F1: Liberty Media announces strong F1 financial results for Q2

Formula 1 revenue was up 49% (+$240 million) in the 2nd quarter of 2022 compared to the same quarter in 2021, which beats estimates by $55.1 million. Operating income (profit) went from a $36 million loss 2nd quarter of 2021 to a $65 million profit in 2023.

Four races have had over 300,000 in attendance this year. Hungary’s 290,000 attendance marked the largest sporting event attendance in Hungary ever.

They mentioned the paddock building in Las Vegas will be 900 feet long and available for events all year long.

“Media rights increased due to growth in F1 TV subscription revenue and increased fees under new and renewed contractual agreements.”

This, along with sponsorship, forms part of F1’s ‘primary revenue’, which saw a 35 per cent increase from $464m to $628m.

“The Formula 1 2022 season continues to set records, as we’ve seen exciting action and unpredictable outcomes on the track. We are attracting fans in person and across all our platforms,” said Stefano Domenicali, Formula 1 President and CEO.

The following table provides Liberty Media’s financial results attributed to the Formula One Group for the second quarter of 2022. In the second quarter, the Formula One Group incurred approximately $11 million of corporate level selling, general and administrative expense (including stock-based compensation expense).

“The Formula 1 2022 season continues to set records, as we’ve seen exciting action and unpredictable outcomes on the track. We are attracting fans in person and across all our platforms,” said Stefano Domenicali, Formula 1 President and CEO. “We are making meaningful progress working with all of our stakeholders including our teams, race promoters, the FIA and business partners towards our goal to hit net-zero carbon by 2030.”

The following table provides the operating results of Formula 1 (“F1”).

Primary F1 revenue represents the majority of F1’s revenue and is derived from (i) race promotion revenue, (ii) media rights fees and (iii) sponsorship fees.

There were seven races held in the second quarters of both 2022 and 2021. Throughout 2021 and particularly in the first half of the season, attendance at races was limited due to the pandemic, and the Paddock Club did not operate in the first half. F1 does not expect its results in 2022 to be impacted by such capacity limitations, though fan attendance continues to be assessed by relevant government authorities on a race-by-race basis. Throughout the first half of the 2022 season, F1 has experienced record attendance in both grandstands and the Paddock Club. There are currently 22 events scheduled for the 2022 race calendar.

Primary F1 revenue increased in the second quarter with growth across race promotion, media rights and sponsorship. Race promotion revenue increased due to higher fees generated from the different mix of events held and contractual increases in fees. Media rights increased due to growth in F1 TV subscription revenue and increased fees under new and renewed contractual agreements. Sponsorship revenue increased due to the recognition of revenue from new sponsors and higher race-specific revenue generated from the different mix of events held. There is a slightly higher proportionate recognition of season-based media rights and sponsorship income recognized during the quarter as 7/22 of revenue was recognized in the second quarter of 2022 compared to 7/23 of revenue recognized in the second quarter of 2021 before the reduction of the 2021 race calendar to 22 races was confirmed.

Other F1 revenue increased in the second quarter primarily due to an increase in freight revenue driven by the increased number of events held outside of Europe and inflation in underlying costs, as well as higher hospitality revenue generated from the Paddock Club, which F1 operated at 5 races in the second quarter of 2022 but was unable to operate in the prior year period.

Operating income and adjusted OIBDA increased in the second quarter. Cost of F1 revenue increased compared to the prior year due to the higher pro rata recognition of team payments across the race season with costs recognized over 22 races compared to 23 races in the prior year period. Other cost of F1 revenue is largely variable in nature and mostly relates to revenue opportunities. These costs increased in the second quarter driven by higher freight costs as well as the impact of a greater scope of activities able to be undertaken compared to the pandemic-affected second quarter of 2021, including operating the Paddock Club. Selling, general and administrative expense increased in the second quarter due to higher personnel and IT costs and increased legal and other advisory fees.

The Liberty SiriusXM Group holds an approximate 2.2% intergroup interest (5.3 million notional shares) in the Formula One Group as of July 31, 2022. 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 July 31, 2022 would have been 238 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 and an inter-group interest in the Braves Group.