02/06/2010
NEWS STORY
We all know that there is only one employee of Formula One's commercial rights holder who really matters and that is its boss Bernie Ecclestone. Now Pitpass' business editor Chris Sylt pretty much gives us the proof.
It came as quite a surprise that the revenue of F1's commercial rights holder, Delta 3, rose 6.4% to a record £680m last year with its operating profit after costs more than doubling to £119.4m. After all, the world economy plunged into the worst recession in living memory, one of F1's shareholders, the US bank Lehman Brothers, went bust, three car manufacturers ended their involvement with the sport and even Ecclestone voiced fears that F1 could collapse if more banks hit the wall. So how on earth did F1 finish the year in such good shape financially?
As Pitpass has reported, F1 signed a slew of new sponsorship deals and also benefited from a 10% annual escalation in the price paid by race promoters. This boosted the revenue but increasing the profit was part luck and part design. Lower oil prices cut travel and freight costs, as did the reduction of the calendar from 18 to 17 races. However, these factors alone weren't enough to more than double the operating profit. To achieve this, F1 took aggressive action.
Delta 3's total wage bill was down by 11.2% to £16.6m in 2009 despite the company taking on eight staff to give a total of 257. The average salary fell by a massive £10,100 with the company's highest paid director, believed to be chief financial officer Duncan Llowarch, taking a gigantic £77,900 pay cut to give him a salary of £410,000.
Llowarch owns 0.8% of Delta Topco, F1's ultimate holding company, but this did not give him immunity from the cuts.
In contrast, Ecclestone, Delta Topco's chief executive and 5.3% shareholder, seems to have emerged unscathed. Ecclestone is on the board of Delta 3 subsidiary Formula One Management and is believed to be its highest paid director on a £4m salary which did not fall on 2008. Some have all the luck.