An old paddock saying goes that Formula 1 is a sport for billionaires who want to become millionaires. In 2026 that is no longer true: thanks to the budget cap and the growth of the championship, Formula 1 teams make profits, are worth billions and live on four major revenue streams. Here is how a Formula 1 team makes money today, with updated figures, and why sponsors have become an even more important part of the model.

Updated September 2026.

In short: a Formula 1 team earns money from four main sources. The first is its share of the championship revenue that Formula 1 distributes to the teams, 1.4 billion dollars in 2025. The second is sponsorship, worth hundreds of millions a year for the top teams. Then there is manufacturer support and commercial activity, from merchandising to hospitality. With the budget cap, which in 2026 limits technical spending to 215 million dollars, revenue is no longer just a way to spend more: it is a way to make a profit, and indeed the average value of a team has passed 3 billion dollars.

How much it costs to race in Formula 1

Formula 1 is the pinnacle of motorsport and a research and development laboratory for the car industry. Designing, building, developing and racing two cars at more than twenty Grands Prix a year costs an enormous amount. That is why in 2021 the FIA introduced a cap on technical spending, the budget cap: it started at 145 million dollars, fell to 135 million from 2023 and in 2026 was raised to 215 million, mainly because it now includes costs that were previously excluded. Driver salaries, the three highest-paid executives and marketing, among other things, remain outside it. We covered this in our article on the Formula 1 budget cap.

So how does a team raise the money it needs to go racing? There are four main sources:

• the distribution of Formula 1 revenue;
• sponsorship;
• manufacturer support;
• the team’s commercial activities.

Formula 1 revenue distributed to the teams

Formula 1, owned by Liberty Media, earns money from television rights, contracts with Grand Prix promoters, championship sponsors, hospitality and licensing. In 2025 the Formula 1 segment’s revenue was 3.87 billion dollars, 14% more than the previous year: 31% from media rights, 27% from the fees paid by race promoters, 22% from championship sponsorship and the rest from hospitality, licensing and other activities.

A large part of this revenue goes back to the teams: in 2025 team payments totalled 1.4 billion dollars, 11% more than in 2024. The split is governed by the Concorde Agreement, the contract between Formula 1, the FIA and the teams, which for the 2026-2030 period was signed by all eleven teams, including newcomer Cadillac. The terms are confidential, but according to estimates published by RacingNews365 each team’s share depends mainly on its position in the constructors’ championship, and in 2025 prize money ranged from about 175 million dollars for champions McLaren to about 75 million for the last-placed team. Ferrari keeps a historic bonus linked to its uninterrupted participation in the championship.

Newcomers, on the other hand, have to pay. For Cadillac, the eleventh team from 2026, the specialist press reported a fee of about 450 million dollars to be shared among the existing teams, to compensate for the dilution of their prize money.

Sponsorship

Sponsorship is the second major source of revenue, and for many teams the most important. The figures vary enormously: from just over one million dollars a year for a minor deal with a midfield team to more than 100 million for the title sponsors of the top teams. Oracle renewed with Red Bull in February 2026, HP is Ferrari’s title sponsor and Mastercard has given its name to McLaren since 2026: none of the three values is official, but press estimates put them at around 100 million dollars a year.

The weight of sponsors shows in the accounts. Mercedes, in its 2025 accounts filed in June 2026, reported revenue of 633 million pounds and a record operating profit, and according to Sportico sponsorship and licensing account for about two thirds of turnover. To understand what it costs to get involved, read our guide to the cost of Formula 1 sponsorship.

Manufacturer support

Many teams are part of a car group, or have a manufacturer as a technical partner, and receive resources, engines and technology from it. In 2026 the grid features many manufacturers: Ferrari, Mercedes, Audi, which took over Sauber, Honda with Aston Martin, Ford with Red Bull and General Motors with Cadillac, which will use its own engine from 2029. For a manufacturer, Formula 1 is both a global marketing platform and a research laboratory, and the new 2026 rules, with a power unit that is half electric and sustainable fuels, have made the championship even more attractive to the industry.

Drivers who bring sponsors

Many small teams once survived thanks to “pay drivers”, drivers who brought a budget with them in exchange for the seat. As early as 2023 several team principals, from James Vowles to Guenther Steiner, called it an outdated model: teams are more solid, the superlicence requires specific results and team academies develop the drivers. What remains today is rather the driver who brings sponsors: that is the case of Franco Colapinto at Alpine, backed by Argentine partners such as Mercado Libre, which renewed its commitment in 2026. It is a different model: the sponsor pays for visibility, not for the seat.

Merchandising, licensing and hospitality

The fourth source of revenue is the teams’ commercial activity: clothing, licensed products, video games, events and hospitality. Its growth mirrors that of the Formula 1 audience, which reached about 831 million fans according to Nielsen’s latest estimate in 2026. The F1 Academy women’s series also contributes: every Formula 1 team supports a car in its own livery, and several brands, from Charlotte Tilbury to Tommy Hilfiger and American Express, are partners of the cars.

How much a Formula 1 team is worth

The sum of these factors, together with the budget cap that prevents unlimited spending, has turned teams into profitable companies. According to Sportico, in November 2025 a Formula 1 team was worth 3.42 billion dollars on average, up 48% in a year: Ferrari 6.4 billion, Mercedes 5.88, McLaren 4.73 and Red Bull 4.32. Forbes, using different methods, estimates an average value of 3.6 billion and average revenue of about 430 million dollars per team.

For a company that wants to sponsor, this means entering a more solid ecosystem than in the past, in which teams look for stable, multi-year partners. Since 1995 RTR Sports Marketing has helped brands build these partnerships: you will find all the information on our page on Formula 1 sponsorship, or you can contact us.

Sources: Liberty Media, 2025 results; Liberty Media, 2025 results press release; Formula 1, the signing of the Concorde Agreement; RacingNews365, team prize money in 2025; BlackBook Motorsport, Ferrari’s historic bonus; RacingNews365, Cadillac’s entry fee; Oracle, the Red Bull renewal; SportsPro, Mastercard and McLaren; BlackBook Motorsport, Mercedes’ 2025 accounts; Sportico, Mercedes’ record profit; Formula 1, the 2026 cost cap; Motorsport.com, the end of pay drivers; ESPN, Colapinto and Mercado Libre; Formula 1, the teams and F1 Academy; SportsPro, team values according to Sportico; Forbes, the most valuable F1 teams; Forbes, F1 fans according to Nielsen.