can someone explain to me - does F make a profit racing? i assume McL and Williams must? - F's revenues seem to be about $200 m [4000 cars x $200,000/car?], so how is 100 m/year justified on F1? - i understand why Marlboro pays another $100 m - no advertising impact for fiat... how do they generate an ROI? thanks PS just reading Jane nottage's story of todt, luca and schu changing a negative culture to a winning culture in 96, 97... what an acheivement!!!!
Marlboro and other sponsors pick up a huge tab. Also Ferrari does not advertise, it gets a lot of "advertisement" and image through F1 racing. However the big part is TV money: Ecclestone sells a complete F1 field and a GP to the TV stations, who get their moneys from the ads. That money is then split up between the teams roughly based on their performance. Nobody knows any of the details (who is not part of Bernie's circle), but that's where the big $$$ come from. Also Ferrari gets $$ from Sauber for its engine/transmissions. So whether Ferrari really breaks even or not probably only Tody etc would know. And I bet even there it is tricky as F1 serves them to some degree as testbed for R&D for the road cars. Besides how do you measure something like "image"? Is the F1 mystique worth 100 mio to the marketing budget? Who knows. Oh and don't forget the merchandising market: Product licenses for Fila, Mattel etc are supposedly a huge income as well.
Ferrari is not a car company. They're a business conglomerate that happens to build street cars for discerning customers. Ferrari makes more on it's name and street cred than it does on it's car sales; F can afford to bank on it's name, ad infinitum. They don't actually spend as much on F1 as is purported by the press; their annual budget of 400mil (give or take) is mostly sponsorship money, and payouts by Bernie (as the race purse is a % of the total pot, decided by the # of points scored, and the amount of TV coverage -- Ferrari has a cornerstone in that regard). Moreover, Ferrari makes more on licesing, marketing and retail sale of collectibles and "goods" (other than cars) than it does on cars. Ferrari , today, is exactly like I 've said: a business conglomorate, whose one of many production assets, happens to be a car factory.
Ferrari do make a bottom line profit on their F1 operations. Sources of revenue 1. All the official Ferrari merchandise (caps, t-shirts, jackets etc.) 2. Sponsors (Shell, Vodafone, Marlboro) 3. Engines and other equipment sold to Sauber 4. The sale of old customer spec F1 and race cars. 5. Performance and revenue package from the Formula One Company (Bernie) *** THIS IS HUGE and is a big part of the overall pot, real figures are kept very secretive. 6. Also the Formula One Company (owned by Bernie) pays logistics and transport expenses if the manufacturer has scored even one point the previous season. Ferrari obviously get this money. 7. Royalties on merchandise sold by other companies (LEGO, posters, etc.) As for the exact ROI??? There is no way of knowing. You cannot put a Dollar value on prestige and image that Ferrari have built up over the years of F1 racing. Also, you have to understand that Ferrari is the constructor as well as the team. Unlike Mclaren Mercedes, that have the race management aspect and the engine constructor aspect. So ferrari does not exactly split their revenue. It all stay with Ferrari. The winning culture at Ferrari is truely legendary stuff. Luca di Montezemolo turned Ferrari around. He is a great leader. It is sad how little people here in the USA know about this great man. He is a perfect example for aspiring young business men looking for the right way to do things and inspiration.
