Formula 1 posts an increase in revenue in 2017
Formula 1 enjoyed an increase in overall revenue in the second quarter of 2017 compared to the same period last year, with a total revenue of $616M.
Operating income decreased however from $90M to $45M as operating expenses grew in the three-month period from April to June.
“We just passed the halfway point in the 2017 season, and attendance, viewership and engagement on digital platforms have increased,” said Chase Carey, Formula 1 Chairman and CEO.
“We are in the process of developing our three to five year strategic plan while focusing on key priorities like improving and building fan engagement that will positively impact the business and build the foundation for long-term results.”
The Formula One Group is still in the process of building its employee base which, in addition to other expected investments in the sport, will see costs continue to rise this quarter.
“The corporate head count has been sort of 70-75, and it has probably about doubled,” said Carey.
“We’re still building it out. We’ve hired most of the senior executives, but we haven’t built the team out fully.
“We’ve talked roughly about $50m a year, and as we go through the planning and budgeting process this fall will probably get refined, because it is more than just head count.
“We had events like F1 Live in London that we think are the type of events that are important for us to engage with fans much more actively and broadly.
“We’re engaged with digital partners. We don’t really have an appropriate digital platform today, so there are investments that we’ve made to support a digital platform for us going forward.
“In the next few months for the first time we’re refining our plans around that.”
- US F1 fan base bigger than expected – Carey
Quarterly results released this week also revealed that The Formula One Group had considerably reduced its outstanding debt thanks to successful debt and equity offerings. A massive – and expensive – $1 billion tier of debt has thus disappeared from the books.
“We have repriced our remaining debt, and have also received upgrades from the ratings agencies,” Carey said.
“The combined effects will be to reduce annual interest expense by up to $90m going forward.”
Interestingly, Liberty Media President and CEO Greg Maffei disclosed that Chase Carey’s remuneration is heavily performance-based.
“We don’t plan to publish his contract,” said Maffei.
“But I did want to share with you the fact that the substantial majority of Chase’s compensation is performance-related, and tied into the operational performance at F1 directly, or the stock of the F1 Group.”
Carey therefore has skin in the F1 game and a personal incentive to see the sport prosper, along with its shareholders.
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