Formula 1 Team Valuations Soar
The average value of Formula 1 teams has seen a massive increase, now standing at $1.8 billion. This represents a 276% rise from just $500 million in 2019, according to business publication Forbes. A major factor behind this jump is the $145 million cost cap introduced in 2021. Prior to this, teams were spending upwards of $400 million annually, with difficulty recouping such high amounts. Now, with the cost cap in place, F1 teams generate an average of $600 million in earnings before interest, taxes, depreciation, and amortization.
Impact of the Cost Cap and the Growth of Formula 1
The new cost structure has made it easier for teams to cover expenses. Teams at the back of the grid now only need to bring in $50 million in sponsorship income to cover the cost cap, which is a more realistic target. About 65% of a team’s income comes from central funds, with the remaining 35% from sponsorships. Moreover, Formula 1’s increasing popularity, especially in the United States, where three races took place in 2023, has also helped boost the sport’s financial growth. The success of the Netflix series Drive to Survive and the new 2022 regulations have also played a key role in expanding F1’s fan base.
Ferrari’s Leading Position in 2023
In 2023, Ferrari remains the most valuable team in Formula 1, with a valuation of $3.9 billion. This puts Ferrari just ahead of Mercedes, which is valued at $3.8 billion. Red Bull Racing comes in third with a valuation of $2.6 billion. Ferrari’s financial strength is a direct reflection of its long-standing history, consistent on-track success, and brand appeal worldwide.
The Rising Value of Formula 1 Teams
Other teams have also seen significant increases in their valuation, with McLaren valued at $2.2 billion and Alpine at $1.4 billion. Despite fierce competition from teams like Red Bull and Mercedes, Ferrari continues to hold the top spot, reflecting both its historical significance in F1 and its robust business model.
Ferrari’s $3.9 billion valuation in 2023 underscores its dominance in the sport, both on and off the track, making it the benchmark in Formula 1 team valuations.
