F1: Mercedes posts $117M loss despite winning 2014 title

(From left) Mercedes teammates Lewis Hamilton and Nico Rosberg won all but three Formula One World Championship races in 2014.

Steve Etherington/Getty Images

The Mercedes F1 team posted a loss of £76.9M ($117M) during its title-winning season in 2014, the company’s annual accounts have revealed.

The team also enjoyed substantially increased revenues, but the high costs of the hybrid V6 rule changes and bonuses paid as a result of the ongoing success ensured that costs increased at a far higher rate.

In fact, the report for Mercedes-Benz Grand Prix Ltd. reveals that turnover (essentially sponsors income and prize money) increased from £125.2M ($190M) in 2013 to £146.9M ($223M) in 2014 “due to higher sponsorship revenue and increased income from the Commercial Rights Holder flowing from improved track performance in 2013.”

Meanwhile, operating costs went from £190.7M ($290M) to £240.2M ($365M) “due to significantly higher bonuses payable as a consequence of the record-breaking level of sporting performance and also increased costs arising from regulation change.”

The loss after tax increased from £51.0M ($77.5M) to £76.9M ($117M), which was “within the pre-defined parameters set by the shareholders.”

The accounts also reveal that on average in 2014 the team employed 765 people, up from 663 in 2013. Wages and salaries rose from £49.7M ($75.6M) to £65.2M ($99.1M).

Looking ahead the company acknowledges that it will receive extra funding from Bernie Ecclestone as a result of its sustained success, as the team signed a deal that triggered bonuses based on winning two championships and a string of races. It notes: “The agreement with the Commercial Rights Holder has provisions for significantly increased revenue flows based on sporting performance, some of which will be triggered in 2015 as a result of the team’s performance in 2014.”

Intriguingly the accounts also say that “the company remains committed to cost reduction in F1 and will continue to work with the other competitor teams and stakeholders to achieve this objective in a fair and transparent way.”

It’s worth pointing out that while Mercedes spent more in winning the title the cost per point earned progressed from a high of £1.0M ($1.5M) in 2012 to £530,000 ($806K) in 2013 and then to £355,000 ($540K) last year, allowing for double points in Abu Dhabi. Mercedes believes that RBR spent £397,000 ($604K) per point in its championship winning years.

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