Do F1 Teams Make Money?

• F1 generated a record $3.87 billion in revenue in 2025, with approximately 45% redistributed to teams as prize money through the Concorde Agreement.
• Ferrari collected the largest individual payout of $277.7 million in 2025 despite finishing fourth in the Constructors’ Championship, earning $112 million more than WCC winners McLaren, thanks to heritage and historical bonuses.
• The average F1 team is now valued at $3.42 billion, up from an era when teams were regularly traded for symbolic sums, after cost caps turned the sport’s franchises into high-margin assets.

Do F1 Teams Make Money In 2026?

F1 teams do make money in 2026, and the sport’s financial picture has changed beyond recognition from the era when most teams struggled to break even. As recently as 2021, only Mercedes and Red Bull turned a profit of between $10 and $20 million on budgets of roughly $450 million, while the remaining eight teams were lucky to end the year in the black. Five years on, the economics of Formula 1 have been rebuilt from the ground up, and every team on the grid is now a profitable enterprise sitting inside a multi-billion dollar financial framework.

The numbers tell the story. Formula 1 reported record first-quarter revenue of $617 million for the opening three months of 2026, a 53% increase on the same period in 2025. That Q1 figure produced an operating profit of $107 million, swinging from a $28 million loss a year earlier. Part of the jump came from calendar changes (three races in Q1 2026 versus two in Q1 2025, after the Japanese Grand Prix moved into the opening quarter), but the underlying trend is real. Full-year revenue for 2025 hit $3.87 billion, a 14% increase year on year and a new record for the sport.

The transformation from loss-making venture to profitable franchise traces back to Liberty Media’s acquisition of F1’s commercial rights in 2017. Under the previous ownership structure, the sport operated as a winner-takes-most model where the top teams hoovered up the bulk of prize money and sponsorship while smaller outfits survived on scraps. Liberty replaced that with a franchise system built on three pillars: standardised revenue sharing through the Concorde Agreement, strict cost controls through dual spending caps, and aggressive commercial expansion into the United States and digital markets. The result is a sport where even the team that finishes last is a profitable, billion-dollar business.

Where Does F1’s Money Come From?

The $3.87 billion that flowed through Formula 1 in 2025 came from four main revenue streams, all managed centrally by Liberty Media before being redistributed through the sport’s commercial framework.

Media rights are the largest single source, accounting for 31% of total revenue at approximately $1.2 billion per year. F1 sells a global broadcast feed to rights holders in every major market, and the value of those contracts has surged since Liberty took over. The biggest recent deal is with Apple, which secured exclusive US broadcasting rights for $150 million per season over five years. That figure nearly doubled the previous ESPN contract, which was worth approximately $90 million per year. In the UK, Sky Sports holds rights through 2034. In Australia, Foxtel renewed at AUS$60 million per year (approximately US$42 million), up from AUS$45 million on their previous deal, after the most-watched season ever on Kayo saw fans stream 898 million minutes across 2025. In Italy, Sky holds rights through 2032. These long-term contracts give Liberty a predictable, multi-year revenue baseline that underpins the sport’s valuation.

Race promotion fees are the second largest stream at 27%, generating roughly $1.03 billion. Circuits pay Liberty Media an annual hosting fee for the right to stage a Grand Prix. Government-backed venues in the Middle East and Asia pay the highest rates, with Saudi Arabia and Bahrain typically exceeding $50 million per year before both races were cancelled in 2026 due to the conflict in the region. Historic European tracks pay considerably less, though even Monaco’s fee has increased in recent renegotiations. The Las Vegas Grand Prix operates under a different model entirely, with Liberty Media owning and managing the event directly rather than charging a hosting fee. This allows the sport to capture the full commercial upside of ticket sales, local sponsorship, and hospitality. The Las Vegas race generated over $1 billion in local economic impact, and the model is widely seen as a template for future high-value events in premium markets.

Sponsorship at the sport level contributes 22% of revenue, approximately $850 million. The headline deal is the LVMH partnership, a 10-year agreement reportedly worth $150 million per year that integrates luxury brands including Louis Vuitton, TAG Heuer, and Moet Hennessy across F1’s hospitality, timekeeping, and broadcast platforms. This deal replaced the long-standing Rolex partnership, which had been worth an estimated $52.5 million annually. Oracle, Aramco, and Mastercard are among the other global partners contributing at the sport level. That $850 million figure covers Liberty Media’s own sponsorship revenue, not the total sponsorship spending across all teams, which is projected to exceed $3 billion when team-level deals are included.

The remaining 20% comes from hospitality, licensing, and digital revenue, totalling approximately $770 million. This includes the Paddock Club (where passes range from $5,000 to $15,000 per race weekend), F1 TV (the direct-to-consumer streaming platform), merchandise licensing, and event hospitality. The 2025 Brad Pitt film F1, which grossed $634 million at the worldwide box office, also contributed to brand value and commercial momentum, though its direct revenue impact flows through Apple’s distribution rather than Liberty Media’s books.

How Does F1 Prize Money Work?

The distribution of F1’s revenue is governed by the Concorde Agreement, a tri-party contract between the teams, the FIA, and Liberty Media that functions as the sport’s financial constitution. Under the current terms, teams receive approximately 45% of total commercial revenue as prize money. Liberty Media retains the remaining 55% to cover its operational costs and generate profit for shareholders.

The 45% figure is not fixed. The base agreement targets a 50/50 split, but a threshold rule means the team share scales downward once total revenue passes the $3 billion mark. With revenue now approaching $4 billion, the effective team share has settled closer to 45%. To put this in context, teams received $1.266 billion in payments in 2024, which represented 61.5% of F1’s OIBDA (Operating Income Before Depreciation and Amortisation) but less than 50% of total gross revenue. The distinction matters because it means the sport can grow revenue without proportionally increasing its payouts to teams, protecting Liberty Media’s margins while still delivering record sums to competitors.

The prize pool itself is split into three tiers. The Constructors’ Performance Pool accounts for 75% of the total and is distributed based on the previous year’s finishing positions in the World Constructors’ Championship. The team that wins the title receives roughly 14% of this pool, while the team finishing tenth receives approximately 6%. The Historical Success Pool takes 20% and rewards teams that have finished in the top three of the WCC over the preceding decade. This pool is only accessible to teams with sustained records of success, which is why it heavily favours Ferrari, Mercedes, and Red Bull. The remaining 5% is the Ferrari Heritage Payment, a guaranteed sum paid to Ferrari in recognition of being the only team present in every season since the World Championship began in 1950. This payment includes an escalation clause: if the total prize pool exceeds approximately $1.6 billion, Ferrari’s heritage share can rise to 10%.

How Much Prize Money Did Each F1 Team Earn In 2025?

The 2025 prize money distribution revealed the biggest gap in F1’s financial structure. McLaren won the World Constructors’ Championship for the first time since 1998 but received only the fourth-highest payout from the central prize pool, collecting approximately $165.8 million. Ferrari, which finished fourth in the standings, collected the largest payout of any team at approximately $277.7 million. That is a difference of $112 million in favour of the team that finished three places lower in the championship.

The gap exists because Ferrari collects from all three prize pool tiers. Their performance pool share for finishing fourth was modest relative to McLaren’s champion’s share, but their historical success bonuses (built on a decade of top-three finishes) and their unique heritage payment pushed the total far above what any other team received. Mercedes collected approximately $230.8 million (second highest) and Red Bull approximately $202.8 million (third highest), both benefiting from strong historical success pool allocations built during their respective periods of dominance.

For McLaren, the $165.8 million figure reflects the cost of recent underperformance. While they earned the largest share of the 75% performance pool as 2024 WCC champions, their historical success bonuses were limited because the team spent much of the previous decade outside the top three. The payout structure means McLaren’s bonuses will grow sharply in future years if they sustain their current competitiveness, but it also means there is a multi-year lag between on-track success and full financial reward.

The incoming 11th team, Cadillac, is projected to receive approximately $63 million in its debut year, a figure that reflects the baseline allocation for a new entrant without any historical success credits. For context, even that floor payment is higher than the total prize money Williams received as recently as 2021 ($13 million for finishing last), illustrating how much the overall revenue pool has grown.

How Do F1 Teams Generate Their Own Revenue?

Prize money is only part of the picture. F1 teams generate substantial revenue independently through sponsorship, manufacturer investment, engine supply deals, and increasingly through commercial engineering divisions that operate outside the sport entirely.

Title sponsorship is the single most valuable commercial asset a team controls. The current benchmark is Oracle’s deal with Red Bull Racing, worth approximately $110 million per year following a multi-year extension announced ahead of the 2026 season. HP’s partnership with Ferrari is valued at approximately $100 million annually, while Mastercard’s naming deal with McLaren (making them the McLaren Mastercard F1 Team from 2026) sits at approximately $90 million. Petronas pays Mercedes an estimated $80 million per year, Aramco’s deal with Aston Martin is reported between $75 and $95 million (which also includes an option to acquire a 10% equity stake in the team), and Revolut’s title partnership with the new Audi team is estimated at around $75 million.

The nature of these deals has changed. Title sponsorship in 2026 is no longer about putting a logo on a car. Oracle provides the cloud infrastructure that runs Red Bull’s aerodynamic simulations and race strategy. HP supplies the hardware that supports Ferrari’s design workflow. These are “total commercial contributions” where cash payments are combined with in-kind technical services that teams would otherwise have to purchase separately. The shift from logo placement to operational integration means sponsors are now embedded in the competitive performance of the cars they support.

The AI and technology sector has been the fastest-growing sponsorship category, with eight major partnerships signed in a six-month window during 2025 and early 2026. Meta AI joined Mercedes as an Official Team Partner, Anthropic partnered with Williams, and Microsoft holds a Principal Partner position at Mercedes. At the sport level, the technology sector now contributes an estimated $565 million to the total sponsorship market. US-based sponsorship spending has risen approximately 68% since 2023, reflecting F1’s aggressive expansion into North America through races in Miami, Las Vegas, and Austin.

Works engine manufacturers also generate revenue by leasing power units to customer teams. These leases are price-capped by the FIA at approximately 12 to 15 million euros per season per customer. Mercedes, which supplies engines to McLaren, Williams, and Alpine, can therefore generate up to 45 million euros in lease revenue per year. Ferrari supplies Haas, while Honda supplies Aston Martin. Red Bull Ford run their own in-house power units without external customers in 2026.

Beyond the track, teams have built commercial engineering divisions that monetise their technical staff on non-F1 projects. Mercedes-AMG F1 Applied Science secured a £12.8 million contract working on INEOS Britannia’s America’s Cup sailing campaign, applying F1 simulation and manufacturing techniques, including aerodynamic modelling, to yacht design. Sauber Technologies (now part of the Audi programme) provides engineering consultancy to aerospace and medical device clients. These divisions allow teams to retain elite engineers and generate high-margin revenue outside the cost cap. McLaren has taken a different approach, using its racing prestige to build a billion-dollar order book for the McLaren W1 hypercar, with 399 units at $2.1 million each generating between $210 and $270 million in revenue during 2026.

How Much Does It Cost To Run An F1 Team?

The cost of running an F1 team is now defined by two regulatory spending caps that control both the car development budget and the engine programme.

The operational cost cap for 2026 is set at $215 million. This looks like a big jump from the 2025 baseline of $135 million (plus inflation adjustments), but the increase is considered broadly cost-neutral by the FIA. The reason is that several categories of spending that were previously excluded or capped separately have been folded into the main figure. Annual depreciation and amortisation costs are now included, and the previously separate Capital Expenditure cap (which had been set at $36 million over a rolling four-year period) has been absorbed into the $215 million limit. The practical effect is that teams are not spending dramatically more than before; the accounting perimeter has simply expanded.

Costs that fall inside the $215 million cap include research and development, component manufacturing, all performance-related spending, and a strict new personnel rule. If any employee spends any portion of their time on F1 projects, 100% of their salary must now count against the cap. This closes a loophole where teams could allocate staff across F1 and non-F1 projects to reduce their reported spending. Costs that remain excluded from the cap include driver salaries and retainers, the three highest-paid staff members, marketing, HR, legal, catering, factory hospitality, travel, logistics, and sustainability initiatives.

To ensure teams in expensive locations are not penalised, the FIA applies an OECD-indexed regional salary adjustment. This is particularly relevant for the Audi team (formerly Sauber), which operates from Hinwil in Switzerland, where wages are much higher than in the UK, where most teams are based. The adjustment means a team in Switzerland can maintain a comparable headcount to a UK-based rival without the Swiss wage premium consuming a disproportionate share of their cap.

The second cap governs power unit development at $190 million for 2026. This was originally set at $130 million but was revised upward after the separate PU capital expenditure cap was removed, folding those costs into the main figure. The PU cap was a critical factor in attracting new manufacturers to the sport: Audi, Ford (partnering with Red Bull), and Honda (returning with Aston Martin) all entered under the assurance that engine development spending would be controlled. For manufacturers that fall behind on performance, the ADUO (Additional Development and Upgrade Opportunities) mechanism allows limited extra development time or budget to close gaps, preventing any single engine supplier from being locked into a position where they cannot compete.

What Happens When A New Team Joins F1?

The expansion of the grid from 10 to 11 teams in 2026, with Cadillac entering as General Motors’ factory operation, provided the clearest-ever benchmark for what an F1 franchise is worth before it has even turned a racing lap.

Cadillac paid a one-time anti-dilution fee of $450 million to join the grid. This fee was distributed equally to the 10 existing teams at $45 million each, serving as immediate cash compensation for the dilution of future prize money. Because the Concorde Agreement prize pool is finite, adding an 11th team means every existing team’s share gets smaller. The anti-dilution fee is designed to offset that loss. To put that in perspective, the original anti-dilution fee written into the 2021 Concorde Agreement was $200 million. The teams negotiated it up to $450 million for Cadillac’s entry (some teams had initially pushed for $600 million), and the agreement was finalised ahead of the 2025 Australian Grand Prix.

The $450 million fee is only the entry ticket. Cadillac’s total startup costs, including factory infrastructure, hiring, equipment, and the development of their 2026 car, pushed the total investment well above $1 billion before they completed a single racing lap. Even with those costs, the maths works because Cadillac immediately acquires a franchise valued at an estimated $1.6 billion, with projected annual prize money of approximately $63 million and access to the same revenue-sharing framework as every other team. The franchise also opens the door to title sponsorship revenue that could reach $50 to $100 million annually once the team is established.

Cadillac has made the deliberate choice to enter 2026 without a title sponsor, running what the industry calls a “clean car.” The strategy is to avoid locking in a naming-rights deal at a discount during a debut season when on-track results are uncertain, preserving the option to command premium pricing in 2027 and beyond once the team has proven its competitiveness and commercial reach.

How Much Are F1 Teams Worth In 2026?

The combination of capped costs, rising revenue, and guaranteed prize money has produced a valuation boom that would have been unthinkable a decade ago. According to Forbes and Sportico, who publish annual F1 team valuations, the average franchise is now worth $3.42 billion. The top of the leaderboard is led by Ferrari at approximately $6.5 billion, followed by Mercedes at approximately $5.9 billion. McLaren sits in the $4.7 to $5 billion range (with a recent stake sale by MSP Sports Capital reportedly valuing McLaren Racing at $5 billion), and Red Bull Racing trails closely behind.

The McLaren story is the most dramatic illustration of how the franchise model has changed the sport’s economics. In 2020, McLaren was in a liquidity crisis with a valuation of approximately £560 million. MSP Sports Capital invested £185 million at that valuation. By 2026, the team’s value had grown to between $4.7 and $5 billion, giving MSP an approximate 10x return on their investment. McLaren’s revenue grew from $166 million in 2018 to over £530 million (approximately $717 million) in 2024, swinging from a $137 million loss to an operating profit. The team now has over 55 active commercial partners, and the McLaren W1 hypercar programme provides a high-margin cash flow buffer that reinforces the team’s engineering prestige beyond the track.

The Toyota-Haas partnership, announced under the TGR Haas branding, represents a newer model for manufacturer involvement. Rather than building a full factory team from scratch, Toyota Gazoo Racing provides design and manufacturing services to Haas in exchange for commercial branding and the opportunity to train technical personnel in the F1 environment. This “technical partnership” model gives Toyota access to F1’s technology platform without the full cost and risk of a standalone entry, and it gives Haas access to Toyota’s manufacturing capability.

These valuations place F1 teams in the same conversation as major global sports franchises. Ferrari’s $6.5 billion sits below the Dallas Cowboys ($9 billion, the NFL’s most valuable franchise) but above most European football clubs. The key difference is reach: while NFL and Premier League franchises are primarily domestic properties, F1 teams compete in front of a global audience, with a cumulative TV viewership that reached 1.5 billion in 2025. For multinational sponsors, that global footprint offers a reach that no single-country sports league can match.

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Formula 1 Revenue Frequently Asked Questions

Sources

• Liberty Media Q4 2025 Financial Results
• Mercedes-AMG F1: Meta AI Partnership
• McLaren Racing: Mastercard Naming Partnership

Written by

George Howson

George Howson is an F1 Chronicle contributor and FIA accredited journalist with over 20 years of experience following Formula 1. A member of the AIPS International Sports Press Association, George has covered F1 races at circuits around the world, bringing deep knowledge and first-hand insight to every race report and analysis he writes.

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