F1 racing: Financial difficulties and prospects are worse than coming (Part 3)

According to Moody’s Investors Services, one of the world’s most reputable credit rating and financial information providers, believes that despite facing difficult circumstances, they believe that F1 is still capable Orientation is everything. 

Moody’s analysts, when evaluating a company ‘s value, take into account the positive and negative points or, more importantly, the risks and make an assessment of the current financial situation.

Since then, Moody has released the B2 debt rating, with a number of existing risks, with future prospects from negative to positive. At first glance, that’s not too good, but Moody says the picture will really depend on how many races this year will be held. Moody generally concluded that they “expected revenue and cash flow creation to be reduced, high financial leverage, and poor liquidity in 2020”.

Hà Nội sẽ tổ chức đua xe F1 vào năm 2020 - VnExpress

Another important issue to mention is that the extension of the Concorde agreement will expire at the end of 2020. To talk about this contract, this is an agreement signed between the World Automobile Federation and F1 teams, talk about the teams participating in the races and how to divide the bonuses and revenue from TV. Of course, this agreement is kept confidential by stakeholders.

Historically, a total of seven Concorde agreements have been issued, starting in 1981, then 1987, 1992, 1997, 1998, 2009 and most recently 2013. The goal of this agreement is to improve professionalism and commercial success for the tournament.

The more important factor is that F1 racing teams are obliged to attend all races, making the tournament more reliable and attracting more television units to spend heavily to hold television rights. In contrast, teams also enjoy a percentage of F1’s commercial revenue each year.

Đường đua xe F1 Hà Nội có thể sẽ được tổ chức tại Mỹ Đình

However, before the disease situation has not been determined yet, the racing teams have admitted that it will be difficult to determine the exact loss. Since then all have not been able to find a common voice in the issue of cost cutting.

Earlier, the new budget to develop the unified car performance was up to $175 million per year, but small racing teams thought that this level was not enough to satisfy them, so the proposal was lower, from 125 -150 million. Big racing teams also make sense when they are the ones who research and produce the parts on their cars, which will cost more than the customers teams just need to buy those parts.