Tag Archive: Concorde

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.

F1 racing: Financial difficulties and prospects are worse than coming (Part 1)

With the official announcement of the delay of the race taking place in early June at the Gilles Villeneuve racetrack, Canada, the total number of delays/cancellations in this 2020 season has increased to 9 stages.

Therefore, the possibility of canceling the whole season is growing and F1 is facing the risk of the financial crisis in the worst-case scenario.

As expected, it is only nearly 2 months before the Canadian GP in the city of Montreal is organized, but before the COVID-19 epidemic situation is still seriously affecting this country (figures until April 24 with more than 42,000 cases of infection, more than 2,100 deaths and no signs of stopping), the race was officially postponed.

Đua xe F1: Khó khăn tài chính và viễn cảnh còn tệ hơn sắp tới

Thus, up to now, only 13 races still take place according to the official schedule and 7 other races are waiting for the time to be rescheduled, except Monacos and Australia have been canceled. FOM (F1 Management) manager Ross Brawn still hopes that the season is expected to start from July in Europe, but there is no audience.

From there, we do not need professional financial analysts from Wall Street to understand the picture that F1 will face in the near future. Most of the revenue from signed tournament deals depends on one clear factor: at least there must be organized races.

Đua xe F1, chạy thử Abu Dhabi GP: Tai nạn và cờ đỏ liên hoàn

That revenue in 2019 was a total of US $2,022 billion, divided into three main sources of revenue, which are race fees from countries (30% last year), TV copyright fees (38%) and sponsorship (15%). Other revenues come from the VIP client area at the Paddock Club (inside and behind the Pit building), as well as the accompanying Formula 2-3 support.

In 2020, F1 is expected to increase its total revenue thanks to the 22nd race. However, in the current context, each race is not organized, causing the tournament to lose $30-$50 million.