Formula 1 has been handed a negative outlook

F1 2020

Negative outlook for Formula 1

A leading global credit agency suggests F1 could survive 2020 season cancellation

Ian Parkes

Thursday 2 April 2020 14:30 Updated: 15:32

Formula 1's outlook has been downgraded to negative from positive by one of the world's leading credit rating agencies.

The move has been made by American company Moody's, that assesses the long-term and short-term ratings related to the relative credit risks of numerous global businesses, and comes in light of the ongoing coronavirus pandemic that has resulted in F1 failing to stage a grand prix this season.

With the Australian and Monaco GPs cancelled, six others postponed and the near-certainty others will follow, Moody's has declared in a statement that the impact being felt by the sport would result in “weakened earnings and cash flow generation, higher leverage and liquidity erosion in 2020”.

Article continues under video

It added in a statement that the switch to a negative outlook was as a result of "the high levels of uncertainty over the 2020 race season and Moody’s expectations of increased leverage and weakened liquidity in 2020".

Moody's, however, believes F1, run by Liberty Media, remains in a strong enough position to weather the possible storm of it being forced to cancel the entire season.

The statement added: “Formula One has strong liquidity and a sufficiently flexible cost base to manage through a severely curtailed 2020 season, which Moody’s consider would likely be able to support a full cancellation.

“As of 31 December 2019, Formula One had substantial liquidity headroom of around $900 million, comprising $400 million cash balance and $500 million undrawn committed revolving credit facility.

“Moody’s expects this to be sufficient to absorb cash outflows from potential refunds of advance payments from promoters, sponsors and broadcasters, team payments, other overheads and interest costs in the event that the 2020 season is cancelled.”