The total figures for the entire season are anticipated to surpass those of the previous season, as both years featured 22 races, and the more profitable Las Vegas race will take the place of the French GP.
Due to flooding in the local area, the Imola race was canceled, resulting in only six events taking place in the April-June period. This was a deviation from the original schedule, which had planned for seven events, similar to the situation in 2022.
The importance lies in the fact that the revenue from race promotion is documented in the quarter when the event occurs, while the revenue from media rights and sponsorship is distributed proportionally throughout the four quarters based on the number of races held within that period.
F1 experienced a decline in revenue for the second quarter of 2022, with a decrease from $744m to $724m. This decline can be attributed to a $10m drop in primary revenue, which includes race fees, media rights, and sponsorship, as well as an additional $10m loss in other revenue sources.
The payments made to the 10 teams decreased from $368m to $344m during the same period. However, after considering these and other expenses, F1 profits saw a slight increase from $49m to $52m.
The cancellation of Imola had a significant negative effect on the recognition of media rights revenue. This was because the number of events decreased from seven to six out of a total of 22. Surprisingly, the overall amount for race promotion was higher, even though there were fewer races. This was due to increased contractual fees for the remaining events.
Greg Maffei, F1 on the grid
Photo by: Mark Sutton / Motorsport Images
Liberty noted: “Primary F1 revenue decreased in the second quarter with growth across race promotion and sponsorship offset by a decline in media rights revenue.
Although there was a decrease in the number of races held during this period, the revenue generated from race promotions increased as a result of higher fees outlined in contracts. Additionally, sponsorship revenue saw growth due to the inclusion of revenue from new sponsors and an increase in revenue from existing sponsors.
The decrease in media rights revenue was caused by a lower proportionate recognition of income based on seasons. However, this was partially balanced out by the continued growth in F1 TV subscription revenue and higher fees from new and renewed contractual agreements.
Liberty also mentioned that there was a decrease in additional earnings during the second quarter. This was mainly due to a reduction in income from freight, which was caused by a decrease in the inflation of freight costs on billing rates. Additionally, there was a decline in revenue from hospitality due to one less race being held in the current period. However, these decreases were partially offset by an increase in licensing income and higher revenue from the sales of F2/F3 car chassis.
Liberty also noted revealed F1’s overall costs increased in part because of expenditure related to the lost Imola race.
The text mentioned that there was a decrease in shipping expenses, but this was balanced out by an increase in expenses related to hosting more guests in the Paddock Club, as well as higher costs due to inflation and increased commissions and partner servicing expenses resulting from the growth in primary F1 revenue streams.
The current period’s F1 revenue also includes additional expenses such as hospitality, travel, and other costs associated with the Imola event. These costs were mostly incurred before the event was unexpectedly canceled.
The decrease in selling, general, and administrative expense during the second quarter was a result of reduced personnel and legal expenses, as well as favorable foreign exchange rates. However, this decrease was partially offset by increased marketing, property, and IT expenses.
Liberty revealed that F1 spent $7m in April-June on costs associated with the planning of the Las Vegas GP.
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