![]() ![]() “As an organisation we were spending on engineering to achieve the best performance. Now they need to link back with HR, and HR needs to link back with finance, and say we need another head that’s costing us £45,000 a year, can we afford it? “An engineer in the past would interview candidates. “Imagine the hiring process,” Wolff explains. The F1 cost cap has also dramatically altered how the team operates. “So, it’s really about records, whether that be on land, sea, air and space, that’s an area for us.” “We have America’s Cup in our applied science department, and we have various other projects on performance engineering,” Wolff explained. Like other top teams, Mercedes has shifted many former F1 people into non-F1 projects. So, support areas still needed to grow vastly in order to support the organisation with the F1 cost cap.” Mercedes’ F1 cost cap victims shifted to other projects “The advantage is that, like the US, we’ve set the spending limit, but we’ve excluded support areas. The bottom line pays for itself because we can’t spend more, so we grow costs in support areas. That has happened in the US sporting franchises. “If you’ve been successful on track, the TV money, and sponsorship basically goes directly into your margins. “The F1 cost cap has changed our business model from lightly profitable, into one with a 25% earnings before interest and tax,” Wolff explained. Mercedes however still finances its High-Performance Powerplants shop, from which the F1 team buys its power units. So profitable was the team last year, that parent Mercedes-Benz AG did not have to contribute. Profits increased from $12m in 2020 to $61m in 2021 as turnover off sponsorship and F1 prize money increased as income went from $319 to $344 million. The team spent $24m less to do considerably more, as it adapted to this new era of cost cutting. Mercedes F1 was however far more profitable in 2021. “All of that, to administer the cost cap.” “We have 30 people more in finance, eight more in legal, 50 more in marketing, communication, sponsorship,” Toto Wolff points out. Ironically, many of them were hired to deal with extra F1 cost cap monitoring duties. Administration, not affected by the cap, rose in staff over the same period. The biggest casualties came in design and engineering, which hemorrhaged 75 people, from 906 to 831 last year. It is particularly painful to hear teams discussing that.” Biggest casualties in Engineering Unfortunately, setting a spending limit on the largest part of the cost centres in the team also made people redundant. “We had to restructure and change our processes. “Restructuring for the cost cap has been such a painful exercise,” Mercedes F1 team boss Toto Wolff explains. The cap has had a significant impact on the Mercedes-Benz Grand Prix team headcount, which was 1063 in 2020, before the cap clipped the staff count back to 1004 souls. Last year it spent $267M, despite the calendar growing from 17 to 22 races. Mercedes-Benz Grand Prix Limited spent $291 million in 2020. The F1 cost cap, and related capers, have been all over the news of late, as the ruling body, the Federation Internationale d’Automobile (FIA) stutters its audit out and dithers on how to deal with a couple of errant teams who dared break that dreaded glass ceiling. The Formula 1 cost cap has hit Mercedes F1 hard and it culled staff too but the team made more money for their efforts.
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