Formula One have experienced a US$596 million decrease in revenue following the enforced break caused by coronavirus.
Compared to last year’s second quarter figures, F1’s revenue has fallen by 96 per cent as cancellations and postponements amounted to US$122 million in operational costs for the motor racing championship.
Between April, May and June, F1 relied on their primary revenue streams as no races took place during those months. Generating US$12 million from broadcasting, sponsorship and race promotion fees. However, compared to the same three months last year, F1 generated US$531 million from the same revenue sources.
An additional US$77 million was lost from other revenue streams dropping from US$89 million to US$12 million this year. Yet, the motor racing series saved US$335 million in payments, the amount they spent in Q2 of 2019 to teams, as races were cancelled. Other costs fell by 85 per cent due to deferrals of non-essential expenses.
Following the announcement of the figures, Liberty Media, owners of Formula 1, said it “continues to monitor and assess the effects of the Covid-19 pandemic on its operations, wholly-owned businesses and various investments”.
Throughout the second quarter of the year, Formula One have adopted cost-cutting measures to help cope with the loss in revenue by implementing salary reductions. 50 per cent of staff in the UK were furloughed using the government scheme paying 80 per cent of employee wages.
Going into the third quarter of the year, F1 are expected to see costs return back to ‘normal’, considering the 2020 season re-starting on July 3.
To assist with cash reserves during the enforced break, Liberty Media secured US$1.4 billion by transferring a 33 per cent stake from Live Nation to radio broadcaster SiriusXM in April. Following that, in June Liberty Media announced their alteration of their term loan worth US$2.9 billion, as well as their revolving credit facility, worth US$500 million, with subsidiary Delta Topco.
Chase Carey, Chief Executive of Formula One has said, “During the break, we continued to move the business forward with a reduced cost cap for the 2021 season and announced new broadcast and sponsorship deals.”
Following the Q2 figures, Formula One have extended their partnership with AMC Networks giving exclusive rights to broadcast races in Slovakia and Czech Republic until 2023.
This weekend, Formula One heads to Barcelona for the Spanish Grand Prix having held races in the UK, Austria and Hungary as part of the restart.
Author: James Parker