04/11/2021
NEWS STORY
As the financials are released for the third quarter of 2021, F1 CEO, Stefano Domenicali says the sport is "firing on all cylinders" and "producing results on the track, for fans, partners and investors".
The third quarter this year, which featured 7 races compared to the 10 over the same period last year, saw revenue increase by 12% $668m (£495m), while 2019's third quarter loss of $104m (£77m) became an $80m (£60m) profit this time around. This included a $338m (£250m) payment to the teams, compared to $441m (£327m) last year.
Of course, a major factor in the results is that this year fans have been allowed access, where last year the pandemic restrictions meant races were held behind closed doors resulting in F1 agreeing special deals with the majority of promoters.
"Formula 1 is firing on all cylinders and producing results on the track, for our fans and partners and our investors," said the sport's CEO, Stefano Domenicali. "We already know that the 2021 season will be one for the ages, with a fierce battle up and down the grid and among the constructors. We have seen the results with fans at the track and with engagement across all platforms.
“We look forward to the next races in Mexico and Brazil before concluding the season with three races in the Middle East, which will complete a record 22-race calendar in 2021, and we are already focused on setting a new record in 2022 with our 23-race calendar.”
F1 began reclassifying certain components previously reported in Other F1 revenue into Primary F1 revenue to better align with the way it currently evaluates the business. In addition, broadcasting revenue was renamed media rights revenue.
The more significant components that were reclassified into Primary F1 revenue include fees for F1 TV subscriptions, fees for licensing commercial rights for Formula 2 and Formula 3 races, fees for the origination and support of program footage, fees for broadcast rights for Formula 2 and Formula 3 races and fees for advertising rights on Formula 1's digital platforms.
Following the reclassification, Other F1 revenue is primarily comprised of freight and hospitality revenue. $34 million of Other F1 revenue was reclassified as Primary F1 revenue for the three months ended September 30, 2020 to conform to the current period presentation.
Fan attendance continues to be assessed by relevant government authorities on a race-by-race basis, although the third quarter of 2021 saw the return of capacity crowds at a number of races for the first time since the start of the pandemic. Most events held during the third quarter of 2021 operated with significantly higher fan attendance compared to the prior year, and the Paddock Club hospitality resumed operations for 6 of the 7 races in the third quarter.
Primary F1 revenue increased in the third quarter, primarily due to growth in race promotion revenue compared to the prior year where limitations on fan attendance led to one-time changes in the contractual terms of races held. Media rights and sponsorship revenue decreased during the third quarter due to the impact of lower proportionate recognition of season-based income (7/22 races took place in the third quarter of 2021 compared to 10/17 in the third quarter of 2020), partially offset by growth in F1 TV subscription revenue and revenue from new sponsors.
Other F1 revenue increased in the third quarter due to hospitality revenue generated from the return of the Paddock Club, which did not operate in the prior year, higher licensing revenue from new contracts and growth in gaming royalties, partially offset by a decrease in Formula 2 and Formula 3 revenue as fewer support races were held in the current period.
Operating income and adjusted OIBDA(2) increased in the third quarter. Cost of F1 revenue decreased compared to the prior year due to one-time fees paid to teams in 2020 upon signing the new Concorde Agreement, as well as the impact of the pro rata recognition of team payments across the race season.
Other cost of F1 revenue is largely variable in nature and mostly relates to revenue opportunities. These costs were broadly flat in the third quarter as increased costs associated with operating the Paddock Club were offset by lower pro rata recognition of FIA fees and lower technical, travel, freight and logistics costs driven by less races in the current period, as well as reduced Formula 2 and Formula 3 costs as there were fewer support races in the current period. Selling, general and administrative expense increased in the third quarter due to increased marketing expense and professional fees.
Check out our Thursday gallery from Mexico City, here.