Formula One Draws Profit, For the First Time in Three Years
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Recently, Liberty Media published the financial results of the Formula One Group. To their delight, the sport has made a profit in the 2019 season. This is actually the time in three years that such a situation has taken place.
Back in 2018, F1’s overall income was $1827m, and it rose to $2022m in the 2019 season. This is a promising sign for the F1 owners, especially after a $37m loss in 2017 and $68m in 2018.
With this profit, the income paid to the 10 teams has also increased. This will be a big boon, for Liberty, especially in terms of the ongoing Concorde Agreement discussions for 2021. In terms of team income, they earned around $913m in 2018, but it got boosted up to $1012m in 2019.
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So what is the reason behind the improved performance? Apparently, Formula One received a boost in primary revenue, owing to broadcast fees (38%), sponsorship (15%) and race hosting fees (30%). However, it ws noteworthy that the hosting fees for 2019 was worse compared to the 2018 Formula One season.
Speaking to Motorsport.com, Liberty Media explained, “Broadcast revenue increased in the fourth quarter and full year due to contractual rate increases, partially offset by the impact of weaker foreign exchange rates.”
“Advertising and sponsorship revenue was relatively flat in the fourth quarter, and advertising and sponsorship revenue grew in the full year due to revenue from new sponsorship agreements.”
How did Formula One reach this stage?
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According to Liberty, the sport’s income grew, largely due to its non-primary streams, which includes digital media. The organisation revealed that the revenue rose during the fourth quarter of 2018 and the whole of 2019.
This was because of numerous increases in various areas. They incluse digital media revenue, Paddock Club attendance, revenue from other event-based activities and higher sales of equipment. It also includes parts and maintenance to F2 and F3 teams.
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However, the company was aware that F1’s also increased that year. The teams’ salaries are dependent on the overall income levels or the sport, so it is all the more important to them.
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Furthermore, numerous technical changes forced other costs to increase. However, F1 CEO Chase Carey remained confident about the future prospects for Formula One.
“F1 continues to benefit from the investments made in the business over the past few years,” he said. “We see this in the strong financial results, viewership, attendance and engagement. 2020 marks the 70th anniversary of the sport, which will provide further momentum.”
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