F1: Liberty Media reports revenue of $715M in 3rd Quarter

Formula 1 reported its revenue for the third quarter of 2022 rose by 7% compared to the same period last year.

The series generated $767 million of revenue across July, August and September.

However, increased costs meant that operating income before depreciation and amortization decreased for the Group overall from $176m to $158m.

“Primary F1 revenue increased in the third quarter of 2022 with growth across media rights and sponsorship, partially offset by a decline in race promotion revenue,” stated F1 in its financial report.

“Race promotion revenue decreased due to lower fees generated from the different mix of events held, with one additional race (the Russian Grand Prix) held outside of Europe in the prior year period.

“Media rights increased due to growth in F1 TV subscription revenue and increased fees under new and renewed contractual agreements, and sponsorship revenue increased due to the recognition of revenue from new sponsors.”

Regarding the sport’s third quarter’s rise in costs, The Formula One Group also noted: “These costs increased in the third quarter driven by the costs of higher hospitality attendance in the Paddock Club and one additional Paddock Club event operated compared to the prior year period.

“In addition, other cost of F1 revenue grew due to higher commissions and partner servicing costs associated with the Primary F1 revenue streams and higher Formula 2 and Formula 3 related costs.

“Selling, general and administrative expense increased in the third quarter due to higher personnel and IT costs and increased legal and other advisory fees.”

Formula 1 president and chief executive officer Stefano Domenicali delivered the following comments:

“Formula 1 is delivering in 2022 across all areas including financial results, engagement with fans and action on the track.

“We look forward to a strong finish to the season with drivers and teams battling on the track.

“We were excited to announce our record-setting 24 race calendar for 2023 which includes the much-anticipated Las Vegas Grand Prix.

“We also announced significant multi-year broadcast renewals to extend our relationships at attractive rates with ESPN in the US and in 3 key European markets with Sky.”

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The following table provides the financial results attributed to the Formula One Group for the third quarter of 2022. In the third quarter, the Formula One Group incurred approximately $14 million of corporate level selling, general and administrative expense (including stock-based compensation expense).

“Formula 1 is delivering in 2022 across all areas including financial results, engagement with fans and action on the track. We look forward to a strong finish to the season with drivers and teams battling on the track,” said Stefano Domenicali, Formula 1 President and CEO. “We were excited to announce our record-setting 24 race calendar for 2023 which includes the much-anticipated Las Vegas Grand Prix. We also announced significant multi-year broadcast renewals to extend our relationships at attractive rates with ESPN in the US and in 3 key European markets with Sky.”

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

F1 Operating Results

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 third quarters of both 2022 and 2021. There are 22 events scheduled for the 2022 race calendar. Throughout 2021 and particularly in the first half of the season, attendance at races was limited due to the pandemic. Restrictions on fan attendance reduced as 2021 progressed, with all races in the second half of the year operating at either full capacity or with fewer restrictions. The Paddock Club resumed normal operations beginning with the Austrian Grand Prix on July 4, 2021. F1’s results in 2022 are not being impacted by capacity limitations, and throughout the first nine months of the 2022 season F1 has seen strong growth in attendance in the grandstands and the Paddock Club.

Primary F1 revenue increased in the third quarter with growth across media rights and sponsorship, partially offset by a decline in race promotion revenue. Race promotion revenue decreased due to lower fees generated from the different mix of events held, with one additional race held outside of Europe in the prior year period. Media rights increased due to growth in F1 TV subscription revenue and increased fees under new and renewed contractual agreements, and sponsorship revenue increased due to the recognition of revenue from new sponsors.

Other F1 revenue increased in the third quarter primarily due to higher hospitality revenue generated from the Paddock Club, which operated at one additional race in the third quarter of 2022 compared to the prior year period and has seen record attendance year-to-date.

Operating income was flat and adjusted OIBDA⁽²⁾ decreased in the third quarter. Cost of F1 revenue increased compared to the prior year due to the pro rata recognition of increased team payments. Other cost of F1 revenue is largely variable in nature and mostly relates to revenue opportunities. These costs increased in the third quarter driven by the costs of higher hospitality attendance in the Paddock Club and one additional Paddock Club event operated compared to the prior year period. In addition, other cost of F1 revenue grew due to higher commissions and partner servicing costs associated with the Primary F1 revenue streams and higher Formula 2 and Formula 3 related costs. Selling, general and administrative expense increased in the third quarter due to higher personnel and IT costs and increased legal and other advisory fees.

The Liberty SiriusXM Group holds an approximate 1.8% intergroup interest (4.2 million notional shares) in the Formula One Group as of October 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 October 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.