Formula 1’s highly lucrative races may become less profitable as a result of the pandemic, the sport’s commercial rights holder has admitted.
The race hosting fees paid by circuits are a major part of the sport’s income. However the pandemic has meant the first races of the 2020 F1 season will be held without fans, hitting promoters’ earning. F1 owner Liberty Media is therefore negotiating new commercial terms with those circuits who cannot admit fans this year.The longer-term consequences of the pandemic for F1 races, and whether the six-figure crowds seen at some races will be possible in the future, remain unclear.
Liberty Media’s chief executive officer Greg Maffei told their annual meeting of stockholders via teleconference yesterday the long-term impact the pandemic will have on live events is “a great unknown”.
The company is “taking a cautious attitude to the belief that things will adjust and change, [and] that we can build businesses that operate in a post-Covid world,” said Maffei.
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“Whether [it’s] through better therapeutics or a vaccine or just changed procedures there will be ways to have live events. Will they be as [large] scale or profitable as historically? I think that remains to be seen. So we’re taking a step-by-step cautious attitude.”
“We’re hoping for the best in terms of both therapeutics and vaccines but we’re not counting on that,” he added.
Chairman John Malone said he remains confident that live events such as F1 races will remain valuable to Liberty Media. “The original thesis of live events representing perhaps the best place to be on content for television or for digital distribution, I think remains intact,” he said.
“Unfortunately we’ve had this pandemic. I personally believe that there will be a therapy and/or a vaccine sooner rather than later that will get us back closer to normal.
“There’s undoubtedly going to be a hangover in terms of valuations. An obviously like everything else if this depression in valuation is excessive, it presents opportunities for those of us who believe in the longer-term thesis that this is a good place to be.
“Live events, particularly where you have a substantial part of the revenue, has little to do with the gate attendance and a lot to do with television and ultimate digital distribution.”
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bren85q
22nd May 2020, 8:43
So potentially putting the TV viewing of races behind a bigger pay wall? or have I misunderstood him? (very possible)
Chaitanya
22nd May 2020, 10:25
F1 already is behind paywall in most countries around the world.
bren85q
22nd May 2020, 12:16
@Chaitanya that is why I said bigger :)
Biskit Boy (@sean-p-newmanlive-co-uk)
22nd May 2020, 10:39
Ok lets discuss.
Revenue streams?
TV Rights : I’d guess, provided the number of races stay the same the value would be the same. I know TV companies may have less to spend, but live sporting events may be at more of a premium.
Race Fees : With less or no spectators these would have to shrink drastically, perhaps to nothing, or maybe F1 would have to pay to use the venues. That’s a welcome switch!
Ok, somebody help me here, what other revenue streams are there?
Lancer033 (@lancer033)
22nd May 2020, 11:57
Sponsorship is the only other thing i can think of
ColdFly (@)
22nd May 2020, 13:21
F1 TV
Licensing
That’s 5 streams and counting; not bad. They might have wished to diversify a bit or be faster at equalising the fixes of these streams.
Fast
22nd May 2020, 18:12
i believe the EU restricts where they can diversify.
ColdFly (@)
22nd May 2020, 10:46
Could also be a lower wall but wider, or a wall with free-of-charge holes where you might be exposed to some advertising.
SadF1fan
22nd May 2020, 11:28
Post-covid insinuates that the virus would be fully under control. Which makes you wonder why anything would change spectator wise, when the threat is fully under control…
Ipsom
22nd May 2020, 11:37
Feel kinda bad for liberty media. Got F1 in its worst financial state after bernie, had one the most dominant and boring season for casual fans and to attract new fans, and now this
NewVerstappenFan (@jureo)
22nd May 2020, 12:53
Wake up and smell the roses.
This is ideal for changing F1 from old errors to a better more sustainable future.
When old ways nolonger work people, companies, sports evolve and change or die.
Events were already unsustainable and not that great for the fan. In some places one would have to sacrifice 1/10th of yearly income to attend a race with their family.
Just to cover insane fees.
Silverstone needed 150k people to attend just to stay on the callendar. What kind of event is this?
Events should make yearly profits for organisers, so they have a buffer in case unusuall times arrise.