The general spending of Mercedes-Benz Grand Prix Restricted fell from £324.9m in 2020 to £297.4m final yr, regardless of the calendar being prolonged from 17 to 22 races because the influence of COVID light.
Whereas many parts included within the total whole don’t come beneath the cap, the drop in spending of £27.4m displays how the group needed to modify to the brand new period of reducing prices.
It additionally contributed to an total enhance in earnings, from £13m in 2020 to £68.8m in 2021.
The opposite key component within the revenue hike was a rise in turnover, which means sponsorship and F1 prize cash revenue, went from £355.3m to £383.3m.
Dad or mum firm Mercedes-Benz AG didn’t should make a monetary contribution, reflecting simply how a lot revenue the group is producing.
Mercedes does nonetheless nonetheless present finance to the separate HPP organisation from which the F1 group in flip buys its energy models.
In one other indication of how the fee cap has had an influence, the general headcount at Mercedes-Benz Grand Prix tumbled in 2021. It rose from 1016 employees in 2019 to 1063 in 2020, the final yr with no cap – when most F1 groups invested closely earlier than the restrictions got here in.
In 2021, with the cap now utilized, it fell again once more to 1004.
Nonetheless, extra vital than the general fall was the drop within the variety of individuals employed in design and engineering – those that fall straight beneath the cap. Having risen by 34 in 2020, it was slashed by 75 final yr, from 906 to 831.
In distinction, the overall of these employed in administration, not restricted by the cap, rose from 157 to 173 in 2021.
Mechanics work on the George Russell Mercedes W13 within the storage
Photograph by: Steve Etherington / Motorsport Photographs
That was boosted by further human sources, authorized and accounts employees members, a lot of whom have been employed to assist the group take care of the additional work created by monitoring and administering the cap.
Wolff mentioned that assembly the cap in 2021 had been “painful”, however that in the end it helped to extend the profitability of the organisation.
“What has occurred in F1 is that by setting a spending restrict on the most important a part of the fee centres within the group, we needed to restructure and alter our processes, make individuals redundant, sadly additionally, to suit into the fee cap,” Wolff advised Autosport.
“Which is especially painful if you happen to hear the discussions of groups not having performed that.
“As an organisation that was spending on engineering, with a purpose to obtain the most effective efficiency, and immediately needing a construction that should analyse from the second of buy all through the manufacturing, the logistics after which deployment on the automobile, and setting priorities of what you give to the automobile, that is tremendous painful and tough.
“The benefit is that, just like the US [sports] franchises, we have set the spending restrict, we have excluded assist areas.
“So the assist areas nonetheless wanted to develop vastly with a purpose to assist the organisation with the fee cap. However the backside line, if you happen to’ve been profitable on monitor with the TV cash, sponsorship is principally going straight into your margins. And that has occurred within the US.
“The underside line pays for itself, as a result of we will not spend greater than that. We develop prices within the assist areas.
“The fee cap has been restructuring-wise such a painful train, however financially it has modified the enterprise mannequin from to a evenly worthwhile firm, or simply worthwhile firm, right into a enterprise with a 25% EBIT [earnings before interest and tax] margin.”
Wolff mentioned the headcount for the administration facet of the corporate has grown even additional in 2022.
Toto Wolff, Group Principal and CEO, Mercedes AMG
Photograph by: Simon Galloway / Motorsport Photographs
“That is pre-empting 22 accounts, however we now have 30 individuals extra in finance, we now have eight individuals extra in authorized, we now have 50 heads extra in advertising, communication, sponsorship, all of that, to manage the fee cap.”
Wolff cited one instance of how whereas beforehand a senior engineer would interview job candidates, now that’s performed by an HR specialist, permitting the engineer – who comes beneath the cap – to focus all their efforts on their major function.
“Think about the hiring course of. An engineer up to now would rent a candidate or would interview candidates. To start with, you possibly can’t afford it [in terms of their time.]
“However the different factor is, we do not know if we are able to afford it financially. So they should hyperlink again with HR, and HR must hyperlink again with finance, and say we want one other head that is costing us £45,000 a yr. Can we afford it?”
Like different high groups, Mercedes has shifted many F1 individuals into non-racing tasks.
“In utilized science, we now have America’s Cup, and we now have varied different tasks on efficiency engineering,” Wolff added.
“We do not need to be an engineering boutique that provides service to the trade. It is actually about data, wherever desires to be – data on land, sea, air and area, that is an space for us.”
