Liberty Media has a positive financial report in Q1 of F1 2021 from that in 2020.
With no grand prix in Q1 of 2020 F1 season, there was natural drop income. In 2021, however, they held one event before March 31 in Bahrain.
Looking at the total revenue of F1 (after Adjusted OIBDA), it was a positive figure of 59 million dollar for Q1 of 2021, as opposed to 49 million (in negative) in 2020. In terms of the primary and other revenue, Liberty Media calculated it differently this time.
The primary revenue jumped from 17 million dollar to 159 million from 2020’s Q1 to 2021. The calculation now includes F1 TV subscriptions, fees for licensing commercial rights for F2 and F3 races, fees for the origination and support of program footage, fees for broadcast rights for F2 and F3 races and fees for advertising rights on F1’s digital platforms.
While other revenue declined from 22 million dollar in 2020 to 21 million in 2021. It now mainly comprised of freight and hospitality. There was no team payments in the same period last year, but this year, F1 paid 44 million dollar to the 10 outfits.
The operating loss dropped from 137 million dollar to mere 33 million. In addition, Liberty Media noted that F1 incurred approximately 11 million dollar of corporate level selling, general and administrative expense, in Q1 of 2021.
The following table provides the financial results attributed to the Formula One Group for the first quarter of 2021. In the first quarter, the Formula One Group incurred approximately $11 million of corporate level selling, general and administrative expense (including stock-based compensation expense).
“The competition on the track has been fierce and sets Formula 1 up for an exciting season,” said Stefano Domenicali, Formula 1 President and CEO. “We are thrilled to welcome Miami to the calendar in 2022, which will attract fans from across the Americas. Additionally, we extended our agreements to race in Japan and Canada, furthering our commitment to grow F1 in these regions. Drive to Survive continues to grow in popularity and we welcome the engagement with new fans.”
|amounts in millions|
|Formula One Group|
|Total Formula One Group||$||39||$||180|
|Corporate and other||(15||)||(14||)|
|Total Formula One Group||$||(152||)||$||(47||)|
|Corporate and other||(10||)||(7||)|
|Total Formula One Group||$||(42||)||$||59|
The following table provides the operating results of Formula 1 (“F1”).
F1 Operating Results
|amounts in millions|
|Primary Formula 1 revenue||$||17||$||159||835||%|
|Other Formula 1 revenue||22||21||(5||)||%|
|Total Formula 1 revenue||$||39||$||180||362||%|
|Operating expenses (excluding stock-based compensation included below):|
|Other cost of Formula 1 revenue||(43||)||(40||)||7||%|
|Cost of Formula 1 revenue||$||(43||)||$||(84||)||(95||)||%|
|Selling, general and administrative expenses||(28||)||(30||)||(7||)||%|
|Depreciation and Amortization||(101||)||(96||)||5||%|
|Number of races in period||—||1|
Primary F1 revenue represents the majority of F1’s revenue and is derived from (i) race promotion revenue, (ii) media rights fees (formerly referred to as broadcasting fees) and (iii) sponsorship fees.
During the three months ended March 31, 2021, F1 began reclassifying certain components previously reported in Other F1 revenue into Primary F1 revenue to better align with the way it currently evaluates the business. In addition, broadcasting revenue was renamed media rights revenue. The more significant components that were reclassified into Primary F1 revenue include fees for F1 TV subscriptions, fees for licensing commercial rights for Formula 2 and Formula 3 races, fees for the origination and support of program footage, fees for broadcast rights for Formula 2 and Formula 3 races and fees for advertising rights on Formula 1’s digital platforms. Following the reclassification, Other F1 revenue is primarily comprised of freight and hospitality revenue. $4 million of Other F1 revenue was reclassified as Primary F1 revenue for the three months ended March 31, 2020 to conform to the current period presentation. The impact of the revenue reclassification for the years ended December 31, 2019 and 2020 can be found in Schedule 3 of this press release.
There was one race held in the first quarter of 2021, compared to no races held in the first quarter of 2020 due to the onset of the COVID-19 pandemic. Fan attendance continues to be assessed by relevant government authorities on a race-by-race basis. While decisions are pending for most events, Formula 1 expects fans to be in attendance in varying capacities at certain events in the first half of the 2021 season, with increasing numbers of fans at events as the season progresses.
Primary F1 revenue increased in the first quarter with growth in race promotion, media rights and sponsorship fees. This was primarily due to the recognition of race specific and season-based income with one race held in the first quarter of 2021 compared to no races in the prior year period. In addition, race promotion revenue in the first quarter of 2021 included proceeds from a one-time settlement related to the cancellation of a race originally scheduled to commence in 2020. Media rights fees also benefited from growth in F1 TV subscription revenue.
Other F1 revenue decreased in the first quarter due to lower freight and logistics revenue, partially offset by higher licensing income. Freight and logistics services were provided in 2020 for the Australia Grand Prix, despite the ultimate cancellation of the race, and the associated revenue in 2020 was higher than the freight and logistics revenue associated with the Bahrain Grand Prix held in the first quarter of 2021.
Operating loss decreased and adjusted OIBDA(2) increased in the first quarter. Cost of F1 revenue increased primarily due to the recognition of team payments in the first quarter, as such payments are recognized pro rata with the race calendar and no races were held in the prior year period. Other cost of F1 revenue is largely variable in nature and mostly relates to revenue opportunities. These costs decreased modestly in the first quarter driven by lower freight and digital media product development costs, partially offset by the proportionate recognition of a full year of FIA fees, higher technical costs and elevated event costs driven by ongoing COVID-related protocols. Selling, general and administrative expense increased due to higher personnel cost as no bonus was accrued in the prior year period.
The Liberty SiriusXM Group holds an approximate 2.2% intergroup interest (5.3 million notional shares) in the Formula One Group as of April 30, 2021. These shares are not included in the outstanding share count of Formula One Group in Liberty Media’s most recent Form 10-Q. Assuming the issuance of the shares underlying this intergroup interest, the Formula One Group outstanding share count as of April 30, 2021 would have been 237 million.
The businesses and assets attributed to the Formula One Group consist of Liberty Media’s subsidiary F1, its interest in Liberty Media Acquisition Corporation, other minority investments, including AT&T, and an inter-group interest in the Braves Group.