Mercedes has broken new ground in Formula 1, surpassing a remarkable milestone as the first team to achieve a turnover exceeding £500 million. The latest financial reports from Mercedes-Benz Grand Prix Ltd. reveal a staggering turnover of £546.5 million for the 2023 fiscal year, closing on December 31.
This substantial figure marks a significant leap from the previous year, with a notable increase of £71.9 million compared to 2022’s turnover of £474.6 million. To put this into perspective, Red Bull Technology, the entity behind Red Bull’s F1 endeavors, recorded a turnover of £385.6 million in 2022.
Despite the impressive growth in turnover, Mercedes experienced a slight dip in profits, reporting £83.8 million for 2023 compared to £89.7 million in the preceding year. Several factors contributed to this, including heightened expenses and increased tax payments.
Assets allocated to race car development, carried over to subsequent seasons, surged from £41 million in 2022 to £52.2 million in 2023. This spike reflects additional investments necessary for the development of the 2024 F1 challenger, requiring a new chassis for the current season. Moreover, the figure encompasses early-stage work on gearbox and suspension components supplied to customer team Williams for 2024, completed before those for Aston Martin.
Mercedes also saw a substantial rise in average staffing levels, with an increase of 175 employees, totaling 1289 in 2023 compared to 1114 in 2022. Consequently, the salary bill surged by £29.6 million to £111.7 million, partly attributed to increased staff bonuses following the team’s second-place finish in the constructors’ championship, an improvement from the previous season’s third place.
Tax considerations further influenced the final profit calculation. In 2022, the team benefited from a deferred tax asset, contributing to unusually robust profits. However, with the government raising the corporation tax rate to 25% in April 2023 from 19% in the previous year, Mercedes’ tax bill escalated by £23.7 million to £32.5 million for 2023.
Despite the fluctuating tax payments, Mercedes’ underlying financial health appears robust, with EBIT (Earnings Before Interest and Tax) remaining relatively stable at £113.8 million for 2023 compared to £113.6 million in 2022.
While Mercedes secured second place in the 2023 F1 championship, an improvement from the previous year, the team experienced a decrease in television coverage due to fewer podium finishes. Nevertheless, other metrics demonstrated robust growth.
Mercedes noted in its filings that although the team’s share of television coverage dipped slightly to 14.7% in 2023, cumulative Advertising Value Equivalent (AVE) remained strong at $5.3 billion for commercial partners and shareholders. Social media presence continued to thrive, with cumulative followers reaching 36 million, a 15% increase, and total engagements hitting 465 million, up by 9%.
Furthermore, the team welcomed seven new commercial partners during 2023 and introduced a high-quality hospitality offering at the Las Vegas Grands Prix, catering to the escalating demand for VIP race experiences as Formula 1 expands globally. In July, Forbes estimated the team’s value at $3.8 billion, highlighting its enduring commercial appeal and strategic positioning in the F1 ecosystem.
