- Race promotion crashed with no spectators
- Liberty Media boss not concerned by losses
Following the release by series owner Liberty Media of its annual financial report, it has been confirmed Formula One lost US$386 million in 2020.
After the Covid-19 pandemic hit ahead of the 2020 season, Formula One was forced to re-adjust its schedule and strategy. Despite this, the series still managed to host 17 rounds, albeit the calendar comprised of a shorter, more geographically compact race schedule, to reduce costs.
Revenue from the season fell from US$2.02 billion to US$1.14 billion in 2020, with 2019's US$17 million profit turning into a US$386 million loss last year.
Race promotion fees crashed from 30 per cent share of Formula One's revenue to only 12 per cent, as several staple events were cancelled and fans were prohibited from attending all but three rounds, where numbers were highly restricted.
Most races paid little or no fee as the series scrambled to piece together a workable calendar.
‘Race promotion revenue decreased as fans were prohibited from attending all but three races, which led to one-time changes in the contractual terms of the originally scheduled races that remained on the 2020 calendar and limited revenue generated from the replacement races that were added,’ Liberty Media in the report.
As fans watched from home, income from broadcasters increased as a share of the total, up from 38 per cent in 2019 to 55 per cent last year, but revenue from the sector was down overall.
‘Broadcast revenue decreased as the altered schedule triggered lower fees pursuant to the contractual terms of certain broadcast agreements, as well as other one-time contract negotiations that took place in 2020,’ Liberty Media added.
According to the filing, advertising and sponsorship revenue was up from 15 per cent to 17 per cent of total revenue in 2020. Despite this, some income was lost as races with certain title sponsors were unable to take place. Some of those losses were clawed back by staging Grands Prix with reduced onsite and logistical overheads.
Despite the overall losses, Liberty Media chief officer Greg Maffei said he is not concerned.
"The F1 balance sheet is very, very strong," Maffei said on the investors call. "I think the operating levels that we have in our agreements are fine. So, I'm not really worried about the balance sheet.
"Our goal was to try and take the pain in 2020, to the degree that we rightly had to make concessions to some of our broadcasters – our goal was to do as much as possible make that a 2020 event and bring 2021 back to normal."
Looking forward to the 2021 season, Formula One is planning to run an ambitious 23-race calendar as it visits Saudi Arabia for the first time and returns to the Netherlands after 36 years.
The 2021 Formula One season begins on 26th March at Bahrain International Circuit.