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Manufacturer spending spiralled out of control

NEWS STORY
11/01/2010

If anyone ever needs any evidence that car manufacturers' spending in F1 got out of control in recent years then this is it.

In its 2010 report, F1's industry monitor Formula Money has calculated that, between them, the six car manufacturers involved with the sport during the last five years spent a total of 3.9bn ($6.3bn). Remarkably, this total is over 45% of the 8.5bn ($13.7bn) spent by all car manufacturers combined in the 60-year history of F1. No wonder the manufacturers have been leaving in their droves.

The biggest spender in the last five years was Honda, which invested 910m ($1.47bn), but Toyota was close behind on 904m ($1.46bn). To put this into perspective, the unit cost of the F-22 Raptor, the only stealth fighter plane in service, is around 84.2m ($136m) so between them Honda and Toyota spent enough on F1 over the past five years to buy a fleet of 20. The US Air Force is only getting 20 of these planes per year so it shows just how much money we are talking about here.

It seems that the tipping point was 2008 when, according to the data, F1's car manufacturers together spent 867m ($1.4bn) which was more than ever before. This figure dropped 30.1% last year to 600m ($970m) due to Honda quitting and the other manufacturers tightening their belts as the economic downturn set in.

Honda's impact on F1's finances is best seen through its top spot on the list of total spending on the sport by car manufacturers since the world championship began in 1950 (see below). Honda is estimated to have spent a total of 1.7bn ($2.8bn) over the 26 years it was involved in F1. It is followed by Mercedes and Renault which spent a total of 1.3bn ($2.1bn) over a long history which saw its engines win eight constructors' titles.

It speaks volumes that Toyota, which has only been in the sport for the past eight years, spent nearly as much as Renault which first entered F1 in 1977. Nevertheless, the connection between length of service and spending is not as straightforward as it may seem since Ferrari, which has been racing in F1 since the first season of the world championship in 1950, lies sixth in the ranking having spent even less than BMW.

Ferrari's team has had so much money rolling in from sponsorship and prize money that the car company has not had to pour in much to top up its budget. With Marlboro, the sport's biggest-paying sponsor, still adorning the scarlet cars this year despite the ban on tobacco sponsorship coming into force in 2006, Ferrari's financial edge over its rivals is set to stay for some time to come.

F1's Top Ten Biggest-Spending Car Manufacturers 1950-2009

Manufacturer Total F1 Spending
Honda 1.720bn
Mercedes 1.470bn
Renault 1.323bn
Toyota 1.300bn
BMW 965.5m
Ferrari 891m
Ford 586.8m
Peugeot 135m
Alfa Romeo 42.6m
Porsche 35m

Source: Formula Money

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