A collective loss of $47m was incurred by all F1 teams in 2017 which was the first year of the new ‘Liberty Media’ era.
Payments fell by about 5 per cent, with the teams receiving $966m in 2016!
A major reason for the drop in revenue will have to be because of the 20 race season(down from a 21 race season) last time round. Also, Bernie had already had an agreement with the Brazilian GP, which allowed them to pay a lower fee than originally planned.
Loss of sponsors also accounted for the drop in revenue, with UBS and Allianz pulling out after Ecclestone made way for Liberty Media.
However, it seems like Liberty’s expansion strategy has been the biggest reason for the drop in revenue. Liberty have moved into a new HQ at London, having hired a new staff and spent heavily on the live event in London.
“Cost of F1 revenue increased primarily due to spend on fan engagement, filming in Ultra High-Definition and higher freight costs, which more than offset reduced team payments.
“Selling, general and administrative expense also increased for the fourth quarter and full year 2017 as a result of additional headcount and new corporate offices.” a Liberty spokesperson said.
Liberty’s operational costs will continue to be high as they are just settling into their new headquarters in London and will hiring close to 30 more employees this year.
F1 CEO, Chase Carey has said that the high costs will be a feature this season too.
“We’ve settled into our new London headquarters,” he said on Thursday. “With headcount currently around 120, expecting to settle around 150 by mid-to-late 2018.
“Overall we expect the associated incremental step-up in overhead to be $50m annually compared to 2016, excluding marketing and development expense tied largely to new initiatives.” he said.
Carey then listed out the F1’s financial goals for 2018.
“to improve our balance sheet and maximise our long-term cash flow.
“A year ago we had over $4bn in external gross debt, and today we’re at $3.2bn, with approximately $115m in annualised interest savings and an improved tax structure.
“We also eliminated the potential overhang in prior share sales from prior F1 owners.” Carey added.
Carey confirmed that new sponsors would be coming in and have shown keen interest in associating with the F1.
“We were positively surprised by the excitement from existing partners to expand and grow their relationships with us, and the level of interest from new commercial sponsors.
“There’s real enthusiasm from new potential sponsors, promoters and video entities to engage with F1.
“Many of these will take time to develop in the right way, and our priority again is building long-term value, not a short-term buck.” Carey concluded.