NOVEMBER 20, 2008
The art of reading financial returns in F1
Reading financial returns is not an easy thing to do and often those who are not trained in the arts of accountants will make serious mistakes if they take the numbers in front of them at face value. The bottom line on the income statement is not the only important figure and often it is necessary to know more about the business than one can find in the media. The Daily Telegraph's reports suggesting that the Honda Racing F1 team is the biggest spender in F1, having reported a vast $218m spend in 2007, are not quite as they seem.
Our sources say that the stories fail to take into account a rather important fact which was overlooked as the authors. At the time Honda was being forced to pay for most of Super Aguri's operations in addition to its own activities. This does not mean that the budget quoted is double what it should be but it is fair to say that probably 25% of the cost quoted was used up by Super Aguri rather than Honda Racing F1. The Honda Motor Company no doubt spent the money but it was not all on the one team as the report suggests.
With that money deducted from the total declared in the company's financial returns, the actual budget of Honda F1 is not as outrageous as the story suggested and while one cannot laud the results achieved for that kind of investment, one can at least say that it is not as bad as the story suggests.