In Numbers: COVID-19 Impact On F1’s Business (2020 Season vs. 2019 & 2018)

The impact of COVID-19 on F1’s business in 2020, in numbers + comparison to 2019 and 2018

• Formula 1 hosted 17 races in the 2020 Formula 1 season after the COVID-19 pandemic forced a revision
• The races were contested between July-December 2020
• Liberty Media reports an average of 87.4 million viewers per race

Liberty Media Corporation announced that its President & Chief Executive Officer, Greg Maffei, will host a conference call to discuss results for 4th quarter of 2020 on Friday, February 26th, at 10:00 am (EST)/02:00 pm (CET)

Yet another off-season story to look forward to?#F1

— Kunal Shah (@kunalashah) February 11, 2021

Here are some interesting numbers (unaudited) from Formula 1‘s results for 2020:

Total revenue

• 2018: $1,827 million
• 2019: $2,022 million
• 2020: $1,145 million (-43%)

For 2020, Formula 1 reports that total revenue of $1,145 million was split between

1. Race promotion fees (12%) – COVID-19 impact: fans not being permitted to attend races; ‘limited revenue’ earned from replacement races
2. Broadcast fees (55%) – COVID-19 impact: altered schedule that triggered lower fees
3. Advt. & sponsorship fees (17%) – COVID-19 impact: Formula 1 wasn’t able to deliver full commitment towards their sponsorship contracts. The earning was either lower in 2020 or deferred earning to future years

How did 2020 compare to 2019 and 2018?

1. Race promotion fees (% of total revenue)
   1. 2020: 12%
   2. 2019: 30%
   3. 2018: 34%
2. Broadcast fees
   1. 2020: 55%
   2. 2019: 38%
   3. 2018: 33%
3. Advt. & sponsorship
   1. 2020: 17%
   2. 2019: 15%
   3. 2018: 15%

Spend x to host a private race with the forecast that y will be the revenue from each race; where y > x in this scenario & y – x is the revenue that #F1 will make & distribute. It’s easier said, than done. Let’s see how Liberty Media tackles this situation.

— Kunal Shah (@kunalashah) April 14, 2020

The TV-only races that Formula 1 held in 2020 led to the increase in broadcast revenue. This was also due to a significant decrease in race promotion revenue. “Race promotion revenue was significantly lower in 2020 as a result of the reduced calendar and one-time revised fee arrangements, as most Events were closed to fans, which provided very different economics for the promoters,” as reported by Formula 1 in an official filing.

The Business Of TV-Only F1 Races

Total team payments

• 2018: $913 million
• 2019: $1,012 million
• 2020: $711 million (+30%)

Total team payments decreased in 2020 due to lesser races contested (17 vs. 21) 

Operating income:

• 2018: -$68 million
• 2019: +$17 million
• 2020: -$386 million

2021 Concorde Agreement

Formula 1 secured the commitment of the 10 participating teams to continue participating in the sports from January 1, 2021 until December 31, 2025.

Key points:

• Teams may terminate their rights and obligations to Formula 1 by giving one full season’s written notice (among other circumstances)
• Consent of 70% of the Teams is required if there are more than 24 races in a season or if there are fewer than 8 races across Europe & North America combined + introduction of new sporting and technical regulations

Liberty Media’s official report can be accessed here.