BLOOMINGTON, Minn. – Liberty Media will not be handing out free money despite the financial difficulties in Formula One created by the coronavirus crises.
“Whether it’s the teams, or promoters or sponsors, we’re not going to be handing out ‘candy’ to everybody,” Chase Carey, Liberty’s F-1 chairman and CEO, said in a conference call.
Just about every entity in F-1 including Liberty is facing financial difficulties because of the cancelled or postponed races. But Liberty is not going to act as a charity to give everyone financial aid.
“We’re going to expect to be treated fairly, but we’re going to deal with it as adults, and with the expectation that 2021 is going to look like the business that we all knew four months ago,” Carey said.
It is not yet known how many F-1 races there will be in the 2020 season, but it certainly won’t be the 22 originally scheduled. Carey has admitted that there is the possibility that there might be no races at all. The aim is to have 15 to 18.
Race promotors who have to hold grands prix with no fans are expecting a big reduction in the fees they usually have to pay to Formula 1 to host those races. Some of them want to pay Liberty absolutely nothing. And some of them even want Liberty to pay all their operational costs of running their tracks for the F-1 weekend.
Sponsors, both those who advertise at the race tracks and those who advertise with the teams, will want discounts because they paid for a full season.
The television broadcasters’ contracts stipulate a minimum of 15 races. If it dips below 15, then Liberty will have to start refunding – on a prorated scale – some of that money back to the broadcasters.
The “prize money” the teams get paid is based on a 63 percent portion of what Liberty earns each year from racing hosting fees, the television money, trackside sponsorship, trackside hospitality, merchandizing and other things. So when the number of races is reduced, so too is the income earned by the teams and Liberty.
The prize money is paid to the teams one year later. So right now, they are getting full funding from 2019. But with F-1 earning a lot less money in 2020, it means that the teams will get paid a lot less in 2021. But Liberty is doing something to support some of the smaller teams. The 2019 prize money is paid out in 10 monthly installments in 2020. Liberty has given several teams advance payments on what they would have received later this year.