Formula 1 saw its second quarter 2020 revenue crash by 96 percent compared to the same period last year as Grand Prix racing’s numbers suffered massively from the impact of the global COVID-19 pandemic.
The sport’s disrupted schedule which included no races during the April-June period logically hit commercial rights holder Liberty Media’s top and bottom lines.
F1’s revenue crashed from $620 million for the second quarter of 2019 to a mere $24 millions for Q2 2020, with income limited to various sponsorship payments.
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F1 has posted a $14 million profit in the same period last year but the lack of revenue in Q2 led to a $136 million loss in the quarter.
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F1 indicated that the sport’s ten teams received no revenue during the April-June period, “since such payments are recognised on a pro-rata basis as races take place on the calendar”.
Furthermore, while F1 has been able to rebuild a calendar for the second part of the year that it hopes will include at least 15 to 18 races, the waving of the promoters’ race fees by Liberty Media will inevitably impact Q3 and Q4 revenue which will include only TV rights and sponsorship income.
“Since there were no events held during the second quarter of 2020, revenue recognition was limited, with recognised primary F1 revenue in the period consisting only of the elements of sponsorship contracts associated with non-race related rights,” stated Liberty on Monday.
“No race promotion fees nor broadcasting fees were recognised. Similarly, other F1 revenue decreased due to zero revenue being generated from the Paddock Club and other event-based and television production activities.”
To mitigate the impact of its economic downturn, “F1 implemented certain cost cutting measures in the second quarter, including the elimination or deferral of non-essential expenditures, salary reductions and lower bonus accruals.
“F1 also utilised [UK] government-supported furloughs in respect of approximately 50% of its employee base for varying periods. Personnel costs are expected to return to more normalised levels in the third quarter as most furloughed staff returned to work in advance of the F1 season commencement.”
On the positive side, F1 announced multi-year broadcast agreements in Germany, Austria and Russia, but there was no sugar-coating the sport’s unsurprisingly bleak numbers.
As of June 30th 2020, Formula 1 had $2.3 billion worth of cash, cash equivalents and revolver capacity on its books.
“We were excited to return to the track in July and have now completed five races of what we expect will be a 15 to 18 race season,” said F1 boss Chase Carey.
“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.
“We re-engaged with added purpose and determination, announcing our #WeRaceAsOne platform, underpinning our sustainability, diversity and inclusion and community strategies.
“#WeRaceAsOne was launched as an initiative to further our sustainability efforts, to stand united against racism, in fight against COVID-19 and to further address inequality and diversity in F1.
“We are thankful to the FIA, teams, promoters, our employees and other key partners that made this return to racing possible.”
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