Red Bull are beaten. That's what people say in the paddock. Get it? RB10? Are beaten? I don't doubt that they will come back. Give them a few races, and we will see a well-known smug face screaming "YES YES YES YES YES YES YES YES YES YES BABY" through the radio. The RB10 will be the next in line to a legacy of great chassis, it all depends on the engine now.
I am so sure about the Milton Keynes rising back to glory because of their success in comebacks in the past and because they have all the necessary tools: a driving tool and his Australian lap dog. The best designer in the business. And the budget. But how much money is needed to let 2 cars drive fast around the best tilkedroms in the world?
I. The Red Bull Budget
Formula 1's world of technology is very opaque: Everybody wants to know what the other teams are building while not exposing any secrets of their own. The same goes for the financial side: everybody wants to know the enemies earnings while being coy about their own state of finance.
Getting numbers from the race teams themselves is like mailing Coca-Cola asking for their special recipe. Thankfully, most teams are operated from motorsport-mekka England. In fact eight out of eleven teams are based in the UK. Ferrari and Torro Rosso are Italian while Sauber resides in Switzerland.
At this point the Companies House London comes into play. Every company has to submit balance sheets which clearly record any spending and earning, and in October 2013 the Bulls have sent in theirs. As usual with taxes, the balance covers the fiscal year 2012. Everyone can have a look at them for one Pound per Company, and that's exactly what some journalists did.
Red Bull Racing's (RBR) balance states a healthy 211 Million Euros in spending. This is the number Christian Horner – the team chief – always uses to claim great efficiency among other F1 teams. But that's only half the truth: RBR has 55 employees. That's about as many as they have mechanics at the track. The trick is a second company named Red Bull Technology. Yes, they use 2 firms to build the winning chassis. And the majority of engineers, including mastermind Adrian Newey, are salaried at the "independent" technology department. Salaries for the 658 employees alone cost 69.7 Million Euros (which btw equals 105.000€ per person).
To be fair, the technology department doesn't solely build two F1 cars. They have supplied the FIA with unified side-impact structures for 2014, Caterham receives gearboxes and KERS, Torro Rosso, the Italian junior team, buys simulator time. But that's about it. It doesn't make for much in F1 money, a few millions probably. Definitely less than 20.
A more detailed look inside the team structure shows that 279 engineers and designers help Newey making his cars so unbelievably quick, and 265 craftsmen form their ideas into sculpture-like carbon fiber.
Research & Development budget for the design department is 90.7 Million Euros. To put that into perspective: That is more or equal to what Caterham, Marussia, Williams, Force India, Torro Rosso and Sauber spend per year for the whole program. Including engine lease.
In total, the energy drink makes paid 278 Million (2012) to give finger-boy a car that took him to his third championship. And they "just" built the chassis, the engine was supplied by Renault. F1 experts say that those numbers can neatly be applied for 2013 as well, while they will rise for 2014.
By now you might get the idea why I decided to write this article/essay/oppo post: to showcase the sad madness that is modern F1.
II. Comparing figures
Numbers are only fun when compared, so let's take a stroll through the grid. Ferrari is rumored to be spending just as much with less much less success. McLaren, the second most winning team in F1 history, lands at a little over 200, and Mercedes – the 2013 runner-up – at 180 Million. The poorest and financially struggling top team Lotus only spent 147.
The rest, starting with Sauber and Williams and ending with Marussia, drop to 8 figure budgets. Marussia for example has barely 200 employees and spends 70 Million Euros. Every year they find their way to the grid is a great success for them.
On the other end, Mercedes lifted another 15 Million to finally get back to the winning streets.
III. Who pays the bill?
Power = money. The powerful, essential teams have secured sweet deals on the TV right payouts. It is all part of the Concorde Agreement.
RB, Ferrari, Mercedes, McLaren and Williams have their special clauses in the Agreement. To be clear, Bernie bought them. In exchange, they guarantee to participate until 2020. Thanks to those clauses, things could get pretty weird and unfair: Should Lotus win the 2014 championship (won't happen, there is Maldonado and Renault) and Ferrari finish last in the constructors, the Italians would still get paid more dollars by CVC and FOM, the F1 parent companies. The same would be true for Red Bull.
The Bulls are rumoured to receive as much as 90 Million Euros per year. Part of it is their general payout, the smaller amount is a success bonus.
The second big sponsor is Infinti. Titlesponsoring, an adapted livery (that beautiful velvet/blue) and the biggest possible are for the logo, the side pod, and a technical cooperation don't come cheap. Calculate with something close to 40 Million.
Then there are the smaller, non title sponsors and partners. Take a look at the 2009 RB5 and the 2013 RB8. In the beginning of 2009, Red Bull Racing was a team with no win, a team that finished 7th of effectively 10 the year before. The car was painted in full Red Bull colors, with 3 sponsors represented by tiny, tiny stickers on the car. Renault and Bridgestone don't count as they are suppliers.
As of now, the car is plastered with other logos. I count 8 different brand names on the car, represented on multiple parts of the car. As mentioned before, they even gave up the biggest area to place the Red Bull stroke to Infiniti (6).
My educated guess is that all the smaller sponsor at least add up to 60 Million. 190 Million are therefore financed externally, the rest comes from the mother house.
IV. Keeping the others on distance – by money and politics
Burning money in such a sophisticated way seems wrong. This isn't 2007 anymore when Honda, BMW and Toyota were able to match the spending. We overcame a financial crisis that destroyed billions of market value over night. F1 was affected as well, and clearing out of the field also paved the way for the Bulls to race to the very top.
With massive spending, the barrier for total success has been altered significantly. It is part of the strategy to eliminate as much competition as possible. Even Lotus can't keep up. This leaves Ferrari, Mercedes and McLaren to fight. Not much opposition if the rules go the "right" way, and if Newey builds a Wunderwaffe of a car. But as soon as things heat up, the energy drink maker shows his real face and engages in politics.
Ferrari and Lotus had the better car at the first races of 2013, and the RB9 couldn't take play out the trump card downforce. The tires would just melt. 2 other teams arguably adapted their vehicles better to work with the Pirellis.
Helmut Marko was not amused. Starting with the first race, he regularly cried for the old tires to come back, even when a safety hazard was not to be seen.
Then Mercedes started closing the gap, and had a secret Pirelli test after the Spain GP. While I understand that the opposition was not happy, Red Bull took it to another level. They sent team boss Horner to the FIA court hearing at which the possible consequences were judged. They aggressively demanded draconic measures against them, going as far as calculating how much of an advantage said test could have been point wise and therefore demanding 162 points to be taken from the constructor's championship.
Funny that they demand such measurements when in 2012 the RB8 was found to have "questionable" parts installed on multiple occasions – including holes in the cars floor in Monaco, something that is clearly forbidden. Or an illegal motor mapping. Or too flexible wings.
They had to fix the issues, but never received penalties.
When arguing against Mercedes, they claimed any test days to be priceless for car development. When Sauber and Force India asked to skip test days in exchange for wind tunnel hours to save money in 2014, Helmut Marko denied it. It would be an advantage to them. Sure.
So what have we learned? Even the slightest possible competition is fought on all fronts, and the smaller teams are not on any field given the possibility to somewhat level the field. All in the sake of total dominance.
V. Why it works for Mateschitz and his Marketing Machine
„Wir kaufen uns nicht einfach für einen Koffer voller Geld einen Kotflügel, um ihn mit unserem eigenen Logo zu bekleben, wir betreiben unseren eigenen Rennstall, wir übernehmen selbst die Verantwortung", sagte Mateschitz einmal der NZZ in einem seiner seltenen Interviews . "Wenn wir Eishockey oder Fußball spielen und dabei gewinnen, wenn wir Formel 1 fahren und Weltmeister werden, dann ist der Effekt viel größer. Die Medien berichten im redaktionellen Teil darüber, wir sind es selber, die den Erfolg feiern. Diesen Ansatz haben wir über zwanzig Jahre durchgezogen."
"We don't just buy a fender for a bag full of money to paint it with our logos – we run our own race team, we take the responsibility", said Mateschitz once to NZZ in one of his rare Interviews. "When we play Ice Hockey or Soccer and win, when we race in F1 and become world champions, the effect is much bigger. The media report about it in the editorial parts, it is us who celebrate the success. We kept this approach for over twenty years."
The boss himself described it: Media attention grows disproportional to success. And Red Bull needs that aura of success it surrounds itself with. Why would anyone pay 3$ for a 0.5l drink in a can?
Because it gives you wings. The same wings that made Pastrana do triple backflips, Baumgartner jump from the stratosphere and Vettel win 4 championships in the high-tech sport F1. On the trot.
Did you notice that there is zero to none Red Bull merchandise available? No Red Bull only caps, stickers, or shirts. The only way to symbolize with the brand is the drink. And that's what they do: they channel all that attention, admiration, heroism into the can. A can that costs next to nothing to produce. A simple and genius business model – but it needs all kinds of marketing activities to support itself. Winning, successful marketing gigs.
In the end, Red Bull spent 200 Million Euros more in 2013 than Marussia. The difference between them? 3 seconds a lap in Interlagos. Think about that when you tune in a race in 2014 and the blue/yellow/red car wins again.
Please feel free to discuss this topic in the now ruined comment section. I will respond to every educated, non-fanboy reply. There also is a Tumblr version of the same article. Picture credit: TMR, Red Bull Racing, Pocketliveries (for awesome graphics used in the chart), biser3a.