F1 has released the financial numbers for Q2 of the ongoing 2023 season which saw less races and drop in total revenue.
Well into the 2023 season, Liberty Media has released the financial details of the ongoing F1 season for Q2 which saw six rounds in all after Emilia Romagna GP was cancelled. Looking at the numbers, the total revenue of F1 stood at $724 millions in 2023 when compared to $744 millions in 2022 for the same period.
The decrease in the ‘primary’ revenue was primarily due to growth across race promotion and sponsorship offset by a decline in media rights revenue. Even though there was one less race, there was growth in race promotion due to contractual increase.
The primary revenue – race promotion revenue, media rights fees and sponsorship fees – in 2023 was down to $618 millions from 2022’s $628 millions. The other revenue dropped to $106 millions in 2023 from $116 millions in 2022 due to lower freight income.
The same period saw F1 pay the teams $344 millions in 2023 as opposed to $368 millions paid in 2022. The operating income had minimal increase to $72 millions in 2023 from $65 millions in 2022. The total income of F1 after adjusted OIBDA had slight increase from $154 millions in 2022 from $155 millions in 2023.
There was $7 million of costs associated with the planning of the Las Vegas GP later in the year. “Formula 1 is capitalizing on our growth momentum and our fans are engaging with the sport across traditional, digital and social media platforms,” said Stefano Domenicali.
“We congratulate Red Bull on their record-breaking performance season-to-date, and are thrilled to see the gaps closing across the rest of the grid to produce exciting rivalries on track. Next year we will host 24 races around the globe, with back-to-back races in closer proximity which will benefit the efficiency of operations for both F1 and our teams.”
Here’s the explanation from Liberty Media –
There were six races held in the second quarter of 2023, compared to seven races held in the second quarter of 2022. The Emilia-Romagna (“Imola”) Grand Prix originally scheduled for May 21, 2023 was cancelled following severe flooding in the region and is not expected to be rescheduled or replaced in 2023. There are now 22 events scheduled on the 2023 race calendar. Primary F1 revenue decreased in the second quarter with growth across race promotion and sponsorship offset by a decline in media rights revenue.
Despite one less race held in the current period, race promotion revenue grew due to contractual increases in fees and sponsorship revenue increased due to recognition of revenue from new sponsors and growth in revenue from existing sponsors. Media rights revenue decreased due to the impact of lower proportionate recognition of season-based income (6/22 races took place took place in the second quarter of 2023 compared to 7/22 in the second quarter of 2022), partially offset by continued growth in F1 TV subscription revenue and increased fees under new and renewed contractual agreements.
Other F1 revenue decreased in the second quarter primarily due to lower freight income driven by the easing of freight cost inflation on billing rates and lower hospitality revenue due to one less race held in the current period, partially offset by increased licensing income and higher revenue related to Formula 2 / Formula 3 car chassis sales. Operating income increased and adjusted OIBDA was relatively flat in the second quarter despite one less race taking place. Team payments were lower compared to the prior year due to the pro rata recognition of payments across the race season with one less race held, partially offset by an expectation of increased team payments for the full year.
Other cost of F1 revenue is largely variable in nature and is mostly derived from servicing both Primary and Other F1 revenue opportunities. These costs increased as significantly lower freight costs were offset by increased hospitality costs associated with servicing higher Paddock Club attendance and cost inflation and higher commissions and partner servicing costs associated with growth in Primary F1 revenue streams. Other cost of F1 revenue in the current period also includes hospitality, travel and other costs related to the Imola event that had largely been incurred prior to the event’s late cancellation.
Selling, general and administrative expense decreased in the second quarter due to lower personnel and legal costs and foreign exchange favorability, partially offset by higher marketing, property and IT costs. There were $7 million of costs associated with the planning of the Las Vegas Grand Prix included in selling, general and administrative expense in the second quarter of 2023.
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