Ferrari's $100 million head start

05/02/2008

Christian Sylt writes...

As if it didn't have enough of a head start coming on the back of scoring the F1 'double' last year reports are now coming to light that Ferrari is likely to have its biggest ever budget this year. It has been given an enormous boost by earning a whopping $100m (£50m) from competing in F1 last year. This is believed to be the biggest ever payout to a team made by the F1 Group which runs the sport.

The payout is revealed by Formula Money, a report which monitors F1's financial health. Ferrari is reported to have earned $68.9m (£34.9m) in prize money by winning last year's Constructors' Championship and is reaping the rewards of the teams' new commercial terms with F1's owners CVC. The winnings are almost double that received by the Constructors' Champions in previous years.

Last year was the first that the top 10 teams shared 50% of the profits generated by F1's commercial rights including those from trackside advertising, television rights fees and corporate hospitality. Previously the teams shared a prize pot made up from 47% of just the television rights revenues.

Ferrari is also believed to have received a final instalment of $33.3m (£16.8) from F1's commercial rights holder Formula One Administration (FOA) as a reward for the team committing to the sport until 2012. This agreement was reached in early 2005 and the total $100m payment to Ferrari for this is thought to have been paid in three annual instalments with FOA holding the money in trust in the meantime.

However, the $100m haul from winning the constructors' title may be eclipsed by the impact on Ferrari's financials of also winning the drivers' title for the first time since 2004.

Formula Money estimates that Ferrari was already the best-sponsored F1 team with an income of $183m (£92.7m) in 2007. The team won the first of five consecutive drivers' titles in 2000 and had its greatest sponsorship gain of those years between 2001 and 2002 when its estimated total increased from $196.9m (£100m) to $211.2m (£107.3m) - a 7.3% boost. Likewise, the greatest gain in the Ferrari car company's total revenues over the same five-year period was a year-on-year increase of 18.7% to $1.2bn (£609m) in 2001.

So look for Ferrari's budget to be turbocharged with even more funding from sponsors over the next two years. In F1 there's no doubt that the rich get richer and the news will certainly be a bitter pill to swallow for rivals McLaren, who are worse off to precisely the same amount of $100 million after being fined by the FIA for last year's espionage scandal.

Then again, what with the proposed budget cap…