Monday, February 28, 2011

Winning Means Money in the Pocket? You Bet

Winning in Formula One brings much more than just prestige. It also brings huge financial rewards. Just look at how Michael Schumacher, the sport’s best driver for the past few years, is now one of the highest paid sportsmen in the world. Estimates of his earnings put his yearly wage packet at $30 million. That means, by the time he has read this sentence he has earned another $6! And again. And again.
Racing drivers don’t just get paid a set fee for the year, however. There are many ways that they can earn money during their career. Here are the different ways that make up the final amount a driver earns.
  • Wage: A driver’s wages are detailed in his contract with the team. The amount is usually a flat fee and includes details like the number of test sessions the driver must take part in, as well as any appearances he must make for sponsors.
  • Win bonus: Some drivers’ wage packet stays the same no matter how well they drive; others are given a bonus depending on results. This bonus is often points related, meaning drivers could earn an extra $150,000 per race win.
  • Championship bonus: Winning the championship is the aim of every driver and, because of its financial benefits, some drivers are given an extra bonus if they win the world title.
  • Merchandise: When a driver becomes successful, race fans often want to wear T-shirts or hats that portray him. Drivers often license clothing manufacturers to produce goods for them in return for a small percentage of profits. Some can earn several million dollars from merchandise rights.
  • Endorsements: Companies love having their products endorsed by a world famous name, and racing drivers can fit perfectly into this category. Formula One drivers can earn several thousands of dollars by giving their names to anything from petrol to shampoo.
  • Personal sponsorship: Some teams allow their drivers to have their own sponsors who don’t deal with the team at all. In exchange for a badge on their overalls or helmets, drivers can earn hundreds of thousands of dollars of extra income.
If a driver wins a lot, then his earning power increases dramatically. For a new driver, just starting out on his Formula One career, he can expect to earn anything from $60,000 upwards for his first season. But as soon as he establishes a reputation as a good driver, he can easily begin to take home more than $1 million per season.
Unlike other forms of racing series, however, especially those in the United States, Formula One teams and drivers are very secretive about what they earn. All the details are locked up in the top secret Concorde Agreement, a covenant signed by all the teams that details how much each team earns from the sale of television rights and other endorsements, like computer games. No one outside the teams knows the exact details of how the payment is split up, but it is widely accepted that teams split between them 47 per cent of television money – believed to be around $300 million in total.

The Bernie Awards: Formula One’s Oscars

Even if a driver has not had a successful season, it does not mean he ends the year without any trophies. Formula One supremo Bernie Ecclestone recently created a series of awards, nicknamed “The Bernie’s”, which are the sport’s equivalent of the Oscars.
A panel of experts and other drivers vote for who should receive these trophies, and they go to various categories each year. The categories include the best track, the best rookie, and the best driver. There is also a special award called the “Drivers’ Driver”, in which every driver – and test driver – votes for the man they consider to be the best in the sport. This accolade is very prestigious because it appreciates the efforts of drivers who sometimes don’t drive for the best teams.

Getting the trophy

No matter when a driver or team wins the Formula One World Championship, they have to wait until the beginning of December to actually get their hands on the trophy itself.
In December, motor racing’s governing body, the FIA (Federation Internationale de l’Automobile), holds its annual awards ceremony in Monte Carlo. This is a black-tie function where all of the winners from motor racing championships around the world are presented with their awards. This evening receives great media coverage around the world and provides the perfect end to the season for a driver – especially if he’s won the World Championship.