04/08/2023
NEWS STORY
The cancellation of the Emilia Romagna due to local flooding has impacted the sport's financial results for the second quarter of 2023.
The cancellation of the race meant that the second quarter featured only 6 races, whereas last year there were 7 races in the same period.
Consequently, revenue for the second quarter was $724m, down on 2022's $744m, along with a 2% drop in primary revenue, which includes race promotion revenue, media rights fees and sponsorship fees, and a further 9% drop in other revenue, streams.
Payments to the teams was $344m, down 7% on 2022's $368m, though the over profit was up from $49m in 2022 to $52m.
"Primary F1 revenue decreased in the second quarter with growth across race promotion and sponsorship offset by a decline in media rights revenue," said Liberty Media in its report. "Despite one less race held in the current period, race promotion revenue grew due to contractual increases in fees and sponsorship revenue increased due to recognition of revenue from new sponsors and growth in revenue from existing sponsors.
"Media rights revenue decreased due to the impact of lower proportionate recognition of season-based income (6/22 races took place took place in the second quarter of 2023 compared to 7/22 in the second quarter of 2022), partially offset by continued growth in F1 TV subscription revenue and increased fees under new and renewed contractual agreements.
"Other F1 revenue decreased in the second quarter primarily due to lower freight income driven by the easing of freight cost inflation on billing rates and lower hospitality revenue due to one less race held in the current period, partially offset by increased licensing income and higher revenue related to Formula 2 / Formula 3 car chassis sales.
"Operating income increased and adjusted OIBDA was relatively flat in the second quarter despite one less race taking place. Team payments were lower compared to the prior year due to the pro rata recognition of payments across the race season with one less race held, partially offset by 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 as significantly lower freight costs were offset by increased hospitality costs associated with servicing higher Paddock Club attendance and cost inflation and higher commissions and partner servicing costs associated with growth in Primary F1 revenue streams.
"Other cost of F1 revenue in the current period also includes hospitality, travel and other costs related to the Imola event that had largely been incurred prior to the event’s late cancellation. Selling, general and administrative expense decreased in the second quarter due to lower personnel and legal costs and foreign exchange favourability, partially offset by higher marketing, property and IT costs. There were $7 million of costs associated with the planning of the Las Vegas Grand Prix included in selling, general and administrative expense in the second quarter of 2023.
"Formula 1 is capitalizing on our growth momentum and our fans are engaging with the sport across traditional, digital and social media platforms," said Stefano Domenicali.
"We congratulate Red Bull on their record-breaking performance season-to-date, and are thrilled to see the gaps closing across the rest of the grid to produce exciting rivalries on track.
"Next year we will host 24 races around the globe, with back-to-back races in closer proximity which will benefit the efficiency of operations for both F1 and our teams."