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The first F1 team with over $600 million

The first F1 team with over $600 million

( – The most profitable team in Formula 1 recently published its financial figures for the 2023 fiscal year. Despite a winless season, Mercedes-Benz Grand Prix Ltd achieved record sales equivalent to US$680.6 million, more than ever before in history by a Formula 1 team in one year.

Mercedes team principal Toto Wolff at the FIA ​​press conference in China

Sales increased by $91.6 million compared to the previous year, which can be attributed to increased income from sponsorships and prize money. In 2023, Liberty Media, the rights holder, will distribute more money to the ten teams than ever before, $1.22 billion, from which Mercedes will also benefit.

But despite the increase in sales, the Brackley-based company reported a slight drop in profits from $111.4 million in 2022 to $104 million now. This is due to a combination of factors, including increased costs and higher tax payments in fiscal 2023.

The increased costs include, above all, a significant increase in the number of employees. While 1,114 employees were employed in 2022, there were 1,289 employees in 2023. 102 of them were recruited in the critical performance area of ​​“Design, Manufacturing, Engineering and Production,” with 73 new management positions also created. Due to the new hires, wages and salaries increased from $116.4 million (2022) to $157.4 million (2023).

Toto Wolff: The 2023 financial year will bring the Mercedes boss almost 50 million

For the 2023 financial year, shareholders also estimate a dividend equivalent to $124 million, which will be paid in full by June 2024. Team boss Toto Wolff, the Mercedes-Benz Group and main sponsor Ineos each own a third stake in the Formula 1 team and will therefore split the profits equally (41.3 million dollar).

Since UK-based teams are also required to report the salary level of their highest-paid managing director, it's worth taking another look at Toto Wolff in his role as team president, CEO and shareholder. Although the name of the highest-paid managing director has not been revealed, it is difficult to assume it is Wolff.

Danner: “What Toto misses most is Niki Lauda”

For Christian Danner, it is clear that with Niki Lauda by his side, Toto Wolff will have a greater vision of the difficult times at Mercedes.

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For fiscal year 2023, in addition to the dividend, he will also receive a salary equivalent to $7.5 million, which represents an increase of about three million dollars compared to 2022. However, he is far from being the team's highest-paid president, as he received Christian Horner, Red Bull's managing director, will receive $14.2 million in 2022.

However, the Austrian will have earned a total of $48.8 million for the 2023 fiscal year, which represents an increase of $13.2 million compared to the previous year. If you add dividends and salary together, Wolff will have earned a total of $115.7 million in pre-tax profits from his Formula 1 career in the three years since the budget cap was introduced in 2021.

Corporation tax increase: why Mercedes made less profit

Back to Mercedes. Race car development assets carried over to the next season rose from $50.9 million in 2022 to $64.8 million last year. This higher figure partly includes the additional investment required for the 2024 Formula 1 car, which requires a new chassis for this season.

The $64.8 million also includes the early work the team was able to do on the production of 2023 transmission and suspension parts, which were delivered to customer Williams this year, and pre-2024 components, those used from Aston Martin, can be completed.

The fact that profits in 2023 were lower than in the previous year is also due to increased tax payments. The team's 2022 numbers included deferred tax assets, meaning earnings were unusually high.

Combined with the increase in the corporate tax rate from 19 percent in 2022 to 25 percent in April 2023, this means Mercedes' tax payments increased by $29.5 million from $10.7 million in 2022 to $40.2 million last year.

Too few podiums: Mercedes 2023 with less TV time

The difference in tax payments compared to last year has had a significant impact on overall profit, but the company appears to be on very solid footing as EBIT (earnings before interest and taxes) is fairly stable. It amounted to $141.2 million for the year ending in 2023, compared to $141 million in 2022.

Mercedes finished 2023 second in the Formula 1 championship behind Red Bull, improving its 2022 performance by one place, but reportedly saw a decline in television coverage as it achieved fewer podium finishes. However, other factors showed strong growth.

In a statement in the filing, Mercedes says: “The team’s share of television coverage decreased slightly to 14.7 percent in 2023, which reflects a lower number of podium finishes for the team compared to 2022.”

“Cumulative Advertising Value Equivalent (AVE) remained strong at $5.3 billion for business partners and shareholders. The team continued to see strong growth on social media, with a cumulative following of 36 million (+15 percent) and 465 million total engagements (+9 percent) “)

“In 2023, the team welcomed seven new business partners and introduced a premium hospitality offering at the Las Vegas Grand Prix to meet growing demand for VIP race attendance as Formula 1 continues to grow globally,” Forbes in July valued the team at $3.8 billion. “.