Formula 1 posts huge revenue drop

The Formula 1 Group and owners Liberty Media Corporation have posted the financial results from 2020, showing a major drop in revenue for the championship.

Formula 1 is a series that involves traveling around the world. Therefore, understandably, the competition was heavily affected by the pandemic. However, organizers still managed to successfully put together a 17-race calendar for 2020. It wasn't all bad news, as Liberty reported an increase in social media followers by 36 percent. According to Liberty, Formula 1 showed "the fastest growth in social engagement compared to all other major sports." Defending champion Lewis Hamilton boasts 21.5 million Instagram followers, while his rival and former Ferrari driver Sebastian Vettel refuses to use social media.

Canceled races cost Formula 1

Canceled races cost Formula 1 significantly throughout the year. Predictably, revenue increased in the last quarter of 2021, which had more races scheduled than previous years. The 2020 season was set to start in March. However, the Australian Grand Prix was canceled days before the start of the event.

Formula 1 and the FIA, with the full support of the Australian Grand Prix Corporation (AGPC), have taken the decision that all Formula 1 activity for the Australian Grand Prix is cancelled pic.twitter.com/rHbc7hlNvH

— Formula 1 (@F1) March 12, 2020

Revenue fell by $877 million for the Formula 1 Group. The overall loss for the year was $444 million. Operating income went from a $17 million profit in 2019 to a $386 million loss in 2020.

Liberty Media published a statement to Nasdaq, the stock market on which both Liberty and the Formula 1 Group are listed.

Primary F1 revenue declined in the full year. 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. 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. Advertising & sponsorship revenue declined as F1 was prevented from delivering all elements of a typical sponsorship offering

With a cost cap yet to be implemented, this will trickle down to affect teams, as their share of the revenue will reduce.

Formula One Group has posted 2020 revenues of $1,145m, down from $2,022m in 2019. Operating income went from $17m profit to $386m loss. Team payments (split between 10 teams) will fall from $1,012m to $711m. #F1

— Phillip Horton (@PHortonF1) February 26, 2021