Bank: “2021 a build-back year for F1”

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Formula 1’s revenues of $485 million (€400m) for Q4 were 7 per cent lower year-on-year, and below market expectations.

A report from investment bank Berenberg says that F1’s financial numbers were not a “miss” so much as a reflection of the opacity of Formula 1’s fundamentals during the pandemic.

The bank says: “2021 looks set to be a build-back year, but a significant improvement over 2020. F1 is different than other live events companies in that most of its revenue has little direct association with specific levels of fan attendance. However, that does not mean F1 is immune to pandemic-related attendance constraints, as demonstrated by 2020’s results (i.e., 70 per cent drop in per-race promotion revenue). Management expects 2021 race promotion revenue to improve over 2020 levels due to increases in fan capacity, vaccination rates, and race count (23 vs. 17). Management was clear in its expectation that race promotion revenue would continue to be negatively affected by the pandemic, but it was far more optimistic about broadcast and sponsor revenue. Specifically, management expects very little broadcast revenue disruption and only minor levels of sponsorship disruption – and even then, mostly due to special circumstances rather than contractual provisions.”

A shining light for F1 is a 35 per cent growth in social media following and claiming the fastest rate of social engagement growth of any major sport, and growing 99 per cent year-on-year.

“These results are not accidental,” states Berenberg. “Since Liberty Media took over, fan outreach and engagement has been a top priority, which is perhaps best embodied by its Netflix series, Drive to Survive (Season 3 drops on March 19th). We expect social metrics to increasingly matter to broadcast rights holders, particularly those that are digitally native, like Amazon. That said, even F1’s traditional media metrics held up reasonably well in 2020. TV ratings fell low- to mid-single digits on a per-race basis, which is far better than comparable pan-Euro sporting events.”

The new season starts with the first race in Bahrain on March 28th.


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