Formula One suffered a decrease in its earnings in 2017 which has led to a smaller prize fund distributed to the sport’s ten teams.
The Formula One Group released its full results for fiscal year 2017 which saw a decline in revenue of $12m from $1,796m to $1,784m.
The revenue drop was the result of 20 races taking place in 2017, one less than the previous year, a lower franchise fee associated with the Brazilian Grand Prix and a shortfall in sponsorship revenue following the loss of commercial partners UBS and Allianz.
With regard to earnings, profits eroded in 2017 as Liberty Media ramped up its corporate expenses, relocating to new offices in London and significantly increasing headcount.
The teams’ prize money allocation fell from $966m to $919m which represents a drop of 5 percent year-over-year, or $47m.
“Cost of F1 revenue increased primarily due to spend on fan engagement, filming in Ultra High-Definition and higher freight costs, which more than offset reduced team payments,” Liberty reported in its company filings.
“Selling, general and administrative expense also increased for the fourth quarter and full year 2017 as a result of additional headcount and new corporate offices.”
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Chase Carey: ‘We had to break F1’s negative spiral’
Team have taken note of Liberty’s continued strategy of investing in the sport, although CEO Chase Carey is hopeful of “improving our balance sheet and maximising our long-term cash flow” in 2018.
“We’ve settled into our new London headquarters,” Carey said.
“With headcount currently around 120, expecting to settle around 150 by mid-to-late 2018.
“Overall we expect the associated incremental step-up in overhead to be $50m annually compared to 2016, excluding marketing and development expense tied largely to new initiatives.”
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