Formula One recovers income in the third quarter of 2020
Formula One suffered another significant loss compared 2019 due to the Covid-19 pandemic, but its income has recovered following the delayed start to the 2021 season.
Due to the COVID-19 pandemic, the start of the 2020 season was postponed until early July, with certain races cancelled and others rescheduled to later dates. This delay meant that Formula One’s income was practically reduced to non-race-related revenues in the first two quarters of the season, leading to a huge loss of income compared to 2019.
The heavily-revised 2020 calendar consists of 17 events beginning July 5th and ending December 13th. There were ten races held in the third quarter of 2020 compared to seven races in the third quarter of 2019.
In the third quarter of the year, the F1 Group earned revenues of $597m, compared with $633m in 2019. Of the total income, $524m was generated by the primary F1 revenue that comprises the race promotion fee, the broadcasting fee and the advertising & sponsorship fees. This primary F1 revenue decreased mainly due to the limited race promotion revenue received since fans were prohibited at all but one race during the third quarter.
The F1 Group also declared an operating loss of $104m for the period, having made a profit of $32m last year.
Liberty Media said: Fans were only in attendance in reduced numbers at one race in the third quarter, and similar limited capacity crowds have been present at two subsequent races.
„Currently, F1 does not expect to have fans at any of the remaining 2020 races. Results in the third quarter of 2020 were impacted by the absence of fans, the location of races as well as the timing of the revised race calendar and pro rata recognition of certain revenue streams, with 10/17 races taking place in the third quarter of 2020 compared to 7/21 in the third quarter of 2019.”
Liberty added: „Primary F1 revenue decreased mainly due to the limited race promotion revenue received since fans were prohibited at all but one race during the third quarter.
„This was partially offset by growth in broadcasting and advertising & sponsorship fees due to the impact of higher proportionate recognition of season-based income with three additional races during the current period, as well as the impact of recognizing revenue over fewer races in 2020.
„However, both broadcasting and advertising & sponsorship revenues were lower than originally contracted. The altered schedule triggered lower broadcasting fees pursuant to the contractual terms within certain broadcasting agreements and also led to other one-time changes as certain broadcasting fees were renegotiated for the current year.”
Commenting on the coronavirus-affected season, Chairman and CEO of Formula 1 Chase Carey said: “We are incredibly proud of the way our Formula 1 community has come together to face the challenges and return to racing in a safe way, and we’ve seen excitement both on and off the track.
“Alongside the FIA and all ten teams, we were pleased to announce the signing of the new Concorde Agreement that further builds on the foundation for the long term future of our sport, along with the significant regulatory changes scheduled for 2022.
„After four years at Formula 1, I look forward to staying involved as non-executive Chairman with Stefano Domenicali assuming the role of CEO in 2021. I want to thank everyone at Formula 1, the FIA, teams, promoters and other partners who have been key to our success,” Carey concluded.
