F-1 purse

[Z28]

Since the F-1 board is not very active and it is biz.

Got my National Speed Sport News late as usual but found this insight in Chris Economaki's editor's notebook

Savvy TV commentator Bob Varsha has somehow penetrated the secrecy of Formula One’s prize money. In a detailed note to this writer, he explains that the total purse — a figure few have ever known — is divided into three parts; 20 percent which goes to the top 20 qualifiers based on qualifying times, two percent of that figure for first, down to four-tenths of one percent for 20th. Then, 45 percent of the total is devoted to car placings at the quarter mark, halfway mark, three-quarter distance and the race finish. The remaining 35 percent goes to the teams, says Varsha, half of it based on constructor points gained over the two previous half seasons, and the other half divided equally among the top 10 teams based on points scored over the previous two half seasons. No one is saying what the total dollar figures are. However, garage-area estimates indicate the $100 million fine handed Team McLaren by the FIA would be lowered by half, based on prize money won by the team that year. If so, that would indicate a lot of zeroes are found in the total purse figure. You do the math.

Bob Varsha would be a credible source. Apparently the old belief of there being no prize money in F-1 isn't quite so. It seems quite weighted towards the top so the have nots end up being the teams that go up for sale or fold.

[jonovision_man]

It's well known that team payments are based on performance.

Here is some stuff that's been leaked over the years... although it's gone up in more recent years with Bernie's concessions to the GPWC:

http://www.concordeagreement.com/Schedule10.html

I'm not sure where Varsha's info is coming from, it's out of synch with most other reports no how payments are determined...

jono

[KevMcNJ]

the whole secrecy of F1 just drives me nuts

but intrigues me at the same time

[AceRacing]

Additionaly, there is the very important travel money that teams recieve to offset the cost of 'flyaway' races (Am ever increasing number of the F1 events). In the past, to recieve the travel subsudy teams had to score points in the previous season to be eligible, smaller teams that didn't score any points took a big hit in the cost of getting to the overseas races.

[GrandView]

Like Jono, I'm a bit puzzled that this is such a revelation. Since a previous version of the Concorde Agreement was made public, the world has had access to the revenue sharing aspects of that document for a few years now.

There's some minutia in the Varsha version that is at odds with what was previously known, but not much of substance. The money in Formula One is outrageous. And by that, I mean the revenue. By all accounts now, in excess of a billion dollars a year.

It was previously leaked that McLaren's $100 million fine would only result in $50 million out of pocket......due to the $50 million in payments that would be withheld to offset the fine. McLaren still feels a $100 million hit.

Even with that kind of money.....and as Jono posted, increased by Bernie and CVC in the new Memorandum of Understanding (prior to a new Concorde Agreement being drawn up).....F1 teams still run largely on sponsorship. McLaren and Ferrari have $400 million annual budgets. That's 80% of the estimated F1 total revenue.......and they aren't getting anywhere near that amount via the revenue sharing agreement.

Without checking my files for precise amounts, F1 teams used to receive 47% of TV revenue. That was all. And that amounted to less than 20% of total F1 revenue. Now the teams are allegedly receiving close to 50% of all F1 revenue. And that is largely portioned out by performance.......previous and current year.

Those amounts might be helpful......particularly for a small team.......remember Stottard and Minardi fighting for the 10th place previous year's portion when Arrows quit and vacated that 10th place position. Minardi didn't earn it having finished 11th, but Arrows wasn't on the grid in the following year to claim it. Minardi prevailed in that instance........McLaren and Dennis interestingly, attempted to block it.

Sponsorship in F1 is huge. And teams will spend what they can garner. Budweiser got their name on the cowl of Williams cars a few years ago (in blue....not traditional red) for $50 million. F1 could certainly survive and flourish with less than $100 million per team. But why do it if you can get $250-$300 of sponsorship? And have your hot shoe's salary also paid by sponsorship? The performance margin is so small now, it takes huge money to gain fractions of a second. The teams at the top of the pyramid have access to that type of money.

In a smaller scale certainly.......but in other motorsports also......'twas ever thus.

[EVL29]

I'm not sure where Varsha's info is coming from, it's out of synch with most other reports no how payments are determined...

jono

Varshas' info sounds exactly like the info from an F1 video series from the about '93 or so called "F1 Saga". It was about 4 to 6 hours,spread over 4 tapes I think. I never had the tapes but they were cut into half-hour episodes that aired on Speedvision in the mid to late '90s.

I think the payouts changed a few years back when Bernie and the GPWC were hashing out their positions and such. The new Concorde and MoU and whatnot has meant a lot of changes since the "F1 Saga" series was made.



BTW,if you ever get a chance to see it,it was very interesting.

[jmart]

F1 purse......

Is that what those hookers use to spank their clients?

[EVL29]

It should also be noted that F1 doesn't have a 'traditional' purse as defined by money paid after the event from the sponsorship of the race.

F1 monies are paid after the end of the season based on a formula calculated by performance on a race-by-race basis.

[ForzaFerrari]

It should also be noted that F1 doesn't have a 'traditional' purse as defined by money paid after the event from the sponsorship of the race.

F1 monies are paid after the end of the season based on a formula calculated by performance on a race-by-race basis.

I very much doubt they pay it all out at the end of the season. Can you imagine the cash flow crisis!

It's just not good business to work that way. All major companies work on regualr payments thoughout the year, and almost always monthly. i would be very supprised if FOM doesn't pay each team its allocated amount at the start of each month throughout the year.

[GrandView]

I very much doubt they pay it all out at the end of the season. Can you imagine the cash flow crisis!

It's just not good business to work that way. All major companies work on regualr payments thoughout the year, and almost always monthly. i would be very supprised if FOM doesn't pay each team its allocated amount at the start of each month throughout the year.

The 1997 Concorde Agreement states that the teams are paid quarterly.

[Jim Wilke]

McLaren and Ferrari have $400 million annual budgets.

I thought I heard somewhere that Toyota's F-1 budget is well over $600 million and Honda's is not far behind.

[Kurt Cobain]

I thought I heard somewhere that Toyota's F-1 budget is well over $600 million and Honda's is not far behind.

I wouldn't doubt that at all, but in light of the fact Honda's only had one win since they became a manufacturer (again) and Toyota has none, they probably wouldn't admit that if true.

[GrandView]

I thought I heard somewhere that Toyota's F-1 budget is well over $600 million and Honda's is not far behind.

According to the latest estimates, neither of the two teams have those kind of budgets.

Toyota did allegedly pump a cool billion into their first two years. Some of that on the aborted V12 engine that was outlawed by the V10 rule. Then they forfeited a third of their deposit by missing their inaugural year.

The science of estimating team budgets (which are never disclosed) is open to speculation I suppose, but enough hints of validation have trickled down from teams.

I imagine it might be easier for a Toyota and Honda to hide expenditures from the public.........but spending on what? There's not much a team is doing that's hidden anymore. For instance the staff, facilities, and resources of most of the top teams are pretty transparent. Ditto for their sponsorships.