How is F1 prize money distributed? Tracking the millions that teams receive

At the start of the 2021 F1 season, all the teams, the heads of the sport, and the FIA came together to sign a new concorde agreement. This is a contract that dictates the terms by which the teams compete in races and how the prize money is distributed amongst them.

The current concorde agreement brought massive changes to how the prize money collected over the season is divided amongst the teams.

Prior to 2021, there was no cost cap applied to teams and there was quite a large gap in the prize money between the teams. Hence, only the front-running teams were able to win races and podiums as they invested a lot of their prize money into developing their car. However, after Liberty Media took over the Formula One Group, they changed how the prize money is distributed amongst teams.

With the new concorde agreement, the prize money difference between the top and bottom teams has decreased quite a lot. As of now, the top team receives 14% of the total prize pot, whereas the bottom team receives 6% of it. Previously, the top team used to receive 20% and the bottom team received only 4%.

As for the total prize pot size, it is estimated to be around $2.2 billion. Out of this massive amount, around $800 million is written down to Liberty Media's expenses for running F1. Additionally, around $400 million is kept as a separate bonus pot, leaving around $1 billion to be distributed to the teams based on their constructor standings.

Previously, teams like Ferrari, Mercedes, McLaren, Red Bull, and Williams used to receive hefty bonuses for being prestigious teams. However, all these bonuses have been removed in the latest agreement, with the exception of Ferrari's bonus for being the oldest team on the grid.

With the new contract, if a team has won a single constructors' title, they will receive a basic bonus. Whereas, if a team has won two or more constructors' titles, they will receive a slightly bigger bonus.

There is another system for giving bonus prize money where the top three teams from the past 10 years are recorded and given either three, two, or one point. The more points a team has amassed over the past 10 years, the more bonus prize money they will get every year.

Of course, all these financial values are simply estimates since F1 always keeps this information highly confidential.

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FIA president feels F1 will always have controversy because of its intensity

FIA president Mohammed Ben Sulayem recently spoke to the media about how F1 will always have some controversy around it. He put it down to how teams on the grid are constantly performing on the limit and are extremely passionate about F1. He said:

"You will always see controversy here. That happens in the battle between the teams that perform at the limit. They always find something. Every hour is a new challenge."

Furthermore, the FIA president also explained why the governing body of the sport is complicated. Since the organization monitors several other motorsport series like Formula E, Karting, WEC, and even Rallying, certain things can go sideways while managing everything.