Toto Wolff and Jim Ratcliffe reap £75m dividend from Mercedes F1, despite challenging season on track. The Mercedes team has endured what many would consider a less than stellar season on the F1 track.
Yet Mercedes-Benz Grand Prix, the racing team behind Lewis Hamilton and George Russell, has reported a significant financial upturn, resulting in a lucrative £75 million dividend for its main shareholders, Toto Wolff and Sir Jim Ratcliffe.
Financial boost amid on-track woes
The Mercedes-Benz Grand Prix saw an impressive 24% increase in revenue to £475 million in 2022, with pre-tax profits ballooning to £113 million from nearly £72 million the previous year. This significant financial leap was largely attributed to increased sponsorship deals and the team’s involvement in the America’s Cup sailing championship.
Accordingly, a dividend of £75 million was approved for shareholders in March, up from £55 million the previous year, based on 2021 performance.
Ownership of the Mercedes F1 team is divided equally between three major stakeholders: a company ultimately controlled by Mercedes-Benz AG, the team’s principal and Austrian billionaire Toto Wolff, and a subsidiary of Ineos controlled by British billionaire Sir Jim Ratcliffe.
Ratcliffe, the second richest person in the UK according to the Sunday Times Rich List, owns a portfolio of sports assets and is currently considering a modified bid for a minority stake in Manchester United.
Regulatory changes and F1’s new direction
While the sport’s governing body, the FIA, commercial rights holder Liberty Media and the F1 teams have agreed to introduce a spending cap in 2021, the new regulations have done little to curb the financial success of teams such as Mercedes. However, Wolff noted that these technical rule changes resulted in a “challenging season” for the team.
The impact will be felt in 2022, when the team’s on-track performances will be less competitive, leading to reduced television coverage.
The Netflix boost
Formula One has enjoyed an influx of new fans, particularly from the United States, following the success of the Netflix series ‘Drive to Survive’. This has had a positive impact on the overall health of the sport, which has historically been a difficult arena for teams – especially smaller ones – to turn a profit.
Lewis Hamilton, who finished sixth in the last championship, is currently third in the standings. His team-mate, George Russell, finished fourth in his debut season last year.
Although the team only managed one win and one pole position, finishing third in the Constructors’ Championship behind Red Bull and Ferrari, its financial performance paints a picture of resilience and adaptability; certainly, a boost provided by the sport increased popularity too.
On the horizon for Mercedes is a planned £70 million upgrade to its Brackley campus in Northamptonshire, due for completion by 2025. Last year they successfully completed the acquisition of land at this site, 70 miles north-west of London.
The distribution of a £75m dividend to shareholders, despite challenges on the track, is testament to Mercedes-Benz Grand Prix’s financial robustness and diversification into other areas such as sailing and applied science.
Wolff emphasised that revenue growth was “primarily driven by higher revenues from Formula One, sponsorship and applied science”, highlighting the brand’s diverse revenue streams.
The contrasting stories of on-track struggles and off-track financial success are sure to keep Mercedes in the spotlight, both as a racing team striving for competitive glory and as a business model in the high-stakes world of motorsport.
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