Formula 1: Debts of $ 2.5 billion, rating downgraded to negative
US, WASHINGTON (ORDO NEWS) — The suspension of the season and even its possible complete cancellation have an extremely negative effect on the state of the world championship in racing in the Formula 1 class. The series has a net debt of $ 2.5 billion, and the international rating agency Moody’s has changed the forecast for F-1 from positive to negative.
The situation is complicated by the fact that the owners of the Royal Races from Liberty Media have a loan obligation of $ 2.9 billion to the famous banking house JP Morgan and the bankers have already informed the organizers of the World Cup that the loan conditions may be violated, primarily from due to the reduction of the competitive calendar.
As already reported by Vesti.Ru, Formula 1 was already forced to postpone or cancel the first eight stages of the season. At the moment, the first race in the calendar is the Canadian Grand Prix, scheduled for June 14. But Moody’s experts do not exclude the complete cancellation of the season in their forecasts. However, the “F-1″ has the resources to survive.
At the same time, the many financial indicators of the championship are not very impressive, according to the British The Telegraph . So the leverage of the loan at the bank is 1: 8.25, which means operating profit must exceed $ 303 million. Last season, Formula 1 earned 482 million, but a reduction in the number of races could seriously reduce the performance of 2020.
The International Motorsport Federation will recognize the results of the championship if at least 8 races are held, but sponsors will only fulfill their obligations if the tournament hosts 15 Grand Prix. This year, revenue is expected to fall not only from sponsorship contracts, but also from ticket sales, and this is in the best years – 20% of the series’s revenues.
What can we say in this situation about contacts for the sale of television rights, which are the main source of income for the F-1. In the reduced season situation, they also provide for a significant reduction in payments. However, experts believe that Liberty Media can stabilize the situation with its own assets, because at the time of the purchase of rights to Formula 1, the loan amount was $ 4 billion.
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