We could have predicted that Formula 1 would cost a lot of money. Now we know how bad it is.
A paltry $ 24 million. Which was Formula 1 sales in the past quarter. To put it in perspective: a year earlier, Formula 1 yielded 620 million dollars. A gigantic difference, which of course has only one reason, namely the corona virus.
Formula 1 mainly gets its money from three sources. The promotion fees, broadcasting rights and advertising and sponsorship money. Because of corona there were no races, so no promotion fees, no broadcasting rights and no advertising money. The only income came from annual sponsorships, which are not linked to races.
If you have little turnover, then it is logical that you have less profit, right? Well, that’s right, although not as bad as you might think. In the past quarter, the Formula 1 organization calculated a loss of 136 million dollars. Formula 1 now costs a lot of money, although it is not too bad. Last year there was a profit of ‘only’ 14 million dollars. That while they generated nearly $ 600 million more turnover at the time.
What causes this difference? Simple, they have been cutting costs nicely. They made the biggest profit on the payouts to teams. The Formula 1 teams receive money per race. In the second quarter of 2019, there were 7 F1 races, so the organization paid $ 335 million. There was no race in the second quarter of 2020, so the organization did not pay anything at all.
There were also fewer organizational costs due to the lack of races, there was less need to advertise and the personnel costs were lower. Some countries, such as the UK, supported companies in paying workers. In this way, Formula 1 managed to avoid bigger financial problems.
Although the numbers are now anything but rosy, F1 does use positive words. They have new sponsorship deals and of course there is now racing again. They hope to be able to drive 15 to 18 races, with all the income that entails. Whether Formula 1 will still be in the black this year? That is not yet clear, as there are still hardly any fans present at the Grand Prix. But Formula 1 is still hopeful.