Red Bull profitable sans Vettel; a lesson in driver selection and profit?

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Perhaps reducing your expenses seems like a good way to increase your profitability and that’s apparently what Red Bull did last year when they parted ways with 4-time champion Sebastian Vettel. Vettel accepted an offer to go to Ferrari and this list a gaping hole of £13m in expenses they didn’t have to factor into their balance sheet.

As the Independent reports:

“Recently-filed accounts for Red Bull Technology, the company which owns the team, show that its costs in 2015 fell by 11.3%. They came to £225.5m on revenue of £235.6m which primarily comes from three sources: prize money, sponsorship and payments from its parent, the energy drinks company Red Bull.

…Red Bull remained with Renault and boosted its research and development spending by £17.5m to hit a total of £98.3m in a bid to improve its chassis and return to its winning ways this year. The team also added 36 staff, mostly in the design, racing and production departments, giving it a total of 730 who were paid a combined £70m. It paid off.”

On one hand, you have teams looking for younger and younger drivers with serious financial backing to get to the F1 ranks and the big teams are looking for younger drivers that have the skills to win championships such as Lewis Hamilton back in 2007, Vettel in 2009, Max Verstappen this year at Red Bull. These young drivers are a good combination of youth, skill and low cost to the teams unlike world champions such as Vettel, Alonso or Hamilton are now.

It brings to point the notion that Ferrari have always gone for proven race winners if not championship winners and they pay dearly for the opportunity. Is there a sweet spot that catches young driver right at their rise to the top without incurring the at-the-top salary expense?

On the other side of that coin, and in defense of Ferrari’s traditional approach to driver selection, a champion can gain you several tenths in lap times in your car. There is no question that Honda McLaren’s decent results this year are due, in large part, to the experienced driving of Fernando Alonso and Jenson Button. It takes a team but these two drivers have placed that car in positions it most likely wouldn’t have been able to place in an average driver’s hands.

There used to be this notion, and I hope I have the exact time correct, but the paddock would often say that Michael Schumacher was worth five to seven tenths in any car such was his skill and the same has been said of Alonso. We could argue that but the point folks are making with this kind of comment is that champions bring more than just large salaries, the question might be, how many Daniel Ricciardo’s and Max Verstappen are out there who are serious contenders but aren’t representing a $40m yearly salary?

Hat Tip: The Independent

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8 Comments on "Red Bull profitable sans Vettel; a lesson in driver selection and profit?"

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Jack Flash (Australia)
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Jack Flash (Australia)
That’s all the “Red Bull Young Driver Program” is about. More so than any other F1 team’s Academy program. Red Bull churn over young ‘Open Wheel’ talent trying to find that near flawless diamond in the rough, amongst the cloudy diamonds in the rough. The ones with speed, poise, racing chops and team skills. These things only emerge under pressure to perform. Redbull are looking to get super talent, cheaply, at the upcurve of their career… and they pour in millions to have that Talent Stable to pick through. That’s what they are about. Vettel. Ricciardo. Verstappen. (although Verstappen was… Read more »
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Yup!

I also thought while reading this article and post, that the savings from not hiring veterans can go right into hiring top designers that will have the resources to make better cars.

Angela
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Angela
This article doesn’t add up to me. Vettel joined Torro Rosso as a rookie. He was then promoted to the Red Bull senior team alongside Webber. All the time, his salary was determined by Red Bull. So the exorbitant salary paid to Vettel by Red Bull was their own decision based on their opinion at the time of Vettels worth. So if I take the thrust of this article literally, then Red Bull should have dispensed with Vettels services the moment he became expensive and dicounted his talent and expertise altogether. As I said, it doesn’t add up. If I… Read more »
Jack Flash (Australia)
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Jack Flash (Australia)
When Vettel moved to Ferrari, his salary reputedly jumped two-fold. This is the money that Ferrari/Sponsors were willing to pay Vettel as a four-time WC to drive for the Scuderia. Red Bull wants driver “value”. RBR doesn’t mind paying a sum for keeping the supreme talent it finds, but in the balance of things, it won’t pay the kind of Sponsor Inflated sums that Ferrari, McLaren and Mercedes are to lure them away and keep them long term. The Red Bull YDA keeps providing new opportunities for driving hotshoes, and if they are good, they keep them on performance based… Read more »
Angela
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Angela
As soon as Vettel was due Contract update, and his worth in return to RBR outstripped his $$$ demands… they moved on. From your assertion above, You are saying that Red Bull wanted to be rid of Vettel because he was too expensive. I have never come across such a statement from anybody before now so please provide a reference for your statement. And then of course, it was just coincidence that Ferrari were looking to replace Alonso at the same time so Vettel said to Red Bull, “don’t worry about a salary increase, I will just move to Ferrari”… Read more »
Jack Flash (Australia)
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Jack Flash (Australia)
Of course Vettel’s “free will” had a big part in his separation from Red Bull. He had a driven interest in driving for Ferrari, emulating his hero Schumacher, and the $30 million dollar offer from Ferrari put significant motivation to leave as a free agent, I am sure. What I was saying is that faced with Vettel’s offer and intent to leave in mid 2014, Red Bull did not protract a long fight for his services with counter $$ offers of that magnitude. As a team, they must of evaluated what they though Vettel was worth to try to lure… Read more »
Jack Flash (Australia)
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Jack Flash (Australia)

To me.. both our viewpoints have merit.

Zachary Noepe
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Zachary Noepe
Just keep in mind Red Bull haven’t been champions since he left. Is that a coincidence? probably. But I think it raises the issue of whether you’re racing to win or to make money, and they’re probably not the same. I would guess that the sweet spot is to be on the podium enough to keep the sponsors in the public eye, but without spending enough to win it all. I would guess it takes five times as much money to go from 3rd to 1st as it does to go from 7th to 5th. If you want the best… Read more »