How F1 Teams Make Money: The $4 Billion Machine | Formula Dream
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How F1 Teams Make Money: Inside the $4 Billion Money Machine
How F1 teams make money, the prize money split by the Concorde Agreement, why even finishing last pays $60 million, the sponsorship that now dwarfs it, and how F1 became a $4 billion business.
Formula 1 teams spend hundreds of millions of dollars a year chasing performance. So where does all that money come from, and do the teams actually make any? F1 is now a business worth close to $4 billion a year, and the way that money flows to the teams is one of the most interesting and least understood parts of the sport. Here is how F1 teams actually get paid.
The three ways a team makes money
Broadly, an F1 team has three sources of income: prize money from the sport's central pot, sponsorship
from the team's owner. For most teams, the first two are the ones that keep the lights on.
Prize money: the Concorde Agreement
The commercial rules of F1 are set by a document called the Concorde Agreement, signed between the teams, the FIA and F1's owner. Its most important job is dividing up the money. Under it, roughly half of F1's profits are shared among the ten teams. In 2025 that came to a total payout of around $1.4 billion across the grid.
Crucially, this money is not split equally. About half of the pot is handed out based on where a team finished in the previous year's constructors' championship, so success on track directly turns into cash. As the 2024 champions, McLaren took the largest slice, estimated at around $147 million. But here is the remarkable part: even the team that finished dead last still received around $60 million. In F1, just being on the grid is worth tens of millions, which is a big reason the entry itself is so fiercely valuable.
Sponsorship: the bigger prize now
For the top teams, prize money is no longer even the biggest earner. Sponsorship has overtaken it. Across the grid, teams generate over $2 billion a year in sponsorship, because a winning F1 car is one of the most valuable advertising spaces in the world, seen by hundreds of millions of people across a global season.
The biggest deals are enormous. McLaren's title partnership with Mastercard is reported to be worth around $100 million a season, the largest on the current grid. Every logo you see on a car, on the sidepods, the rear wing, the halo, the driver's overalls, is a sponsorship slot sold for real money, and the better a team performs, the more that space is worth.
The owners, and the "trophy asset"
Behind the prize money and sponsorship sit the owners. Some teams are backed by giant car manufacturers, Ferrari, Mercedes, Audi, who treat F1 as the ultimate marketing platform. Others are owned by billionaires or investment groups. Many teams do not actually turn a large profit, and some run at a loss, yet the owners keep pouring money in, because an F1 team has become a "trophy asset": their valuations have soared, with the grid collectively worth many billions, so even a team that loses money on paper can be a spectacular investment as its value climbs.
Where the sport itself makes its billions
The money the teams share has to come from somewhere, and that is F1 itself, run commercially by Liberty Media, which took over in 2017 and transformed the sport into a record-breaking business worth $3.87 billion in 2025. F1's own income comes mainly from broadcasting rights (TV deals around the world), race-hosting fees (circuits pay large sums for the privilege of holding a Grand Prix), its own sponsorship, and premium hospitality. F1 keeps its share and distributes the rest to the teams, and the whole machine has been growing at record pace.
Why finishing higher pays twice
Put it all together and you see why every position in the championship matters so much financially. Finishing higher in the constructors' standings brings a bigger slice of the prize money, and it makes a team more attractive to sponsors, who pay more to be on a winning car. Success compounds: win more, earn more, spend more (within the cost cap), win more again. It is the financial engine that drives the entire sport.
Frequently asked questions
How do F1 teams make money?
Mainly through three streams: prize money from F1's central pot (shared via the Concorde Agreement), sponsorship from the brands on the car, and investment from the team's owner. For top teams, sponsorship is now the largest.
How is F1 prize money split?
Roughly half of F1's profits go to the teams, and about half of that is distributed based on the previous year's constructors' championship position, so the champions earn far more than the backmarkers.
How much does the last-place F1 team earn?
Even finishing last is worth around $60 million in prize money, while the champions earn around $147 million. Just being on the grid is highly valuable.
How much is Formula 1 worth?
F1's commercial business generated a record $3.87 billion in revenue in 2025, and it distributes around $1.4 billion of that to the teams.
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