Picture Credits McLaren F1 Team
Liberty Media Corporation reported their ‘Second Quarter 2023 Financial Results’ last Friday. One of the standout pieces of information, was the fact that when comparing the financial numbers for this period with 2022 there was a $20 million loss of revenue. The reason for this largely coming from the cancellation of the Imola based Emilia Romagna Grand Prix.
When Liberty Media announced its $4.4 billion (£3.3 billion) acquisition of Formula 1 from Delta Topco back in the end of 2016, it had a clear intention of improving Formula One and a desire to turn it into a sport that listened to its fans and gave them what they wanted. Whenever someone watches Formula One this season it is not long before they would hear pundits, fans or commentators saying how the popularity of the pinnacle of motorsport is bigger than ever. As such the aim of Liberty Media is certainly on its way to being met.
Of course, what the majority of fans hope for is close wheel to wheel racing and this is not yet visible at the front of the grid due to Red Bull Racing’s dominance – in particular that of current F1 Drivers’ double world champion Max Verstappen. An achievement acknowledged in the recent publication of the Second Quarter Financial Results by Liberty Media as Formula 1 President and CEO Stefano Domenicali said: “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.”
One thing that is difficult to predict is the impact of cancelled events which are unable to be rescheduled in the same quarter. Last Friday, Liberty Media’s financial report explained how the cancellation of this year’s Emilia Romagna Grand Prix – which meant only six events were held in the April to June period – helped result in a decrease of $20 million. This was because the revenue this time around was $724 millioncompared to the published $744 million in the Second Quarter financial report of 2022.
Liberty Media’s most recent financial report explained the reason for the loss in the breakdown of its findings which also showed that it is far from doom and gloom for the powers that be in F1 as other areas can help offset some of the financial losses.
The report stated: “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.”
Meanwhile, 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.” However, once again they were able to largely help manage some of this loss as it was then “offset by increased licensing income and higher revenue related to Formula 2 / Formula 3 car chassis sales.” Thereby reminding everyone of the impact the other categories has on F1.
With this year’s long awaited Las Vegas Grand Prixseeing $2,000 seated tickets sell out and the unprecedented Formula 1 Heineken Silver Las Vegas Grand Prix Million Dollar All-Access Experience hit the headlines, it can be assumed that Liberty Media’s fourth quarter financial results of 2023 will make promising reading for those in charge. This is because the Vegas extravaganza features in that period. However, the financial report did note that “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.”Despite the loss in revenue for the second quarter of 2023 compared to last year, with such a huge event still to come the corporation must surely still expect to make more money on the whole season.
Although, with F1 bigger than ever, the bubble may burst sooner rather than later. For a start it will be interesting to see whether the 2024 financial results can better those of this year – but that is a discussion for another day, or rather another year.
With all the talk of financial results, it must always be remembered that the Emilia Romagna Grand Prix was cancelled for health and safety reasons after the region’s severe flooding had resulted in loss of life and livelihood. At that time F1 proved that cash is not king – as shown by last Friday’s published data – and here’s hoping that continues to be the case for many decades to come.
Picture Credits Oracle Red Bull Racing F1 Team
