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Mercedes becomes first F1 team to exceed £500m turnover

Mercedes has become the first Formula 1 team to exceed a turnover of £500 million, according to its latest published accounts.

Lewis Hamilton, Mercedes F1 W15, George Russell, Mercedes F1 W15

Photo by: Steve Etherington / Motorsport Images

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The company that runs the squad, Mercedes-Benz Grand Prix Ltd., declared a turnover for 2023 of £546.5 million, which covers the year that ended December 31.

This figure represents an increase of £71.9 million over the 2022 figure of £474.6 million.

As a comparison, Red Bull Technology, the company behind Red Bull’s F1 team, had a turnover of £385.6m in 2022.

However, despite the increase in turnover at Mercedes, the Brackley-based outfit reported a slight fall in profits – down to £83.8 million from the £89.7m it declared in 2022.

This is the result of a combination of factors that includes both increased costs and higher payments of tax in the 2023 financial year.

Race car development assets, which are carried forward to the following season, went up from £41 million in 2022, to £52.2 million last year.

This higher figure included in part the extra investment needed to change its 2024 F1 challenger, which required a new chassis for this season.

The £52.2m figure also includes the early work that the team was able to do in producing the 2023 gearbox and suspension parts that have been supplied to customer Williams this year, which was able to be completed before the 2024 components used by Aston Martin.

Mercedes also reported a big increase in average staffing levels, up by 175 to 1289 last year, compared to 1114 in 2022.

This resulted in its salary bill jumping by £29.6 million to £111.7m from the £82.1 million it declared in 2022 – although part of this was caused by the increased staff bonuses handed out for the team finishing second in the constructors’ championship rather than the third of the previous season.

There were also some tax elements at play in the final profit calculation.

The team’s 2022 figures included a deferred tax asset, which meant its profits last year were unusually good.

This, allied to the government increasing the corporation tax rate to 25% in April 2023 from 19% in 2022, means Mercedes’ bill jumped by £23.7 million from £8.6 million in 2022 to £32.5m last year.

The contrast in tax payments year on year had a big impact on overall profit, but the business seems to be on a very solid foundation with its EBIT (Earnings Before Interest and Tax) being pretty stable. It was £113.8 million for the year ended 2023, compared to £113.6 million in 2022.

While Mercedes finished 2023 in second place in the F1 constructors' championship behind Red Bull, improving on its 2022 performance, it also reported a decline in the coverage it got on television because it delivered fewer podiums. However, other factors showed strong growth.

In a declaration in the filings, Mercedes stated: “The team’s share of television coverage showed a small decline to 14.7% for 2023, reflecting the lower number of podium finishes the team enjoyed versus 2022.

“The cumulative Advertising Value Equivalent (AVE) remained strong for commercial partners and shareholders, at $5.3 billion. The team continued to grow strongly on social media, with a cumulative followership of 36 million (+15%) and a total of 465 million engagements (+9%).

“During 2023, the team welcomed seven new commercial partners and introduced a world-class hospitality offering at the Las Vegas Grands Prix, to serve the increased demand for VIP race attendance as F1 continues to grow globally. In July, Forbes estimated the value of the team to be $3.8 billion.”

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