F1: Liberty Media Formula 1 revenues and profits soar in Q3 (Update)

Liberty Media CEO Greg Maffei joins ‘Squawk on the Street’ to discuss the company’s investor day, the company’s ownership stake in Formula 1, Atlanta Braves, media outlook, and more.

Formula 1 continued to boost its revenues and profits in the third quarter of 2023, with the revenue up 24% $715m in 2022 to $887m, and income/profit rose 61%.

The 10 F1 teams shared payments of $432m between them during the quarter, up from $370m in 2022.

The following table provides the financial results attributed to Formula One Group for the third quarter of 2023. In the third quarter, Formula One Group incurred $23 million of corporate level selling, general and administrative expense (including stock-based compensation expense).

“Formula 1 continues to experience sell-out crowds, record race attendance and strong growth across our social and digital platforms, outpacing that of other major sports leagues. This growth is attracting commercial partners, including our recent agreement with American Express that marks the first new sports vertical they have sponsored in over a decade,” said Stefano Domenicali, Formula 1 President and CEO. “We are making material progress on our sustainability initiatives, including reducing F1’s corporate emissions and amplifying F1 Academy by fully integrating the series into the 2024 F1 calendar with participation from all ten F1 teams.”

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 eight races held in the third quarter of 2023, compared to seven races held in the third quarter of 2022. There are 22 events scheduled for the 2023 race calendar.

Primary F1 revenue increased in the third quarter with growth across race promotion, media rights and sponsorship partly driven by one more race held in the current period, which resulted in a greater proportion of season-based revenue recognized. Race promotion revenue also increased due to higher fees generated from the different mix of events held, with two additional races outside of Europe, and other contractual increases in fees. Media rights revenue benefited from increased fees under new and renewed contractual agreements and continued growth in F1 TV subscription revenue. Sponsorship revenue also increased due to recognition of revenue from new sponsors and growth in revenue from existing sponsors. Other F1 revenue increased in the third quarter primarily due to higher freight income driven by two additional races held outside of Europe and higher hospitality revenue generated from the Paddock Club, partially offset by lower licensing income.

Operating income and adjusted OIBDA increased in the third quarter. Team payments were higher compared to the prior year due to the pro rata recognition of payments across the race season with one more race held, as well as 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 due to higher hospitality costs driven by cost inflation and the mix of events held in the current period, as well as increased freight costs due to two additional races outside of Europe.

Other cost of F1 revenue in the third quarter was also impacted by increased technical, travel and other event-related costs due to one additional race, as well as increased commissions and partner servicing costs associated with higher Primary F1 revenue streams, certain early-stage costs of promoting the Las Vegas Grand Prix and costs incurred for the new F1 Academy series.

Selling, general and administrative expense increased primarily due to higher personnel, property, IT and marketing costs, some of which is attributable to the Las Vegas Grand Prix, partially offset by lower legal costs and foreign exchange favorability. There were $8 million of costs associated with the planning of the Las Vegas Grand Prix included in selling, general and administrative expense in the third quarter of 2023.

The businesses and assets attributed to Formula One Group consist primarily of Liberty Media’s subsidiary F1 and other minority investments.

Total cash and cash equivalents attributed to Formula One Group increased $119 million during the quarter as cash from operations at F1 more than offset capital expenditures primarily related to the Las Vegas Grand Prix. During the third quarter, Formula One Group announced it entered into a definitive agreement to acquire Quint. The transaction is expected to close by year-end and will be funded with Formula One Group cash on hand.

Total debt at Formula One Group was relatively flat in the third quarter. Formula 1 repriced its $1.7 billion Term Loan B facility on October 4, 2023, reducing the margin from 3.00% to 2.25%.