The presentation revealed that $7.1bn of revenue is already committed to the
F1 Group largely thanks to the long duration of race agreements. Analysts at
the meeting said few other media businesses had such visibility.
Research by F1’s industry monitor, Formula Money, shows that the longest
contract is for the British Grand Prix, which will generate an estimated
$452m for the F1 Group by the time it ends in 2026. Grand Prix contracts
provide $4.7bn of its guaranteed revenue and, in contrast, only $1.4bn is
committed from television contracts. This is because the contracts were
restricted in 2001 to five years after a competition inquiry by the European
Commission.
The data show that over each of the next 15 years the F1 Group will receive on
average $473.3m of revenue.
The prospectus reveals that F1’s single biggest cost – prize money – is
increasing. It currently comes to around 50pc of the group’s earnings before
interest, taxes, depreciation and amortisation (Ebitda). It also gives a fee
to the Ferrari team due to its historical status.
Prize-money payments are set out in F1’s Concorde Agreement, which expires at
the end of this year. The new contract will run from 2013 until the end of
2020 and gives extra payments to any team which has competed since 2000
without changing its name, with further fees to past championship winners
and back-to-back champions.
In 2010, the most recent year for which data are publicly available, the F1
Group’s Ebitda came to $538m on revenues of $1.6bn. However, ratings agency
Standard Poor’s expects that the increased team payments will reduce
Ebitda by five percentage points to 27pc from 2013.
Its bottom line is also likely to be squeezed by accelerating interest
payments on debt from the Royal Bank of Scotland and Lehman Brothers, which
CVC used to acquire F1 in 2006. Interest payments came to $59.2m in 2010 and
at the end of the year the business still had $2bn outstanding, which was
due by 2014.
This month CVC secured a new $2.3bn loan, due by 2018, to refinance the
previous debt and make a one-off cash payment of $1.1bn to Delta Topco. This
may be paid as a dividend, giving F1’s shareholders a further boost before
the IPO.