Red Bull reduced investment in Formula One team and still won

Energy-drink manufacturer Red Bull reduced its investment in its championship-winning Formula One team by $28.5 million to $108.9 million last year according to its latest financial statements.

The decreased spending turbocharged the drink manufacturer's return on investment from its involvement with F1 as its Red Bull Racing team took both the drivers' and constructors' championships for the third year running in 2012. Last month, it repeated the feat, and this success is largely due to its spending in 2012 — development on F1 cars is done during the year prior to their introduction.

In 2012, Red Bull Racing's revenue was almost the same as the previous year at $286.7 million. Likewise, its costs remained stable at $285.5 million. So how did Red Bull manage to reduce its spending on the team? Its revenue comes from three main sources: sponsorship, prize money and payments from Red Bull itself. The biggest-paying sponsor is believed to be luxury auto brand Infiniti, which became the team's title partner at the start of this year. However, Red Bull Racing's sponsorship tally did not change significantly in 2012.

Sponsorship is the smallest of the team's sources of revenue. Next up is prize money, which comprised 47.5 percent of F1's underlying profits last year. This amount was divided into two, one-half of it split equally between the top 10 teams and the other paid to them in a sliding scale depending on position in the constructors' championship.

Red Bull Racing's prize money payment increased from an estimated $86.5 million in 2011 to $94.2 million last year, but this wasn't a result of an improvement in the standings. Instead, the increase was attributed to a boost in F1's profits, which led to the 47.5-percent prize fund rising from $698.5 million in 2011 to $751.8 million in 2012.

According to F1's trade guide “Formula Money," Red Bull Racing was also paid a one-off bonus of $25 million in 2012 for signing a new commercial agreement with the sport's boss, Bernie Ecclestone. The agreement runs from 2013 until the end of 2020. AutoWeek

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