Formula 1’s earnings break away without a race. Liberty Media estimates the drop in sales in the first quarter of 2020 to be over $ 200 million. The second quarter should also look bleak.
It is a difficult time for the ten teams, FIA and Liberty Media. The fastest traveling circus in the world is currently at a standstill. Formula 1’s sources of income dry out without racing. Ten grands prix have been canceled or postponed indefinitely due to the global corona crisis.
That has consequences. Track operators and promoters do not have to pay entry fees. Because Formula 1 cannot do justice to the contracts, the money of the TV stations doesn’t flow either. Revenue from advertising and sponsorship, which is tied to races, does not appear. Other sources of income, such as the Paddock Club, a VIP era in the paddock, are not making any difference either. The corona virus depresses sales and leads to losses.
Bad operating result
The operating company Liberty Media puts the loss in sales in the first quarter at 207 million US dollars (about 191 million euros). While revenue was $ 246 million in the first three months of last year, this time it is only $ 39 million. Where does this income come from, for example? Some sponsorship contracts are not linked to racing events.
Liberty Media’s first quarter operating loss was $ 152 million. In the same period last year, the Formula 1 group’s loss was $ 58 million.
The F1 Group’s operating profit deteriorated from a profit of $ 59 million to a loss of $ 42 million. Liberty Media gives the operating income before depreciation and amortization (OIBDA). Interest and taxes are not included in the OIBDA.
Formula 1 liquidity guaranteed
Formula 1 hopes that the corona crisis will weaken by July, and then you can start again. It is planned to start the season in Austria on July 5. The goal is a racing calendar with 15 to 18 races. This would secure the income from the TV contracts.
No races will take place in the second quarter of 2020 either. This will have a negative impact on the books. Formula 1 has prevented. Around 50 percent of the workforce has been on forced leave paid by the state since April 3. Top managers waive part of their salary.
Ferrari – GP Abu Dhabi 2018
Mercedes – Formula 1 – GP Azerbaijan 2019
Red Bull – Team Photo – Austrian GP 2019
Renault – team photo – French GP 2019
McLaren – Pit Stop – GP England 2019
Haas – GP England 2019
Toro Rosso – team photo 2018
Alfa Romeo – team photo 2019
Lance Stroll – Racing Point – Formula One – Austrian GP – Spielberg – June 28, 2019
Williams – Formula One – French GP – Le Castellet – June 20, 2019
Liberty paid no racing team in the first quarter. It has now leaked that Formula 1 has given some teams an advance in recent weeks to fill the biggest financial holes. That should be Haas, Alfa Romeo (Sauber), Racing Point, Alpha Tauri and Renault.
You don’t have to worry about the liquidity of Formula 1 after the quarterly figures. Liberty speaks of $ 2.5 billion in cash and cash equivalents – including one billion of F1’s liquidity. The operating company is looking for fresh sources of money. The announcement states: “We intend to offer Liberty SiriusXM shareholders a subscription right offer of $ 750 million on May 18 to redeem the intra-group loan to the Formula One Group.”