Mercedes Benz Grand Prix Limited, the company behind the Mercedes Formula 1 team, generated revenues of over $581 million and profits of $110 million in 2022, with both figures showing a significant increase in the Compare to 2021.
No wonder, after all, rights holder Liberty Media paid out a total of $89 million in 2022, which was distributed among the 10 teams, more than in 2021. Together, almost $1.2 billion went to the 10 teams.
Essentially, this also represents increased revenue from Formula 1’s sponsorship and prize fund, which is solid evidence of how successful top teams can be in the sport’s current financial environment. 2017 was actually the first year since Mercedes returned to Formula 1 in 2010 that they were able to finish profitably. In 2014, Mercedes made a loss of over $90 million.
With the introduction of the budget cap in 2021 and the increasing popularity of the premier class among fans and sponsors worldwide, revenues have increased significantly, while costs, on the other hand, have increased less.
Toto Wolff collects $35 million
In addition, in March 2023, Mercedes paid a dividend of $92 million for the 2022 financial year to the three one-third shareholders Ineos, the Mercedes-Benz Group and Toto Wolff.
In addition to a fixed salary of $4.54 million, the Mercedes team boss will have collected over $35 million for the 2022 season, making him by far the team boss with the highest income. However, this is due to his position as co-owner of the Formula 1 team, as he is not only employed but also owns 33.3 percent of the company himself.
While Wolff’s fixed salary of $4.54 million is almost halved compared to 2021 – he still got $8.4 million in 2021 – his total income from Mercedes has increased by almost 36 percent compared to the previous year of $31.3 million due to the increase in the dividend Dollars increased to 35.2 million.
Why revenue could fall in 2023
The Mercedes sales figures also include a contribution from the Applied Science department. Like other major teams, Mercedes has pulled employees and other resources from direct involvement in the Formula 1 program to stay under cost. Total revenue also includes items such as the sale of transmissions and related systems to Aston Martin and Williams.
Sales increased by a total of $111.99 million compared to 2021. Of this income, 51 percent came from sponsorship and licenses, 30 percent from the Formula 1 prize fund and 19 percent from other income, which came mainly from the field of applied science.
Prize fund revenue increased because 2021 was still a COVID-affected season, with several of the more lucrative away races canceled and some late replacement races added, with some spectator restrictions still in place, while 2022 saw a normal schedule in place.
So overall there was a bigger pie to divide between the teams in 2022, and as reigning constructors’ champions in 2021, Mercedes continued to get the biggest piece of it. This revenue will decline in the 2023 season as the impact of the team’s slide to third place in the 2022 championship is felt.
100 new employees, but lower personnel costs
The cost of sales, that is. The team’s expenses for racing increased to a lesser extent than sales, namely from 364.8 million to 430.3 million. This reflects the additional resources put into the W13 project for the new regulations in 2022, after the 2020 cars were largely carried over to 2021, as well as the impact of inflation.
Profits after tax were 110.3 million, an increase of 25.64 million compared to 2021. However, there was a one-off tax event in 2022 that put a big dent in the number. At the operational level, profit was even higher, from 88.2 million to 139.34 million, which is perhaps a better indicator of the company’s performance.
The average number of employees was 1,114 in 2022, an increase of over 100 compared to the previous year. In the areas of design, engineering and manufacturing, which are directly under the cost cap, only 24 were added, the rest were administration.
The latter increase largely reflects additional human resources and finance staff needed to comply with cost caps, as well as additional marketing staff dedicated to servicing sponsors as the team does more hospitality at races.
Interestingly, despite the increase, overall personnel costs fell from $133.7 million to $115.06 million, largely due to the fact that the team fell to third place in the constructors’ championship in 2022 with just one race win and therefore the employees were not the ones received success bonuses that they had earned in 2021.
Ineos pays over $50 million in sponsorship
In the 2022 season, the team finally acquired ownership of the Brackley site, which it had held since its inception as British American Racing in 1999, reflected in a $36.8 million increase in fixed assets.
Wolff notes that the acquisition “provides a safer, more robust and independent business model for the future and enables significant investment in state-of-the-art, carbon-neutral facilities as the campus expands.”
An interesting detail that emerges from the financial statements is that Ineos’ annual sponsorship in 2022 was worth $51.52 million. This figure had to be published because the company, as a shareholder of the team, is a related party.
In addition, the Ineos-backed America’s Cup project paid Athena Racing $15.7 million for research and development work carried out by Applied Sciences.