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£420m cost of Red Bull's F1 success

NEWS STORY
09/06/2011

The Austrian energy drinks company Red Bull isn't renowned for being one of the biggest spending brands in the history of F1 but that doesn't mean that its teams have been scraping to get by in the sport. Far from it in fact as a report in the Independent by Pitpass' business editor Chris Sylt reveals that Red Bull has spent a total of £422.4m on F1 since buying its flagship team from Ford at the end of 2004. It may sound like a lot but it propelled its driver Sebastian Vettel to world championship success last year so some would say it is a bargain.

In 2005, its first full year as owner of Red Bull Racing, the Austrian energy drinks company poured £58.3m into its parent company Red Bull Technology. A further £85.6m flowed in from Red Bull the following year and in 2007 it invested £89.2m with £78.2m of that going to Red Bull Racing, the company which directly runs the team. In 2008 the total paid by Red Bull dipped slightly to £82.5m with £79m of it going directly to Red Bull Racing. The big boost came in 2009 when Red Bull Racing received £96.9m out of a total £106.8m paid by its owner. This was nearly double the investment it made just five years earlier and it came at the right time.

To maximise lead time, development work on F1 cars is done the year before they are introduced and in 2009 Red Bull's spending on research and development increased 18.8% to £57.2m. It was far from the only focus of the team's investment drive as it also spent £4.9m on improving its engineering facilities and although staff numbers remained stable at 592 their total pay increased 21.9% to £45.9m. Vettel, who leads this year's standings, is believed to be paid £9.8m with his partner Mark Webber getting around £3.7m.

Red Bull has been accused of breaching the resource restriction which all the teams have agreed to. It remains to be seen whether there is any truth in these accusations and it would be hard for anyone external to tell since the resource restriction is patchy in the areas it applies to. As Sylt reported earlier this year Red Bull Racing team principal Christian Horner wants the agreement to be more restrictive and one would imagine that he would not be in favour of this if his team had been in breach so, if anything, this indicates that the allegations are false.

Red Bull wholly owns the team and provides the funding in return for its logos being emblazoned almost all over its livery. The team made a pre-tax profit of £3.9m on revenue of £160.8m in 2009 but according to data from F1's industry monitor Formula Money, factoring in the value of Red Bull's on-screen exposure gives a big boost to its return.

Red Bull has the most prominent logos on its team's livery and its on-track success made it the most visible brand in the sport for the past two years running. Red Bull's Advertising Value Equivalent (AVE) - the price it would have to pay to buy a similar amount of on-screen exposure - came to an estimated £136.9m in 2009 and £219.9m in 2010 when it received almost a quarter of the total received by all the teams.

Although it took victory last year, Red Bull was not the most cost effective team in F1. That accolade went to McLaren which came second and narrowly missed out on the title despite having a much smaller budget than Red Bull. McLaren's budget is estimated at £158.9m compared to the £185.2m available to Red Bull. It led to McLaren's spending coming to around £350,000 per point it scored compared to £374,000 at Red Bull.

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