Formula One's Commercial Rights' Holder, Liberty Media has announced that income in the second quarter of 2021 continued to increase as spectators returned to several races.
The Covid-19 pandemic has understandably had a negative impact on the economic side of Formula One in 2020 as the majority of last year’s races took place behind closed doors. The ‘ghost’ races meant that the promoters and the Commercial Rights’ Holder could not generate the vital income it gets from ticket selling and the operating of the Paddock Club. Moreover, additional income that comes for example from merchandise at the track or on-site selling of food and drink could not achieved either.
Primary F1 revenue represents the majority of F1’s revenue and is derived from three sources: race promotion revenue, media rights fees and sponsorship fees.
On the 1st of January, 2021, Formula One has made tweaks to its revenue structure. The media rights fees were previously referred to as broadcasting fees.
However, it has been renamed media rights fees for 2021 as it includes from now on not only the broadcasting fees, but also the fees for F1 TV subscriptions, fees for licensing commercial rights for Formula 2 and Formula 3 races, fees for the origination and support of program footage, fees for broadcast rights for Formula 2 and Formula 3 races and fees for advertising rights on Formula 1’s digital platforms. Following the reclassification, other F1 revenue is primarily comprised of freight and hospitality revenue.
Comparing the second quarter of 2021 with that of 2020, the sport saw a significant increase in income. There were seven races held in the second quarter of 2021, compared to no races held in the second quarter of 2020 due to the COVID-19 pandemic.
While in recent races – Styrian, Austrian, British and Hungarian Grands Prix – a high number of spectators were granted access to the events, in the races held in the second quarter of 2021, only a very limited number of fans were in attendance and there was no Paddock Club hospitality.
In 2020 F1 posted an operating loss of $122m for the same period, and that was reduced to a loss of $36m this year.
While Formula One claimed an income of just $24m in the second quarter of 2020, it has increased to $501m this year, mainly due to the growth in race promotion, media rights and sponsorship fees compared to the same period of the previous year.
Other F1 revenue increased in the second quarter due to certain event-related activities associated with the seven races held in the current period compared to no races held in the prior year period, including higher freight, media and technical services, travel and Formula 2 and Formula 3 income. Licensing revenue also increased due to new contracts.
However, the income of $501m is still below what the sport achieved in the same period of 2019 when it generated an income of $620m. The sport is expected to generate a further lift in income with the significant increase of the number of spectators in the races that has already taken place or will be staged in the three months of July, August and September.
In total, in 2020, the sport posted an operating loss of $122m for the same period, and that was reduced to a loss of $36m this year.
“Formula 1 is having an incredible season and the drama on the track is resonating with fans worldwide. The battle for the Championship is intense and very close, evoking memories of some of the sport’s greatest rivalries of the past,” said Stefano Domenicali, Formula 1 President and CEO.
“We are seeing increasing numbers of fans tune in at home, and it is great to see the fans retuning to the races, with a sellout crowd at Silverstone of 356,000 across the weekend marking one of the largest fan events in the world since COVID.
“We were very pleased with the first Sprint event and look forward to the next one in Monza, and we continue to prove, despite the challenges presented by the pandemic, that we can adapt and find solutions for the remainder of the season,” concluded Domenicali.