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Teams prize money drops $45m under Liberty

NEWS STORY
08/08/2018

Latest results reveal that the teams will receive $45m less in prize money than before Liberty Media bought the sport last year.

The figures reveal that in the period April - June the teams received $307m in prize money which is down 7% on the same period last year.

However, as Forbes reveals, contrary to some media reports, the teams haven't taken a $23m hit on 2017 as Liberty's documents clearly state that "team payments are recognized pro rata with the number of races".

With 21 races this year, as opposed to 20 in 2017, the pro rata payment has reversed and as a result the total amount of prize money will in fact rise. Indeed, the total prize money of $921m is a $2m increase on 2017... however, it is $45m down on the amount the teams received in 2016, the year before Formula One changed ownership.

Part of the reason for the fall in revenue in the period April - June, when revenue fell by $31m to $585m, can be accounted for by the fact that this year saw the return of the French Grand Prix which replaced the Russian Grand Prix which moves to a late-September slot. With Formula Money reporting that the hosting fee for the Paul Ricard event was $20m, this means a $28m drop on the $50m usually paid by organisers in Sochi.

Various other factors have seen costs rise dramatically which all have a negative effect on the prize pot.

The new London HQ, the dramatic headcount increase, the new theme tune and logo have all impacted the sport's balance sheet before the teams get to see their share of the 68% underlying profits.

And talking of that logo, it is entirely possible that F1 will have to strike a sizeable financial deal with 3M before the case goes before the court later this month.

With F1 yet to sign a significant new sponsor or even a new race - Miami having been shelved until 2020 at the earliest - not to mention those increased costs, it comes as little surprise to learn that operating income fell by 69% to just $14m in the most recent quarter while cash in the bank dropped by $72m to $198m.

"We expect to see some further negative pressure in Earnings before Interest, Tax, Depreciation and Amortisation during 2018, mainly due to the ongoing investments in organisation and infrastructure which the company is carrying out to support the long term growth of the business," admits ratings agency Moody's. "As a result of the increase in headcount, the management estimates a step-up in corporate overheads of about $50 million per annum by the end of 2018 compared to 2016 levels."

The teams reduced prize money comes at a time Force India has been brought out of administration by a consortium led by Canadian billionaire Lawrence Stroll and Williams and McLaren make no secret of the fact that they are depending on the sport successfully introducing regulations that will level the playing field whilst also redistributing the prize pot on a move even basis.

At the same time, the engine manufacturers are unclear what the regulations will be post-2020, fearing that their costs may be driven up by having to simultaneously develop engines to two different sets of regulations.

Mercedes and Ferrari have already voiced strong opposition to the plans post-2020, and to add to the uncertainty it remains to be seen whether new Ferrari boss Louis Camilleri will prove as confrontational towards the sport's management as his predecessor, Sergio Marchionne.

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READERS COMMENTS

 

1. Posted by Rock Doc, 09/08/2018 16:52

"The only reason there has been some interesting races this year is that finally Ferrari and Red Bull are able to give the Mercedes a challenge. Even with that the delta to overtake is huge and you end up with processions until the tires wear away.

Also this year the gap to the rest of the teams is huge, more than in any recent year. It's a massive gap between the leaders and the midfield teams. They simply cannot compete with the top 3 who just blow past them when they need to.

All of this has nothing to do with the way Liberty is running the show, it is all down to the rules. Liberty have added nothing of value. But it does look like they are taking lots of cash for themselves, by spending it frivolously on trinkets. "

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2. Posted by Ro, 08/08/2018 20:55

"@JClark-Monza1967 You get your figures from where ? Media Liberty? Just look at the stands, empty spaces....get real! I have my opinions and you have yours. Every race has been a bore. Certainly no racing! Just a procession."

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3. Posted by JClark-Monza1967, 08/08/2018 19:46

"@RO "no spectators"

Track attendance and viewership is up in 2018. Yes, not every race is a corker but overall quality of racing has been much higher (and closer) than in recent years. You're welcome to your opinions and preferences but the facts and statistics don't support your assertions."

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4. Posted by Ro, 08/08/2018 19:14

"Seems to me that what Media Liberty (sic) is that they are forcing the teams to agree to the number of races, ie more races, more you get. Never mind that the venues will be crap, no spectators (who gives a toss about those nowdays) and there will definitely be more races in the USA. Fair enough but the quality of races will suffer, and when revenues will go down, what then? As I said before, F1 at the moment is like racing Scaletrix, no overtaking, whoever is in front at the start wins. That to me isnt racing."

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