Formula 1 posts $386m loss for COVID-hit 2020 season
Formula 1 took a record $386m hit to its bottom line in 2020, a predictable loss caused by the global COVID-19 pandemic.
The sports overall revenue fell from $2,022b in 2019 to 1,145b in fiscal year 2020, while the small $17m profit recorded in 2019 was followed last year by an operating loss of $386m.
F1’s 10 teams inevitably bore the brunt of the sports’ shortfall, with total payments falling $1,012b in 2019 to just $711m in 2020.
“Team payments decreased in the full year driven by the contraction in F1 revenue and the associated impact on the calculation of variable elements of team payments,” stated F1 comercial rights holder Liberty Media.
“Team payments in 2020 included one-time fees paid to teams upon signing the 2021 Concorde Agreement.”
Dwindling revenue from race promotors due to the disrupted 2020 season represented just 12% of total revenue last year compared to 30% in 2019.
“Race promotion revenue decreased as fans were prohibited from attending all but three races, which led to one-time changes in the contractual terms of the originally scheduled races that remained on the 2020 calendar and limited revenue generated from the replacement races that were added,” added Liberty Media.
Read also: F1 ‘hopeful’ of spectator attendance at most races in 2021
Last year’s 15-race season safeguarded most of Formula 1’s broadcasting contracts which accounted for 55% of total revenue in 2020, although a payment reduction was applied in some cases.
“Broadcast revenue decreased as the altered schedule triggered lower fees pursuant to the contractual terms of certain broadcast agreements, as well as other one-time contract negotiations that took place in 2020.”
Formula 1’s advertising and sponsorship revenue also declined in 2020 “driven by one-time changes in sponsorship contracts due to the cancellation of races to which contracted sponsorship inventory specifically related and the limited activities at the races, including hospitality.”
However, last year’s shorter scheduled and the reduced number of flyaway races led to a decline in costs.
“Costs decreased in the fourth quarter and full year due to lower hospitality and lower freight costs from fewer, logistically cheaper races.”
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