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Red Bull Investment in Toro Rosso is $80M Per Year — But Why?

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The Red Bull investment in Toro Rosso approximates $80 million

The Red Bull energy drinks company’s involvement in Formula One is two-pronged: it runs the Red Bull Racing (RBR) team as well as Scuderia Toro Rosso (Italian for “Team Red Bull”). The latter has always been the junior team, where aspiring Red Bull drivers first go before moving on to RBR.

In Red Bull’s 14-year involvement in the sport, Toro Rosso has only won a single race. RBR has won 58 and four championships to go with them. And yet a new report has revealed that despite Toro Rosso’s lesser status, Red Bull nonetheless spends an inordinate amount of money on the team. Of the $187 million or so that the entire outfit gets for F1, the Red Bull investment in Toro Rosso amounts to about $80 million, or 43 percent of the total.

The gap does get larger once you begin to factor in sponsorship and prize money, but it still raises an interesting question. Given the massive performance difference between RBR and Toro Rosso, which has consistently finished around seventh in the constructors’ championship, why does Red Bull value the Toro Rosso team enough to invest a whopping $80 million into it?

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The most obvious answer is that Toro Rosso helps RBR be an even better team than it would be alone. It provides an environment where drivers can be further developed in F1 before they get behind the wheel of a car that has the ability to win championships, which comes with a degree of pressure that can easily get the better of an unprepared driver.

The best engineers can also filter up to the RBR team, and in general Toro Rosso can act as a lower-pressure test-bed for technologies and even new partnerships. This is happening right now with Honda, which began supplying engines to Toro Rosso in 2018. Red Bull used this as an opportunity to assess Honda’s potential and decided to sign with the manufacturer for 2019.

The marketing value also can’t be underestimated. Mercedes estimates that its involvement in F1 alone is worth about $3 billion in advertisement per year. Toro Rosso doesn’t get nearly the same amount of exposure, but it’s bound to make a dent in getting that $80 million back.

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