Rising costs, falling revenues: Liberty Media's financials a problem for F1 teams

Monday, 13 november 2017, 19:13 , by Matthew Scott

Liberty Media's latest financial results will have made for concerned reading for F1 teams as they look to plan for next season. 

Liberty purchased a 100% share in Formula 1's parent company, Delta Topco, in January, for $4.6Bn, buying out a consortium of sellers in order to complete the purchase, some of which was offered in shares.

Interestingly, those shareholders represented 64.7% of the new company, Formula 1 Group, but in the nine months January-September 2017, Liberty disclosed that only 3% of those shareholders currently retain their stake.

But what will concern team owners most will be the additional incurred costs by Liberty which are being set against their underlying profit. 

Teams split 68% of F1's profits between them, meaning that the higher the costs go, the lower the profit margin. Liberty revealed on Thursday that the revenue generated for the nine months to September 2017 was $650m, a $41m drop over the same period last year. That meand $41m of revenue not going to the teams that was at this point last year.

Liberty explained away the drop, citing the lack of German Grand Prix (which was on hiatus) in the calendar this year, as well as 'higher personnel costs as a result of additional headcount due to the acquisition by Liberty of Formula 1.”

However, these additional costs make up an eye-watering 19%, or $88m, increase, eating into what the teams take home. 

Liberty has also increased the debt on its books to an astonishing £3.3Bn and the result of all of this is an overall loss of $160m for the year to date - little wonder why some investors chose to sell up.

What will concern the teams most, however,  is a fact that F1 legend Niki Lauda alluded to in comments on Sunday - that some of the profit drop could have been offset by Liberty attracting new sponsors to the sport; something that they have struggled to do since the acquisition.

Lauda's scathing words, coupled with controversial new engine regulations, means it is a delicate time for fans and teams alike, something that fans should be aware of going into the 2018 season. 

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