Mercedes lost 100 million euros in 2014
Mercedes' domination was total in 2014. However, it did not come at a low cost: the team lost 100 million euros during the fiscal year.
In order to win its first Constructors’ World Championship trophy (this championship did not exist yet in 1954), Mercedes invested in developing the best car on the grid. Thus, its total expenditures for the 2014 season reached 324 million euros.
These costs have thus increased significantly (67 million euros) compared to the previous season for two distinct reasons. The first is obviously the change in technical regulations, which forced the team to completely revise the structure of its single-seater to adapt to the new hybrid V6 engines. The second is that each team employee has a performance clause in their contract, which triggers the payment of bonuses in the event of victories and titles at the end of the season. Its payroll thus increased from 67 to 87 million euros between 2013 and 2014, which should be seen in light of the recruitment of 100 additional people, bringing the total to 765 people.
On the revenue side, the team also recorded an increase but of “only” 21 million euros, reaching nearly 200 million euros. In this aspect of its income statement as well, Mercedes was able to rely on two different levers. The first is the increase in its sponsorship revenues. The second is the agreement negotiated with Bernie Ecclestone. As revealed last May, Mercedes thus obtained 80 million euros for its sporting performances, plus an additional 30 million euros to reward its status as a historic F1 team.
According to the report published by the team, additional resources should be freed up during the season: « The agreement with the Commercial Rights Holder provides for a significant increase in revenue based on sports performance, a portion of which will be exercised in 2015 to reward the team’s performance in 2014.»
Mercedes will also be able to record in its 2015 accounts an increase in sponsor contributions as numerous partners have been announced since the end of last year: Hugo Boss, Epson, Schuberth, Bose, and Qualcomm. Not to mention the renewal of its partnerships with IWC or Puma.
We can therefore think that the team’s shareholders, starting with Toto Wolff and Niki Lauda, made significant investments and agreed to lose a substantial amount of money during the 2014 season before receiving financial returns in the following seasons.
On a larger scale, it’s exactly the same scenario as Williams, who recorded 48 million euros for the 2014 season but was rewarded with a good third place in the Constructors’ Championship. We can thus recall that one of the shareholders of the Grove team is none other than a certain Toto Wolff…
With the participation of www.racingbusiness.fr
