Liberty Media shared details of the Q3 of F1 2020 as numbers drop with regards to 2019 despite more races as COVID-19 continues to hurt business.
After the first quarter saw no racing, the second had three, while the third saw the maximum of 10 – which was three more than what took place in F1 2019 in the same period. The numbers were down still for Liberty Media due COVID-19.
The lack of fans were not the only reason for the numbers hurting but the contract renegotiation, whether it was with the F1 circuits or the broadcasters did play a significant role as well. The total revenue – without any cuts – stood at $597 million.
Despite the three extra F1 races, it was still $36 million less than 2019 in the same period. There was fall in both Primary and Other Expenses, with the former at $524 million in 2020 to $553 million in 2019, while the latter stood at $73 million this year to $80 million.
Team payments saw a slight increase from $335 million last year to $441 million in F1 2020. The operating income saw a huge fall – taking all the cuts into account – as it stood at a loss of $104 million for 2020, as opposed to a profit of $44 million in 2019.
Liberty Media noted $8 million in corporate level selling, general and administrative expense. “We are incredibly proud of the way our Formula 1 community has come together to face the challenges and return to racing in a safe way, and we’ve seen excitement both on and off the track,” said the current F1 chief, Chase Carey.
“Lewis Hamilton broke Michael Schumacher’s record of 91 wins and he keeps raising the bar. Alongside the FIA and all ten teams, we were pleased to announce the signing of the new Concorde Agreement that further builds on the foundation for the long term future of our sport, along with the significant regulatory changes scheduled for 2022.
“After four years at Formula 1, I look forward to staying involved as non-executive Chairman with Stefano Domenicali assuming the role of CEO in 2021. I want to thank everyone at Formula 1, the FIA, teams, promoters and other partners who have been key to our success,” he summed up.
Here’s the full note from Liberty Media explaining the financial statement:
“Due to the COVID-19 pandemic, the start of the 2020 season was postponed until early July, with certain races cancelled and others rescheduled to later dates. The 2020 revised calendar consists of 17 events beginning July 5 and ending December 13. There were ten races held in the third quarter of 2020 compared to seven races in the third quarter of 2019. Fans were only in attendance in reduced numbers at one race in the third quarter, and similar limited capacity crowds have been present at two subsequent races.
“Currently, F1 does not expect to have fans at any of the remaining 2020 races. Results in the third quarter of 2020 were impacted by the absence of fans, the location of races as well as the timing of the revised race calendar and pro rata recognition of certain revenue streams, with 10/17 races taking place in the third quarter of 2020 compared to 7/21 in the third quarter of 2019.
“Primary F1 revenue is comprised of (i) race promotion fees, (ii) broadcasting fees and (iii) advertising & sponsorship fees. Primary F1 revenue decreased mainly due to the limited race promotion revenue received since fans were prohibited at all but one race during the third quarter. This was partially offset by growth in broadcasting and advertising & sponsorship fees due to the impact of higher proportionate recognition of season-based income with three additional races during the current period, as well as the impact of recognizing revenue over fewer races in 2020.
“However, both broadcasting and advertising & sponsorship revenues were lower than originally contracted. The altered schedule triggered lower broadcasting fees pursuant to the contractual terms within certain broadcasting agreements and also led to other one-time changes as certain broadcasting fees were renegotiated for the current year. Additionally, Formula 1 has been prevented from delivering all elements of a typical sponsorship offering due to the cancellation of races to which contracted sponsorship inventory specifically related and the limited activities at the races, including hospitality, leading to one-time changes in sponsorship contracts.
“Other F1 revenue decreased in the third quarter due to the non-operation of the Paddock Club and lower freight revenue, partially offset by increased revenue from the F2 and F3 support series as there were three additional races in the current period compared to the prior year. Operating loss increased and adjusted OIBDA decreased in the third quarter.
“Team payments increased partially due to one-time fees paid to teams upon signing the new Concorde Agreement as well as the pro rata recognition of prize fund payments across the race season. Other cost of F1 revenue is largely variable in nature and mostly relates directly to revenue opportunities. These costs increased in the third quarter due to the increase in number of races compared to the prior year, partially offset by lower hospitality and lower freight costs, as only one flyaway race took place in the current period. Selling, general and administrative expense decreased due to favorable foreign exchange rates and lower discretionary marketing expense.”
Here’s Liberty Media with the Q2 results of F1 2020
Here’s details of Q1 of F1 2020 from Liberty Media