Revealed: How Mercedes’ on-track form is affecting finances as accounts published

Thomas Maher
Lewis Hamilton, Mercedes, 2024 Australian Grand Prix.

Mercedes' finances have remained very stable throughout 2023, with only a small dip in profit reported.

Mercedes has reported a dip in profit but an increase in financial turnover, according to its latest accounting reports.

Mercedes’ 2023 financial accounts have been released, showing that increased costs and higher tax payments in 2023 led to a small dip in profits, although the team’s turnover increased to over half a billion pounds.

Mercedes’ turnover increases as profit dips

Documentation released by the UK’s Companies House has revealed the latest on the financial situation of the Mercedes F1 team, covering the 2023 year.

Mercedes-Benz Grand Prix Ltd. has declared a turnover of £546.5 million for 2023, which is an increase of £71.9 million over its 2022 figures.

Despite turnover increasing by just over a sixth, Mercedes’ profits took a small dip from the 2022 figure of £89.7 million – their 2023 profit was £83.8 million.

Throughout 2023, Mercedes paid out £75 million to shareholders, up from £55.2 million in 2022.

Mercedes’ figures show an increase in its ‘cost of sales’, ie. the money it spends to go racing, rising from £350 million to £413.6 million with an £8.8 million rise in its administrative expenses.

It reported that its race car development assets climbed by £11.2 million in 2023, rising from £41 million in 2022 to £52.2 million in 2023 – this higher figure would have taken into account the team’s spend throughout 2023 as the research and development into its new 2024 direction and chassis was embarked upon.

What are the reasons behind Mercedes’ profits taking a dip?

The staff figures for the Mercedes F1 team climbed from 1,114 average across the 2022 season to 1,289 in 2023 – between wages, salaries, social security, and pension contributions, the team’s cost of staffing climbed from £93.8 million to just under £127 million.

The salary bill also increased as a result of team bonuses as Mercedes climbed back into second place in the Constructors’ Championship, after finishing in third in 2022.

The highest-paid director’s remuneration climbed from £3.7 million to £6 million.

In terms of calculating its profits, Mercedes’ tax bill was much higher in 2023 as they paid £32.5 million compared to £8.6 million in 2022.

The higher figure is contributed to by a deferred tax payment of £14.8 million from 2022, with a 2023 figure of just over half a million pounds. With the UK government also increasing corporate tax rates by 4.5 percent, these factors contribute to the hefty £24 million tax increase. Without the deferred tax, Mercedes’ taxes went up by just over £8 million – largely attributable to the tax rate change.

Indeed, Mercedes reported figures for profit before tax remained very stable at £115.8 for 2023, only marginally different from £113.4 million in 2022.

Mercedes also reported the dissolution of its wholly-owned subsidiary R.T.C. Management Company in January 2023 as well as a reported figure of £50 million in sales to INEOS, just under £10 million to Mercedes-AMG High-Performance Powertrains, and £3.8 million to Mercedes-AMG GmbH.

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Interestingly, despite climbing a position in the Constructors’ Championship, Mercedes also reported a decline in its television coverage.

In the report, Mercedes said: “The team’s share of television coverage showed a small decline to 14.7 percent for 2023, reflecting the lower number of podium finishes the team enjoyed versus 2022.

“The cumulative Advertising Value Equivalent (AVE) remained strong for commercial partners and shareholders, at $5.3 billion. The team continued to grow strongly on social media, with a cumulative followership of 36 million (+15%) and a total of 465 million engagements (+9%).

“During 2023, the team welcomed seven new commercial partners and introduced a world-class hospitality offering at the Las Vegas Grands Prix, to serve the increased demand for VIP race attendance as F1 continues to grow globally. In July, Forbes estimated the value of the team to be $3.8 billion.”

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