Formula One Group made a bigger loss in 2018

The Formula One Group generated increased income in 2018 compared to the previous year – but a hike in expenditure meant that the organisation made a bigger loss overall.

Formula One Group made a bigger loss in 2018

The news comes as F1 and the teams continued what are likely to be increasingly complex negotiations over both the sport's rules and the commercial arrangements for 2021 and beyond.

Liberty Media's annual results, issued on Thursday, indicate that F1's revenues rose by some $44m from $1783m in 2017 to $1827m last season.

However, only $6m of that was due to "primary revenue" - income from race fees, TV and advertising/sponsorship – with the rest coming under the "other revenue" heading.

Having made a profit of $47m in 2016, followed by a loss of $37m in 2017, F1 has posted an increased loss of $68m for the 2018 season.

The income paid to the 10 F1 teams has continued to fall, from $966m in 2016 to $919 in 2017 and $913m in 2018.

Liberty notes that income from race fees was "flat", despite there being 21 races as opposed to 20 the previous year.

The company points out that the combined fees from the German and French GPs did not make up for the fee lost due to the absence of Malaysia.

"Race promotion revenue increased modestly primarily due to contractual increases in race promotion fees, as well as a contract amendment for one event that provided for an increase in promotion revenue which was fully offset by a reduction in advertising revenue related to that event.

"This contract amendment was neutral for total Primary F1 revenue.

"In addition, race promotion revenue in 2018 was impacted by the calendar variance, with the non-occurrence of the Malaysian Grand Prix in 2018 not fully offset by the return of two European races in France and Germany."

Liberty says that its TV income also similar to the previous year, and was hit by problems with a partner.

"Broadcast revenue was essentially flat for the full year 2018 as contractual rate increases and favourable foreign currency movements were offset by the early termination of one contract with a failing broadcast rights broker."

Crucially, Liberty has admitted that advertising and sponsorship income, which it has regarded as a key area of growth since it bought the business, actually fell in 2018.

It notes: "Revenue from new sponsorship agreements and growth in certain contractual agreements did not fully offset the aforementioned contract amendment that saw a reduction in advertising revenue fully offset by an equal increase in promotion revenue (which was neutral to primary revenue)."

The increase in "other" revenue derives from several sources, and is "primarily due to higher logistics revenue, higher digital media and TV production related revenue, increased revenue from various fan engagement activities and higher spare part sales for the F2 and GP3 support series".

Liberty stressed that F1's performance was hit by increasing costs, "as the business continued to invest.

"Cost of F1 revenue increased primarily due to logistics and travel expense, higher costs associated with providing the chassis and component parts to F2 and GP3 teams, digital media development and spend on fan engagement, which more than offset reduced team payments."

The company also notes that it was hit by bad debts associated with partners: "Selling, general and administrative expense increased primarily as a result of increased marketing and research costs and increased bad debt expense due to payments issues with two commercial partners."

shares
comments
Leclerc: Ferrari not running flat out yet

Previous article

Leclerc: Ferrari not running flat out yet

Next article

Lowe dismisses future doubt amid Williams plight

Lowe dismisses future doubt amid Williams plight
Load comments
Remembering Switzerland’s first F1 winner Prime

Remembering Switzerland’s first F1 winner

Stepping up to F1 in 1962, Jo Siffert shone with Rob Walker Racing Team and BRM before his career was abruptly ended in a fatal crash at Brands Hatch in 1971. Kevin Turner looks back at the life of Switzerland's first F1 winner on the 50th anniversary of his death

What Verstappen is risking with his current stance on 2021 F1 world title defeat Prime

What Verstappen is risking with his current stance on 2021 F1 world title defeat

OPINION: Max Verstappen is back in the lead of the 2021 Formula 1 drivers’ championship, with the season’s final flyaway events set to get underway in the USA this weekend. But a defensive stance he’s recently adopted could have a lasting impact for the Red Bull driver when it comes to his chances of defeating Lewis Hamilton and Mercedes

The hidden Ferrari struggle that Sainz’s recent charge put to rest Prime

The hidden Ferrari struggle that Sainz’s recent charge put to rest

Despite appearing to adjust to life as a Ferrari driver with relative ease, it was far from straightforward under the surface for Carlos Sainz. But, having made breakthroughs in rather different routes at the Russian and Turkish races, he’s now targeting even greater feats for the rest of the Formula 1 season

Formula 1
Oct 20, 2021
The final throes of Brazil's fleetingly successful F1 team Prime

The final throes of Brazil's fleetingly successful F1 team

Emerson Fittipaldi is better remembered for his Formula 1 world championships and Indianapolis 500 successes than for the spell running his eponymous F1 team. Despite a hugely talented roll call of staff, it was a period of internal strife, limited funding and few results - as remembered by Tim Wright.

Formula 1
Oct 18, 2021
Why McLaren's expanding agenda will benefit its F1 resurgence Prime

Why McLaren's expanding agenda will benefit its F1 resurgence

In the 1960s and 1970s, McLaren juggled works entries in F1, sportscars and the Indy 500 while building cars for F3 and F2. Now it’s returning to its roots, expanding into IndyCars and Extreme E while continuing its F1 renaissance. There’s talk of Formula E and WEC entries too. But is this all too much, too soon? Stuart Codling talks to the man in charge.

Formula 1
Oct 17, 2021
How Tsunoda plans to achieve his F1 potential Prime

How Tsunoda plans to achieve his F1 potential

Yuki Tsunoda arrived in grand prix racing amid a whirlwind of hype, which only increased after his first race impressed the biggest wigs in Formula 1. His road since has been rocky and crash-filled, and OLEG KARPOV asks why Red Bull maintains faith in a driver who admits he isn’t really that big a fan of F1?

Formula 1
Oct 15, 2021
The danger of reading too much into F1's clickbait radio messages Prime

The danger of reading too much into F1's clickbait radio messages

OPINION: After Lewis Hamilton responded to reports labelling him 'furious' with Mercedes following his heated exchanges over team radio during the Russian Grand Prix, it provided a snapshot on how Formula 1 broadcasting radio snippets can both illuminate and misrepresent the true situation

Formula 1
Oct 14, 2021
How F1’s pole winner approach undermines drivers Prime

How F1’s pole winner approach undermines drivers

OPINION: Valtteri Bottas is credited with pole position for the 2021 Turkish Grand Prix, despite being beaten in qualifying. This is another example of Formula 1 and the FIA scoring an own goal by forgetting what makes motorsport magic, with the Istanbul race winner also a victim of this in the championship’s recent history

Formula 1
Oct 13, 2021