The COVID-19 pandemic, with the revolutionised F1 calendar and races without an audience and new circuits stepping in for cancelled Grand Prix, but it has had a heavy impact on the sport. And Teams will now be suffering.
Last Friday, Liberty Media released the results for its 2020 financial year, and what immediately stands out is a 44% loss compared to 2019, or around $386 million.
It is easy, however, to understand the main reason, namely the COVID-19 pandemic, which exploded in China at the end of 2019 and then spread to the rest of the world from the first weeks of 2020; an emergency, unfortunately, that is still alive and kicking.
The global crisis, as we well remember, had even cast doubt on the possibility of having a 2020 season, with the postponements (and cancellations) in a flurry between March and early June. Then, with a huge logistical effort of absolutely significant magnitude, Liberty Media and the FIA managed to guarantee a 17-GP season, which started on 5th July in Austria and ended in Abu Dhabi on 13th December.
Going back to the figures published at the end of last week, it can be seen that we have gone from $2.22 billion in total revenue in 2019 to $1.145 billion in 2020, with an operating loss of $386 million, after the teams have received their due. Under this heading, too, there has been a sharp decline: from $1.12 billion in 2019 to $711 million last year.
The extraordinary situation experienced last year, in fact, led to the teams sharing just 12% of the overall ‘cake’, compared to 30% the year before; a collapse caused by the lack of a large part of the income paid by the organisers of the grand prix which, in the majority of cases, last season either did not pay any fee or paid one that was lower than the amount foreseen by the contracts in place.
“Revenue from race promotion fell heavily due to the general ban on fan access, except on three occasions,
“This led to one-off changes to the contractual terms regarding races originally scheduled to remain on the 2020 calendar, as well as very limited revenue generated from new entries,” Liberty Media explained.
On the other hand, revenues from broadcasting went from 38% of the total to 55%. In spite of this, and despite the fact that the fact that 17 races took place ensured that most broadcasters paid the full amount, Liberty Media admitted that in some cases there was a reduction in payments due, again with one-off renegotiations.
There was also a slight increase in the share of total advertising revenue, from 15% to 17%, although part of the income was lost due to the non-playing of some GPs with specific title sponsors. Also in this case Liberty Media admitted renegotiations due to the general situation caused by COVID-19, with a lower number of races and also with the limited activity in the paddock.
Finally, Liberty Media pointed out that there was, alongside the drop in revenue, also a drop in Formula 1 costs, obviously due to the shorter schedule and the reduced number of trips around the world.
“In the fourth quarter and, in general, during the year, costs due to logistics and transport have decreased, also thanks to a smaller number of races, with lower logistics costs,” the report concluded.