I’ve heard it said that there are better sports investments than owning a sports team or league. Owners, especially of successful and championship teams, often take big losses and try to make it up in merchandising. Others become owners for the love of the game or simply to buy the ultimate sports fantasy package.
We’re all familiar with some of the high profile owners: Hall of famer Nolan Ryan in the MLB; Bernie Ecclestone in all of F1; Mark Cuban, Jay-Z (though he’s now an agent), Usher, Michael Jordan, and Dan Gilbert in the NBA; Jerry Jones and the Ford family in the NFL. Sometimes they experience great success, and sometimes they end up in Bill Simmons’ list of bad executives. (By the way, while researching for this post I found out that Gene Simmons and Paul Stanley own a piece of an arena football team called the Los Angeles Kiss. That’s the first thing since Kurt Warner or He Hate Me that’s caught my interest so much in the league… and I guarantee it’s the only time you’ll see Bernie Ecclestone and Gene Simmons mentioned in the same conversation.)
But what if you and I were one of these moguls and we decided we wanted to fund a Formula one team? How much would we need? I mean how much would we need to do it right, and not end up on a Bill Simmons “worst of” list? What if we wanted to start a dynasty like Williams, McLaren, Lotus, Mercedes, Ferrari and make a legendary driver like Shumacher, Fangio, Senna, Lauda? What if we want a proven champion like Hamilton, Alonso, Vettel, or Raikkonen?
Budgets of F1 teams are closely held secrets, but several insiders have taken educated guesses and here’s what I can gather: We would have needed about $270 Million to run a team last year. This includes 2 cars at somewhere between $5-7 Million in materials (engines, chassis, gearbox…), and ten times that much in research in development. The rest is to run the organization, including the payroll of the 100 plus employees needed to run the show. By the way, some estimates go as high as $470 Million, and the team trying to win with less, moneyball style is Marussia at under $100 Million. So let’s put that into context…
Using the $270 Million number, which seems to be in the middle, to run an F1 team for one season is about:
- $110 Million more than the payroll of the World Series champion Boston Red Sox, according to Deadspin (full Major League Baseball team payrolls)
- More than twice the payroll of the Denver Broncos ($120M), who are carrying the best record in the NFL this season and Peyton Manning’s contract. (2013-2014 NFL payrolls by team)
- $255 Million more than an IndyCar team according to NBC Sports’ Motorsportstalk
- $150 Million more than the entire Ohio State Buckeye sports program and $180 more than Florida State’s, according to USA Today (ranked #1 and #2 in the country as of posting…). While Moody’s and the world laments over raising college sports budgets, they spend half as much as one F1 team.
- $140 Million more than a new F-35 Fighter jet, according to Time Magazine
- $263.5 Million more than it costs to run a NASCAR team.
- $30 Million more than the Seattle Mariners just agreed to pay in Robinson Cano’s new deal according to ESPN (thanks again to Jay-Z) over the next 10 years (totally irrelevant, but I wanted to mention Jay-Z twice in a Formula 1 article.)
So, all that said, if you and I were going to make a run at Red Bull Infiniti, we would need more than if we were going to make a run at a World Series and a Super Bowl combined. So, I’m going to need a few partners… heavy hitters if you will… let’s do this.
All kidding aside, the Formula 1 vehicles are the most technologically advanced creations in sports. World class engineers such as Adrian Newey run teams equivalent in talent and size to some of the most notable technology companies on earth. They put a marvelous product on the track that clearly fans like us and advertisers such as Rolex, Coca-Cola,Vodafone, Mclaren, Ferarri, UPS, Marlboro, and Red Bull are willing to pay to see.
For more sources on this topic, here is a fantastic infographic from CNN that shows how they make money back; James Allen covers this years’ big sponsorship gains; Autoweek explains why Formula One Grand Prix cars cost so much;Formula 1 grand prix explains how much it costs to build the car); and Auto123 article from November on the increasing budgets of F1 teams.