Breaking even or making a profit have always been "internal targets" that the Red Bull Formula 1 team have "aspired" to, says boss Christian Horner. To achieve championship success in Grand Prix racing, bigger teams as Red Bull and Mercedes have spent hundreds of millions per season year on year, with this being deemed unsustainable in the long-term. One way of combatting this was the introduction of a cost cap for all 10 teams limiting how much could be spent in one calendar year, with it being about $145 million USD in 2022. Certain expenditures are exempt such as salary for the top three earners and marketing costs, with the hope being that keeping costs under control will eventually allow the teams to become profitable businesses and make money instead of losing it. Horner – who guided the Red Bull outfit to success in both championships in 2022 – says this goal has long been on the radar of the Milton Keynes-based team.
Horner explains components of budget
"Obviously, you've got a significant amount coming from Formula 1 revenues," Horner explained when asked in an exclusive interview with RacingNews365.com about the component parts of the Red Bull budget. "We probably have the largest portfolio of partners and sponsors in F1 with over 50, so that reduces the burden of cost to [the parent company] of Red Bull to potentially less than 10% of our total cost. "That's on Red Bull, but on the [Red Bull] Racing side, the [newly-formed] Red Bull Powertrains has take significant investment. "In an ideal scenario, [Red Bull GmbH not having to contribute to the budget], that would be the breakeven or even profitable point that we aspire to. "That's always been an internal target."
How the cost cap has helped
In 2022, Red Bull were found to have exceeded the cost cap limit in place during the 2021 season after their accounts had been submitted to the FIA. They were the only team to do so – with Aston Martin and Williams receiving procedural breaches – and received a $7 million fine and reduction in testing allocation as a penalty. However, despite this, Horner believes the cost cap has been a good thing for the teams, highlighting one area in particular. "It's helped to reduce costs, for sure, and it's had a direct hit on the bottom line with the amount of stock, the number of components that you make, the amount that you can actually spend is obviously heavily restricted now compared to previous years," he explained. "It's just driven efficiency throughout the business. In years gone by there would be millions of pounds worth of unused stock left at the end of the year, that would effectively have to be written off. "Now, you can't afford to do that, you can't afford to carry that, you have to be absolutely efficient and frugal with how you apply your budget, particularly in development and manufacturing."
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