (€53.6 million) of other revenue which includes prize money as the financial statements say it comes from “the F1 World Championship commercial rights, other revenues from core business and grants for research and development.” Capping it all off is a $10.7 million (€9.6 million) increase in the value of products under development bringing Toro Rosso’s total revenue to $183.6 million (€164.8 million) as shown in the table below.
F1’s prize money is paid in arrears the year after it is earned so Toro Rosso’s haul in 2018 was based on its seventh place in 2017. Since then it has finished in ninth and sixth place which was its joint-best ever result. The previous record came in 2008 when the team won its first and only race since it was founded in 1985 by Italian entrepreneur Giancarlo Minardi.
Overall the financial statements layout a pretty daunting picture of what it takes to keep a Formula One team moving, with its biggest costs coming from “Purchases of team clothing, stickers and materials to build cars.” which is a whopping $56.5 million and “Travel, maintenance, repair, driver fees, energy and telecomms” which comes in at $45.6 million.
The staff breakdown is also far more detailed than the ones found in British financial statements which tend to have just two categories. In contrast, Toro Rosso’s filings reveal that the team has four managers, 14 junior managers, 190 white collar workers and 102 blue collars giving a total of 310.
Other somewhat ‘smaller’ expenses such as the team’s entry fee to the F1 championship will cost them $546,133 and then an extra amount depending on where they finished last year – when Mercedes enjoyed a hugely dominant 2016 season, it was left facing a bill of more than $5.25 million for entry to the following campaign – but as a whole Toro Rosso brings in $1.8 million net profit, which means in terms of having a financially stable and profitable sports team which is never easy, especially Formula One, means Toro Rosso not only drives exposure for Red Bull it also makes money.