F1: 2nd Quarter Profit up 11% over 2022 despite Imola cancellation

The cancellation of the Imola GP had a negative impact on Formula 1’s financial numbers for the 2nd quarter of 2023, but profits were up 11%.

The loss of the Imola race due to local flooding meant that only six events were held in the April-June period, instead of seven as was originally scheduled, and as was the case in 2022.

F1’s revenue for the second quarter dropped from $744m in 2022 to $724m, with a drop of $10m in primary revenue (race fees, media rights and sponsorship) and another $10m lost in other revenue streams.

Highlights

• Announced 24-race calendar for 2024 with increased geographic efficiency in support of F1’s sustainability objectives
• Extended agreements for Austrian Grand Prix until 2030 and Hungarian Grand Prix until 2032
• Announced extension of Heineken as Global Partner under multi-year deal
• Formula One Group shareholders received distribution of 6.8 million shares of Atlanta Braves Holdings common stock on July 19^th to settle intergroup interest in Braves Group
• Paid $71 million in exchange for the cancellation of 1.1 million notional FWONA shares underlying intergroup interest held at Liberty SiriusXM Group
• At Formula 1, the quality of the fan experience at Grand Prix weekends continues to improve and is helping drive sellout crowds at many races

The following table provides the financial results attributed to Formula One Group for the second quarter of 2023. In the second quarter, Formula One Group incurred $17 million of corporate level selling, general and administrative expense (including stock-based compensation expense).

“Formula 1 is capitalizing on our growth momentum and our fans are engaging with the sport across traditional, digital and social media platforms. We congratulate Red Bull on their record-breaking performance season-to-date, and are thrilled to see the gaps closing across the rest of the grid to produce exciting rivalries on track,” said Stefano Domenicali, Formula 1 President and CEO. “Next year we will host 24 races around the globe, with back-to-back races in closer proximity which will benefit the efficiency of operations for both F1 and our teams.”

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 six races held in the second quarter of 2023, compared to seven races held in the second quarter of 2022. The Emilia-Romagna (“Imola”) Grand Prix originally scheduled for May 21, 2023 was cancelled following severe flooding in the region and is not expected to be rescheduled or replaced in 2023. There are now 22 events scheduled on the 2023 race calendar.

Primary F1 revenue decreased in the second quarter with growth across race promotion and sponsorship offset by a decline in media rights revenue. Despite one less race held in the current period, race promotion revenue grew due to contractual increases in fees and sponsorship revenue increased due to recognition of revenue from new sponsors and growth in revenue from existing sponsors.

Media rights revenue decreased due to the impact of lower proportionate recognition of season-based income (6/22 races took place took place in the second quarter of 2023 compared to 7/22 in the second quarter of 2022), partially offset by continued growth in F1 TV subscription revenue and increased fees under new and renewed contractual agreements. Other F1 revenue decreased in the second quarter primarily due to lower freight income driven by the easing of freight cost inflation on billing rates and lower hospitality revenue due to one less race held in the current period, partially offset by increased licensing income and higher revenue related to Formula 2 / Formula 3 car chassis sales.

Operating income increased and adjusted OIBDA was relatively flat in the second quarter despite one less race taking place. Team payments were lower compared to the prior year due to the pro rata recognition of payments across the race season with one less race held, partially offset by an expectation of increased team payments for the full year. Other cost of F1 revenue is largely variable in nature and is mostly derived from servicing both Primary and Other F1 revenue opportunities.

These costs increased as significantly lower freight costs were offset by increased hospitality costs associated with servicing higher Paddock Club attendance and cost inflation and higher commissions and partner servicing costs associated with growth in Primary F1 revenue streams. Other cost of F1 revenue in the current period also includes hospitality, travel and other costs related to the Imola event that had largely been incurred prior to the event’s late cancellation.

Selling, general and administrative expense decreased in the second quarter due to lower personnel and legal costs and foreign exchange favorability, partially offset by higher marketing, property and IT costs. There were $7 million of costs associated with the planning of the Las Vegas Grand Prix included in selling, general and administrative expense in the second quarter of 2023.

The businesses and assets attributed to Formula One Group during the second quarter of 2023 consisted of Liberty Media’s subsidiary F1, other minority investments and an intergroup interest in Braves Group, and as of August 4, 2023, consist primarily of Liberty Media’s subsidiary F1 and other minority investments.