23/03/2012
NEWS STORY
After-tax profits of the Formula One Group are expected to hit $325.7m this year, according to research by the sport's industry monitor Formula Money. It is the first time that F1's bottom line has accelerated past the $300m mark and it gives the business an estimated net profit margin of around 16%.
It shows the cash-generative power of F1 and the public may soon be able to share in this. It is understood that the sport will be floated on the Singapore Stock Exchange later this year at a value of $10bn, a multiple of more than 30 times its net profit.
In the long term F1's profits will rise much higher. According to the research, in the next five years its revenue is projected to increase by over 50% to $3.3bn with net profits coming to $882.3m.
The boost in revenue comes from new races which are being added to the calendar as Texas joins this year followed by New Jersey in 2013 and Russia in 2014. However, adding races only brings with it a modest increase in the cost (largely through personnel and transporting camera equipment) so F1's overheads remain relatively static except one - the prize money payment to the teams.
Currently the teams get 50% of the underlying profit (EBITDA) of F1's rightsholder (Jersey-based company Delta Topco) and this is the company's biggest single cost.
In the year to 31 December 2010 the teams got a total of $658m in prize money and Formula Money's data shows that within two years this will double to an estimated $1.2bn. The teams' share of prize money has tripled since 2006 when it came to $215.7m. The boost was due to F1's rising revenues as well as a new deal, signed in 2006, which doubled the teams' share of the sport's profits.
Formula Money's data also shows that by 2016 the total team prize fund will come to an estimated $1.6bn, with the championship winner taking home a $222m reward. This amount is bigger than the entire annual budget of over half of the current 12 teams and compares to the $102m that Red Bull Racing received for winning the championship last year.
F1's accelerating fortunes (all figures in $m)
| 2012 | 2013 | 2014 | 2015 | 2016 | |
| 2012 | 2013 | 2014 | 2015 | 2016 | |
| Sanction fees | 710 | 808 | 918 | 1,034 | 1,166 |
| TV rights | 550 | 606 | 670 | 755 | 851 |
| Trackside advertising | 300 | 346 | 397 | 447 | 504 |
| Sponsorship | 150 | 165 | 182 | 205 | 231 |
| Paddock Club | 190 | 219 | 252 | 284 | 320 |
| Other | 116 | 128 | 142 | 161 | 181 |
| Total revenue | 2016 | 2,272 | 2,561 | 2,886 | 3,253 |
| Team prize money | 894.5 | 1,035.3 | 1,194.3 | 1,373 | 1,574.9 |
| Total costs | 1690.3 | 1,831.1 | 1,990.1 | 2,168.8 | 2,370.7 |
| Net profit | 325.7 | 440.9 | 570.9 | 717.2 | 882.3 |
Source: Formula Money