Prize money and how teams make money
An F1 team's income comes from three main places: its share of the sport's revenue, paid out as prize money; sponsorship; and the money its owners put in. Some teams also earn from selling engines or parts to other teams.
The Concorde Agreement
The rules on how the sport's money is shared are set out in the Concorde Agreement, a contract between Formula 1 (the commercial rights holder), the FIA and every team. It also covers things like how many races there can be, how rules are voted on, and what a new team has to pay to join.
The current agreement is the ninth. It runs from 2026 to 2030 and was signed in two parts: the commercial side in March 2025 and the governance side, which involves the FIA, in December 2025. All 11 teams signed both.
The exact terms are confidential, so the figures below come from reports and from the published accounts of Liberty Media, F1's owner.
How the prize fund is shared
Formula 1 earns money from TV rights, race hosting fees, sponsorship and hospitality. After its own costs, a share goes into a prize fund for the teams. In 2025, according to Liberty Media's filings, teams received around $1.4 billion in total.
Most of that is paid by finishing position in the Constructors' Championship. Each place is worth a set slice of the fund, and a team gets more the higher it finishes. Reported estimates for 2025 had the champion team earning around $175 million and the last-placed team around $75 million, with roughly $11 million between neighbouring positions.
Two other payments come on top:
- a smaller pot shared between teams that have won titles or finished in the top three over recent seasons
- a long-standing bonus for Ferrari, as the only team that has raced in every season of the World Championship since 1950
These extras mean Ferrari can end up with the biggest cheque of any team even in a year when it doesn't finish first.
Prize money is generally paid based on the previous season's results, which is why a team's bank balance can lag behind its form on track.
Sponsorship
Sponsors are the other big source of income. Teams sell space on the car, the drivers' overalls and the team kit, and many have a title sponsor whose name is part of the team's official name. Teams also sign technical partners who supply products such as fuel, lubricants, computing or tools, sometimes in exchange for money and sometimes in exchange for the product itself.
Drivers can bring sponsors too. In the past, "pay drivers" bought seats with personal backing. That still happens in a quieter form, but the super licence points system means drivers now need results as well as money.
Owners and manufacturers
Most teams are owned either by car makers (such as Ferrari, Mercedes and Audi) or by wealthy individuals and investment groups. Owners can put in money to cover losses, though the cost cap limits how much of it can be spent on the car.
Since the cost cap came in and revenue has grown, teams have become far more valuable. Several now report profits, which was rare for anyone except the top teams before 2021.
Selling to other teams
Teams that build engines sell them to customer teams. Some teams also sell other parts, such as gearboxes and suspension, to partner teams. See engine manufacturers and customer teams.
Drivers' pay
Drivers are paid by their teams, not by Formula 1, and there's no prize money for individual race results. A driver's earnings depend on their contract, including any bonuses for wins and titles. See driver contracts and the transfer market.