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[source](https://www.sportico.com/feature/formula-1-team-value-rankings-1234727512/)


# With in 2  years it has seen the sport turn from a cost center into a big business with serious potential for profit on offer. If you are a car manufacturer you can no longer sit on the sidelines.

Some may be quite surprised to see Red Bull not on the top spot having won the title last year in 2022. If we can recall before the budget caps were introduced these teams were all losing bucket loads of cash. The budget cap was introduced in 2021 with last year being $140 million which covers their overheads excluding drivers and top management salaries.

Breaking even was the first task which most have achieved and surpassed all within the last 2 seasons. The likes of McLaren went through some restructuring complications and by next season will or should be in profit. Aston Martin set up an entire new team including factory facilities which would not be cheap and only be down by $55 million is nothing to what they have now. Williams have new owners and have basically been rebuilding from scratch and will also be in profit this season with a much better performance seen thus far.

Ferrari top the charts regarding profit even though they have not performed well, but this is all down to the Concorde agreement. The agreement which all the teams have to sign has a special bonus package for Ferrari due to them being involved from the start (1950) and is a type of loyalty bonus.

Revenue for the teams is generated in many ways with sponsorships being the biggest earner. The more successful the team is the better deals the team can sign and they can be worth north of $200 million per season. Title sponsors are normally multi year deals and are seen more as a partnership. We saw INEOS team up with Mercedes which turned into a 33% shareholding.

Teams make money through merchandise, license agreements with merchandise and engineering services due to the teams being leaders in their field. We have seen Mercedes rent out their engineering/applied science services to other areas such as yachting. Another big earner is the new developments they create supplying the motor industry so they all work hand in hand with various manufacturers. Williams are known for their superior battery technology and make a substantial income annually from their patents.

In 2022 the holding company of Formula One (F1) paid out $1.16 billion in prize money to the 10 teams involved which was a slight increase of $90 million from he year before. The holding company handed over 45% of all profits to the racing teams which is an extra boost and why this racing business will only become more profitable as the sport expands.

Toto Wolf bought 30% of the Mercedes racing team back in 2013 which only cost $50 million and is now worth $900 million plus a salary being the head of the team. As an investment I cannot think of a sport offering so much opportunity due to the growth that has yet to take place. Throw in the technology development that is sold on along with the enjoyment factor of being involved there is nothing that comes close.  

Later this year we will see the inaugural grand Prix in Las Vegas which will generate huge revenue for the sport through the corporate bookings and package deals sold at crazy money. The teams receive 45% of this so next year these figures should see every team in decent profit.

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