(Motorsport-Total.com) – Formula 1’s most profitable team recently published its financial figures for the 2023 financial year. Despite a season without victories, the Mercedes Benz Grand Prix Limited company achieved record sales of the equivalent of 680.6 million US dollars, more than ever before in history by a Formula 1 team in one year.
© Motorsport Images
Mercedes team boss Toto Wolff in the FIA press conference in China Zoom Download
Sales increased by $91.6 million compared to the previous year, which can be attributed to increasing income from sponsorship and prize money. In 2023, rights holder Liberty Media distributed more money to the ten teams than ever before, $1.22 billion, from which Mercedes will also have benefited.
However, despite the increase in sales, the Brackley-based company reported a slight decline in profits from $111.4 million in 2022 to $104 million now. This is the result of a combination of factors, including both increased costs and higher tax payments in fiscal year 2023.
The increased costs include, above all, a drastic increase in staff. While 1,114 employees were employed in 2022, there were 1,289 in 2023. 102 of these were hired in the performance-critical area of “design, manufacturing, engineering and production,” with 73 new administrative positions also created. Due to the new hires, wages and salaries increased from $116.4 million (2022) to $157.4 million (2023).
Toto Wolff: The 2023 financial year will bring Mercedes team boss almost 50 million
For the 2023 financial year, the shareholders are also estimating a dividend of the equivalent of $124 million, which is to be paid in full by June 2024. Team boss Toto Wolff, the Mercedes-Benz Group and title sponsor Ineos each have a third stake in the Formula 1 team and will therefore divide the dividend equally ($41.3 million).
Since the UK-based teams are also required to report the salary level of their highest-paid managing director, it is worth taking another look at Toto Wolff in his role as team boss, CEO and shareholder. Although the name of the highest-paid managing director is not disclosed, it is difficult to assume that it is Wolff.
For the 2023 financial year, in addition to the dividend payment, he will also have been paid a salary of the equivalent of $7.5 million, which corresponds to an increase of around three million dollars compared to 2022. However, he is far from being the team boss with the highest salary, as Red Bull managing director Christian Horner received $14.2 million in 2022.
Nevertheless, the Austrian will have earned a total of 48.8 million dollars for the 2023 financial year, which represents an increase of 13.2 million compared to the previous year. If you add dividends and salary together, Wolff will have a total of $115.7 million in pre-tax earnings from his Formula 1 work in the three years since the budget cap was introduced in 2021.
Corporate tax increased: Why Mercedes made less profit
Back to Mercedes. Race car development assets carried over to the following season rose from $50.9 million in 2022 to $64.8 million last year. This higher figure partly includes the additional investment required for the 2024 Formula 1 car, which required a new chassis for this season.
The $64.8 million also includes the early work the team was able to do in producing the 2023 transmission and suspension parts, which were delivered to customer Williams this year, and the pre-2024 components, those from Aston Martin used, could be completed.
The fact that profits in 2023 were lower than in the previous year is also due to increased tax payments. The team’s 2022 numbers included a deferred tax asset, meaning profits were unusually high.
Combined with the increase in the corporate tax rate from 19 percent in 2022 to 25 percent in April 2023, this means that Mercedes’ tax payment increased by $29.5 million from $10.7 million in 2022 to $40.2 million last year has increased.
Too few podiums: Mercedes 2023 with less television time
The difference in tax payments compared to last year had a big impact on the overall profit, but the company appears to be on very solid footing as EBIT (earnings before interest and taxes) is fairly stable. It was $141.2 million for the year ending 2023, compared to $141 million in 2022.
Mercedes ended 2023 in second place in the Formula 1 championship behind Red Bull, improving its 2022 performance by one place, but was reported to have seen a decline in television coverage as it achieved fewer podium places. However, other factors showed strong growth.
In a statement in the filing, Mercedes says: “The team’s share of television coverage fell slightly to 14.7 percent in 2023, reflecting the team’s lower number of podium finishes compared to 2022.”
“Cumulative Advertising Value Equivalent (AVE) remained strong at $5.3 billion for commercial partners and shareholders. The team continued to see strong growth on social media, with a cumulative following of 36 million (+15 percent) and 465 million total engagements (+9 percent).”
“In 2023, the team welcomed seven new commercial partners and introduced a premium hospitality offering at the Las Vegas Grands Prix to meet increasing demand for VIP race attendance as Formula 1 continues to grow globally,” Forbes estimated in July valued the team at $3.8 billion.”