Mercedes’ performance is lagging out on the racetrack, but the team remains ahead in the financial fast lane of Formula 1, becoming the first outfit in Grand Prix racing to surpass the £500 million ($620 million) mark in annual revenue.
The Brackley squad’s latest accounts for its fiscal year 2023 reveal a significant jump to £546.5 million, a £71.9 million increase compared to 2022.
This financial growth reflects the burgeoning commercial value of F1, fueled by a global audience and lucrative sponsorships.
However, despite the surge in revenue, Mercedes' profit dipped slightly to £83.8 million from £89.7 million in 2022, a drop attributed to two key factors: increased operational costs and a higher tax bill.
A significant portion of the team’s increased spending went towards car development. The 2024 challenger required a new chassis, resulting in race car development assets jumping from £41 million to £52.2 million.
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Mercedes also saw a substantial staff increase, with an additional 175 employees joining the team in 2023, bringing the total to 1289.
This expansion naturally led to a higher salary bill, up by £29.6 million. While some of this increase stems from bonuses awarded for the outfit’s second-place finish in F1’s 2023 Constructors’ Championship, a larger workforce translates to higher ongoing expenses.
The team's 2022 financial picture was positively impacted by a deferred tax asset. However, 2023 saw a government-imposed corporation tax increase from 19% to 25%, resulting in a £23.7 million jump in Mercedes’ tax bill.
While this significantly affected the team’s bottom line, it's important to note that Mercedes' core business remains healthy, with their Earnings Before Interest and Tax (EBIT) remaining stable at around £113 million.
On the sporting front, while Mercedes clawed its way back to second place in the 2023 championship, the team experienced a decrease in television coverage due to fewer podium finishes. However, other areas likely saw growth, such as sponsorship deals and fan merchandise.
“The team’s share of television coverage showed a small decline to 14.7% for 2023, reflecting the lower number of podium finishes the team enjoyed versus 2022,” Mercedes stated in its filing.
“The cumulative Advertising Value Equivalent (AVE) remained strong for commercial partners and shareholders, at $5.3 billion. The team continued to grow strongly on social media, with a cumulative followership of 36 million (+15%) and a total of 465 million engagements (+9%).
“During 2023, the team welcomed seven new commercial partners and introduced a world-class hospitality offering at the Las Vegas Grands Prix, to serve the increased demand for VIP race attendance as F1 continues to grow globally. In July, Forbes estimated the value of the team to be $3.8 billion.”
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