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Liberty remains upbeat after posting F1 operating loss

Liberty remains upbeat after posting F1 operating loss

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By: SportBusiness International team

Posted:
1 Mar 2018
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The Formula One Group has posted an operating loss of $40m (€32.2m) for the first full year of its stewardship under Liberty Media, but the US mass-media company remains confident of the series’ future direction following a significant level of investment.
 
Liberty Media released its financial results for 2017 yesterday (Thursday), with Formula One Group forming one of its three core business units alongside satellite radio company SiriusXM and the holding group for Major League Baseball’s Atlanta Braves.
 
Formula One Group reported total revenue of $1.783bn for 2017. Although Formula One was recorded as posting a $17m profit, $57m of “corporate and other” costs led to the operating loss.
 
The change of control of Delta Topco – the holding company of the Formula One Group and F1’s commercial rights-holder – from private equity firm CVC Capital Partners to Liberty Media was approved in January 2017 as part of Liberty’s takeover of the championship. 
 
Liberty outlined estimated figures for the previous 12-month period to provide a basis for comparison. Primary F1 revenue represented the majority of F1’s revenue and was derived from the three core areas of race promotion fees, broadcasting fees and advertising and sponsorship fees. This amounted to $1.483bn.
 
F1 held 20 races in the 2017 season in comparison with 21 in the 2016 season, leading to a decrease in race promotion revenue and the loss of one promotion fee. The reduction in race promotion revenue for the fourth quarter and full year was partially offset by the impact of other contractual increases.
 
Broadcast revenue increased in the full year due to the impact of certain contractual rate increases. However, the increase in the full year was partially offset by the adverse impact of weaker prevailing foreign currency exchange rates used to translate a small number of Pound and Euro-denominated contracts into US dollars.
 
For the full year, advertising and sponsorship revenue increased as Liberty said higher fees and growth in certain contractual arrangements plus revenue from new sponsors more than offset two non-renewed agreements.
 
Liberty said other F1 revenue increased modestly to $301m, primarily due to higher logistics and digital media revenue, contributions from broadcasting in Ultra High-Definition and higher hospitality revenue. Liberty also noted that it made $919m in payments to the sport’s teams in 2017.
 
Commenting on the results, Formula One chairman and chief executive Chase Carey (pictured) said: “The 2017 season was successful in increasing viewers across TV and digital platforms. In 2018, we continue to focus on fan engagement through increasing carriage on linear and digital platforms, enhancing the race excitement, hosting more F1 Live events and collaborating with our partners.”
 
Greg Maffei, Liberty Media’s president and chief executive, added: “When Liberty completed its purchase of F1 last January, we knew the business would require investment to achieve its full potential. Chase Carey and team made great progress on their strategic goals and we look forward to more in 2018.”

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