In 2011 F1’s operating costs also increased as it upgraded its cameras to
broadcast in high definition for the first time. This contributed to a 15pc
rise in operating costs to $180m which left F1 with an operating profit of
$108.5m. It then paid $913m in non-cash interest on $3.1bn of inter-company
loans which are part of a complex but perfectly legitimate tax avoidance
structure.
This sees F1 paying around 4pc tax despite 14 of the 30 companies in the group
being located in the UK where the main rate of corporation tax is 25pc. It
pushed Delta 2 into a net loss of $731m but stripping out the interest on
inter-company loans and amortisation payments gave it profits of $412m, up
10pc on the previous year.
During 2011 F1 paid off $159.6m of its bank debt and had $1.6bn outstanding at
the end of the year. This left it with a cash surplus of $188.3m taking its
total in the bank to $507.8m.
The road ahead may not be so smooth as the contract which commits the teams to
race in F1 expires at the end of this year and has not yet been extended.
The accounts state that “the directors are confident that through these
discussions terms will be agreed for all teams to continue to participate
beyond 2012.”
F1’s chief executive Bernie Ecclestone faces the additional threat of being
implicated in a criminal case in Germany after Gerhard Gribkowsky, a banker
who oversaw the sale of F1 to CVC in 2006, claimed he received a $44m bribe
from Mr Ecclestone and his family trust to wave through the deal. Mr
Ecclestone has not been charged and says that he paid Mr Gribkowsky after he
threatened to give false information about his tax affairs to HM Revenue and
Customs.