The Coronavirus pandemic has dealt a heavy blow to economical conditions. Almost every organization has faced a financial crisis during this period. The whole world has gone into lockdown since March and is now slowly coming back to function normally. But it will take many more months for things to be fully normal like before the COVID-19 outbreak.
All sporting events were suspended for some months and fans are still not allowed inside stadiums. Formula 1 was suspended for April, May and June. In the same period in 2019, seven F1 races took place.
Due to this massive suspension, Formula 1 has made a massive revenue loss. According to a report by Inside Sport, Liberty Media released Formula 1’s revenue figures on Monday. Formula 1’s revenues crashed by a record 96% year-on-year during the 2020 Q2 period.
No race was held in the 2020 Q2 period. Revenue during that period was just $24m, compared to the $620m earned in 2019. F1 made a $14m profit in Q2 2019, but it has made a $136m loss in Q2 2020. The Coronavirus pandemic has heavily affected the Formula 1.
According to the report, F1 divides its income into:
- Primary revenues – race promotion fees, broadcast fees, advertising and sponsorship fees
- Other revenues – hospitality and other event-based and television production activities.
Formula 1 generated $12m from primary revenue sources in Q2 2020, versus $531m in Q2 2019, and a further $12m from other revenues versus $89m in Q2 2019.
Liberty Media said in a statement: “Since there were no events held during the second quarter of 2020, revenue recognition was limited, with recognised primary F1 revenue in the period consisting only of the elements of sponsorship contracts associated with non-race related rights.”
As Formula 1’s revenues dropped by a massive 96%, they have also cut-off their expenses. They made no payments to teams during this period and saved $335m compared to last year. Other revenue-related costs also declined by 85% from $106m to $16m.
Liberty Media said: “Selling, general and administrative expense decreased due to lower personnel costs and lower discretionary marketing expenditures, partially offset by the effects of foreign exchange-related losses. F1 implemented certain cost-cutting measures in the second quarter, including the elimination or deferral of non-essential expenditures, salary reductions and lower bonus accruals.”
After a long suspension period, Formula 1 has finally resumed from 3rd July with the Austrian Grand Prix with new rules implemented to tackle the Coronavirus pandemic.
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