A Formula 1 team previously known for its big spending is actually profiting from the series’ new cost cap.
Mercedes saw its profits rise by $60.7 million in 2021, due largely to the $145 million limit placed on teams this season. Profits totaled only $15 million in pandemic-affected 2020.
- Team revenue grew to $423.3 million from $392.4 million last year.
- Mercedes cut 75 jobs related to design, manufacturing, and engineering. Its headcount in administration — not counted against the cap — grew from 157 to 173.
- The company attributed its revenue growth to increased sponsorship and applied science money.
The FIA said on Monday that Red Bull had exceeded the 2021 cost cap by under 5%. It has not yet determined a punishment for the team. Red Bull said its 2021 submission to the FIA was below the cost cap, and it will “carefully review” the governing body’s findings.
F1’s cost cap applies to expenses related to vehicle parts and performance, but not marketing, driver salaries, and other business expenses.
The cap dropped to $140 million this year and will be $135 million from 2023-25.
Cash Flow Accelerating
F1 saw strong growth in the second quarter, with its $744 million revenue up 49% year-over-year. The series flipped a $43 million loss in Q2 2021 into a $49 million profit.
Along with crowds returning in full, F1’s Paddock Hospitality Club luxury fan experience has proven more popular than ever.