In recent weeks there has been much talk of introducing a £112m ($150m) budget cap and one of the latest to support it is Haas. There is good reason for this as an article for Forbes by Christian Sylt reveals that the budget of the company which runs the team is well within the limit.

When American businessman Gene Haas announced his intention to launch a Formula One team in 2014 there was much scepticism about whether he could pull it off let alone race competitively. Now, three years later, it has proven itself.

The team finished eighth in its inaugural season and currently lies in the same spot. It doesn't sound like much but Haas has actually had more points-paying finishes than any all-new team this millennium. The runner-up was Toyota and unlike the Japanese squad, Haas has carefully counted its pennies from the outset.

Just as the company which ran Toyota's F1 team was based in Germany whilst its owner had its HQ in Japan, Haas is run from Oxfordshire even though its parent company is in North Carolina. However, unlike Toyota, which made its own engines and designed its own chassis, Haas has an engine lease agreement with Ferrari whilst Dallara supplies design services.

According to Forbes, the 2016 accounts for Haas Formula, the company which runs the team, state that it has "commitments under operating leases" and "commitments to acquire services." The former cost the team £23m last year whilst the latter came to £25.6m.

It means that Haas Formula doesn't need to spend money on, or employ people to do, research and development on the engine or chassis which is incredibly cost-intensive. It has kept its costs under control and its accounts show that last year total expenses came to £94.9m with a workforce of just 57. In contrast, Red Bull Racing, the company which manages the F1 team, has 58 staff but costs of £197m including £10.1m of research and development spending whereas Haas Formula's accounts show none.

Its accounts reveal that in addition to the spending on Ferrari and Dallara, the 57 staff were paid a total of £4.3m and "other operating leases" cost the team a total of £16.2m. It took a £11.7m hit on currency exchange differences when the value of the Pound plummeted following Britain's Brexit vote in June last year. Next up was a £1.8m charge on depreciation of the team's assets and finally £12.3m of administrative expenses.

It brings the team's total costs to £94.9m which was covered by revenue in the form of fees from its parent company in North Carolina. The same goes for its small subsidiary in Italy which gives design support and had costs of just £7.1m last year. Although its accounts don't show staff numbers, they state that it only spent £523,000 on salaries. It is understood that including the staff in North Carolina this brings the total to around 200 but it isn't possible to verify this, or tell whether they work across F1 and the Stewart-Haas NASCAR team, as American companies aren't obliged to file publicly-available accounts.

The Haas Formula accounts show that its revenue came to £100m last year, leaving it with a £4.1m net profit after paying the £94.9m costs and £1m of tax. The bulk of the profit went in the bank as the accounts show that the team had cash reserves of £4.6m by the end of 2016, up from £1m the previous year.

Its bottom line should get a boost this year as the team is receiving around £22m of prize money in line with its eighth place in the 2016 standings. Despite this being a turbocharged performance on a modest budget Haas himself recently said it needs to do better.

"We're certainly committed to Formula One," he said but ominously added "if we never have a chance to win, I'd really have to question why we're here". A change in the regulations could boost his chances but this isn't expected for another three years and only time will tell whether Haas is prepared to wait that long.

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READERS COMMENTS

1. Posted by bfairey, 02/10/2017 18:37

"The last time Dallara designed and built a F1 car it was a load of junk
now what is different? And what part does the North Carolina plant
have to play?"

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2. Posted by Uffen, 02/10/2017 18:15

"Dallara does the chassis work. They do it inexpensively, according to Haas. But you get what you pay for. Dallara is making money off the Haas contract, so Haas must be getting (budget - x%) worth of chassis work from them. As mentioned by Spindoctor, Haas are obviously in it for the exposure.

As is so often said, no one remembers who finishes second - so we know who remembers who finishes eighth. "

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3. Posted by Spindoctor, 02/10/2017 11:05

"Very impressive Financial Controls. They'd win an Accountancy race hands down, but stand no chance of being anything other than also-rans in F1....
Not much of an ambition, but I suppose the "exposure" is worth the cost, as relatively cheap advertising."

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The real reason Haas is in favour of a budget cap

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