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Liberty Media moves to shore up F1 finances

A general view as Max Verstappen leads the field at the start during the F1 Grand Prix of Brazil (Photo by Mark Thompson/Getty Images)

Formula One Group owner Liberty Media has announced that it has reattributed its stake in Live Nation Entertainment from the sport to its SiriusXM tracking stock in a move that will see $1.5bn (€1.39bn) in net asset value go in each direction.

Liberty confirmed the move in a statement yesterday (Thursday) and the reattribution is effective immediately. The company has also announced that some F1 teams have received advanced payments to help deal with financial difficulties they are facing due to Covid-19.

Liberty Media president and chief executive Greg Maffei said the reattribution will reduce the risk to investors as both F1 and Live Nation deal with the effects of having to postpone a number of events. The move will ensure F1 receives a net cash payment of $1.4bn.

Maffei said: “The new Formula One Group now has a strengthened balance sheet that positions us to support and enhance the Formula 1 business while also being opportunistic during these challenging times.

“We believe the reattribution is also responsive to the request of many Formula One Group shareholders to create a more focused currency. For Liberty SiriusXM, this combines a complementary set of businesses that are established leaders in the live and audio entertainment space. Both the new Formula One Group and Liberty SiriusXM Group now have currencies with which to complete acquisitions, raise capital and engage in share repurchases, among other things.”

Maffei, speaking on a conference call with analysts, did not specify the details of the team payments. “We have advanced money in advance of team payments for certain teams already,” he said. “There are cases where we may do more of that. There are other things that we might do to bridge teams that need help.

“We’re certainly not viewing this as an open chequebook. But we understand this is a little different than say Live Nation which does do advances to artists but the scale here is much larger in terms of what a team requires.

“(These are) teams which we want to make sure are solvent because they are part of what we need to race successfully in 2020, 2021, and beyond.”

The 2020 F1 season has not started yet with nine races having been called off due to Covid-19. It is hoped that 15-to-18 events can still be held this year but it remains to be seen when the sport will be able to resume.