NOVEMBER 14, 2006
Cost-cutting? Yeah right!
This is the time of year at which the Formula 1 team financial results become public information and that is always interesting to see how the sport is developing. You may recall that much effort has gone into cost-cutting in the last couple of years although you would not know that from looking at the numbers being reported for the 2005 financial year. The 2005 season was the year in which two-race engines were introduced and almost all of the costs (or savings) involved in that were registered outside the UK.
World Champions Renault F1 pushed up its budget from $179m (at today's exchange rate) in 2004 to $229m in 2005 - a hike of 28%.The team made a profit in 2004 of $5.1m and that went up by 29% in 2005 to $6.6m. At the same time the team's staff count in England rose by nine percent from 463 people to 508.
The interesting thing is that Renault outspent the mighty McLaren. The Woking team may have other money involved in the funding of its new factory but the racing team - McLaren Racing Ltd - pushed up its staff from 524 to 538 and its turnover from $208m to $216m - $13m less than Renault. McLaren took $9.1m in profit in 2005.
It was expansion too down at Honda Racing where the staff rose astonishing 14% from 382 to 438, while the turnover went through the roof, rising 62% from $114m to $185m, although the team actually spent $190m and so ended up with a small loss.
The Williams team was the only major British-registered operation which cut back. The team dropped from 513 to 500 staff and the turnover was pared back from $169m to $159m. The team made a profit of $68m but this was due to a legal settlement worth $48.7m (which was probably Jenson Button's deal with the team) and by selling a driver's contract (believed to be Nick Heidfeld's) for $1.9m.
Red Bull Racing cannot be used as an indication as its $137m budget in 2004 (when it was Jaguar Racing) dropped to just $20.4m in 2005 as the Austrians switched the accounting to another company. The team's staff in 2004, incidentally, was 324 but it undoubtedly increased in the course of last year.
The Midland team was rather less impressive. The staff in 2004 was 204 but that dropped to 192 in 2005 while the turnover fell from $62.4m to $47.7m. In fact the team spent $76.3m so the result was a substantial loss.
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