Many people wonder where the huge amounts of money needed to fund successful F1 teams come from, but the question isn’t always that easy to answer.
Most of the well-known teams do have public tax returns, but there is not always a great deal of information on where the revenue was generated. Very few teams provide a breakdown of their income.
Teams make their money in a variety of ways. The main ways are sponsorship, merchandise and sharing their skills with other teams or other industries.
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Sponsorship is a huge money-maker for F1 teams, and there are probably a lot more sponsors than you think. There are the obvious sponsors, which are usually those you’ll see emblazoned across the cars, but there are many other deals that largely take place in the background. For example, some teams license their name to be used by outside companies that can then sell products or services using their association with the F1 team. Sponsorship is generally the primary income stream for F1 teams.
Merchandising is becoming more important to some F1 teams, but it’s still very underdeveloped compared to other sports. Ferrari does enjoy substantial revenues from merchandising, but none of the other teams can come close to matching the Italian giants.
Prize money amounts are certainly substantial at the very top of the sport, running into tens of millions of dollars, but the numbers are far less impressive for the smaller or less successful teams. Added to this,Forbes reports that F1 teams are set to receive considerably less prize money this year than last year.
Forbes estimates that the teams will get $45 million less than they did in 2017. One reason is that there are more races this year, so the pro rata amount has fallen. Either way, the finances involved in running a successful F1 team are staggering and it’s certainly not a sport that is easy to get into.