Hamilton’s road to riches

Formula One drivers are some of the highest paid sports stars in the world and the best stand to make hundreds of millions of dollars during their career. New research highlights the earning power of the 2009 grid

Driver earnings can be affected by many factors in Formula One. Skill is only a part of it, with marketing appeal, nationality and the luck of being in the right place at the right time all influencing a driver’s earning potential. But shedding light on the future earning power of F1’s stars, new research by F1 industry monitor Formula Money has revealed the predicted career wealth of all last year’s competitors.

The Driver Value Index predicts that 2008 world champion Lewis Hamilton will earn more in his career than any other driver who competed in F1 during last season. The 25-year-old Briton was paid an estimated US$20m in 2009 by McLaren and already makes more than any other driver from sponsorship receiving an estimated US$11m last year from brands including Reebok and banking group Santander. The research shows that Hamilton is expected to make US$614.8m over his career – even more than has been earned by superstar driver Michael Schumacher who returns to the sport with Mercedes this season after a three year hiatus.

The research was calculated by working out the average career length for all drivers who retired in the last decade and then multiplying the current drivers’ estimated years remaining in the sport by their average annual earnings. The results were then weighted for world champion drivers and also for those who won their first race or point ahead of the average.
To date Schumacher has earned more than any other driver in F1 with his pay from Benetton and Ferrari coming to an estimated US$336m. Further sponsorship payments of US$155m over his 16-year career in F1 bring his total earnings to US$507m. Although it is believed that Mercedes will pay him US$10m annually it isn’t expected that Schumacher’s total tally will accelerate significantly since it is unlikely that the 41-year-old German will remain competitive for more than a few years.

Even German TV channels aren’t banking on the seven-times champion having the same kind of draw that he did in the early 2000s. According to IP Deutschland, the agency which sells advertising for German host broadcaster RTL, the cheapest 30-second slot during a Grand Prix this year is €21,900, a drop of €1,500 on last season. The top rate, for a slot during the prime-time Brazilian GP has risen from €82,800 to €93,000, but it’s still a long way from the €117,000 that was charged for a slot during Schumacher’s ‘farewell’ race in 2006.

In contrast to Schumacher, Hamilton has a potentially long career ahead of him and in addition to this as the youngest ever F1 world champion he has been a high earner from an early age. Should he win another championship his earning power will rise again. However, even Hamilton’s predicted earnings won’t make him the world’s richest sportsman. Last year, before the recent scandals drove away several of his sponsors, Forbes magazine calculated that Tiger Woods had become the first sports star to make a billion from career earnings. The golfer made more than US$100m in 2009, more than twice as much as the best-paid F1 driver Kimi Räikkönen on US$45m.

Räikkönen takes second place in the Driver Value Index with predicted career earnings of US$383.3m. This is buoyed by his high level of earnings from endorsements (at US$8m, second only to Hamilton) and because he was the sport’s highest-salaried driver since Schumacher’s premature retirement, earning an estimated US$37m annually at Ferrari. His departure from F1 this year to join World Rally is unlikely to change this as his proven earning potential would doubtless affect his salary if he returns to F1, as he has indicated he might.

Despite being the current world champion Jenson Button only ranks fourth in the list with total career earnings of US$236.7m – less than a quarter of Hamilton’s estimated haul. As Button has only just won the title in his 10th season and at the age of 30, he hypothetically has less time remaining in F1 to reap the additional financial benefits that a world title brings. He won just one race prior to taking the F1 title last year which, when combined with his age explains his position in the ranking.

Some potential stars of the future, such as Sebastian Vettel (US$71.4m) and Robert Kubica (US$59.6m) appear relatively far down the ranking. This is due to the fact that total career earnings for drivers close to the start of their careers have been projected using an average career length for a competitor of their standing. If drivers such as Vettel and Kubica race for as long as Rubens Barrichello, or win as many championships as Schumacher, then their earning potential will dramatically expand.

On average the drivers will earn US$83.6m over their careers, confirming F1's place as one of the most lucrative sports for its competitors. However, even F1 drivers were hit by the economic downturn. The average driver salary fell from a record US$7.78m in 2008 to US$6.43m last year with Button and two-time world champion Fernando Alonso both taking pay cuts to help their teams stay in the race. Neither of them have suffered in the long-term for their sacrifice. Button’s world championship was a testament to his faith in Brawn, while Alonso will this year take home the highest salary in the history of the sport, with US$40m from his new team Ferrari. It’s a sign that things are looking up financially, at least from a driver’s perspective.