Who wants to start a Formula 1 team with me?

F1 teams include two cars, two drivers, and hundreds of supporting cast

F1 teams include two cars, two drivers, and hundreds of supporting cast

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:

Does it cost more to win a Formula 1 championship or a Super Bowl?

Does it cost more to win a Formula 1 championship or a Super Bowl?

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.

 

Great infographic on the costs of a Formula 1 vehicle...

Great infographic on the costs of a Formula 1 vehicle…

 

  • http://www.youtube.com/watch?v=B5OWRRJh-PI&list=FLYJP3MjZQ-BJugrvyegfQ7Q&index=1&feature=plpp_video Alberto Knox

    I have been trying to wrap my head around Red Bull’s involvement in F1. I am grateful for it, but don’t see how it makes sense. The cash outlay is obviously enormous, as this article states, but where is the revenue stream? I looked all over COTA during F1 weekend and couldn’t actually find Red Bull itself for sale. If the product is not in demand by those who actually attend the race and see all the promotional placement can demand from those who follow the sport remotely be that much greater?

    Infinity, Mercedes, Mclaren, Lotus, they are natural fits. As are banks, expensive watches, etc. I just wonder how many F1 fans actually drink that nasty urine-esque pseudo-supplement.