09/12/2014
NEWS STORY
Formula One's teams made combined net losses of £127.5m last year according to an article in the Daily Telegraph by Christian Sylt.
The losses have come to light in the teams' accounts and were driven by the accelerating costs which fuelled the collapse of Caterham and Marussia in the past two months.
Marussia ceased trading in November whilst administrators have said that Caterham, which is also based in Oxfordshire, needs new investment to continue racing next year. If both fail to make it to the grid it will lead to the loss of more than 400 jobs. Others are said to be at risk and the accounts reveal why.
Remarkably, more than half of the total loss was made by Lotus which is controlled by the private equity firm Genii Capital.
Its £64.9m loss is the largest ever recorded by an F1 team and widened by £9.6m as revenue remained stable at £92.7m. Costs were cut by £3m but interest payments on the inter-company loans increased from £630,000 to £13.6m.
Staff numbers were boosted from 520 to 557 and it paid off as Kimi Raikkonen won the season opener for the team last year. It secured ten further podium finishes but by the end of the season cracks began to appear as Raikkonen left for Ferrari amidst claims that Lotus owed him £15m.
It had a noticeable effect as Lotus finished eighth in the standings this year. It is one of the teams which are pushing to cut costs in F1 where the average annual team budget comes to £150m.
As Pitpass revealed in October, Mercedes, made the second highest loss last year as operating costs rose £39.6m to £190.7m due to increased spending on its 2014 car. It is the highest amount that Mercedes has spent since it took over the outfit at the end of 2009.
Likewise, last year the Force India team received £17m from its shareholders, the trio of Indian conglomerate Sahara, Dutch businessman Michiel Mol and tycoon Vijay Mallya who has an estimated fortune of £480m. The team still burned up the third-highest loss at £38.5m and, as Pitpass revealed last month, its auditor said that the "material uncertainty" over whether its owners will continue to fund it may cast doubt over its future.
Just four teams made a net profit - last year's champions Red Bull Racing, its sister outfit Toro Rosso, Williams and McLaren. At £15.1m McLaren's after-tax profit was the biggest. It was driven by a new contract it signed with F1's boss Bernie Ecclestone which boosts its prize money and led to revenue rising £26.1m to £191.8m.