Ferrari hopeful F1 losses will be ‘short-lived’
Ferrari is hopeful the loss in revenue from its Formula 1 team will be “short-lived” through 2020 as it braces for a drop in prize money and sponsorship income.
All 10 F1 teams are anticipating a fall in revenue from racing activities this year due to the impact of the COVID-19 pandemic.
The opening 10 races of the 2020 season have already been called off, and while F1 bosses remain hopeful of staging as many as 18 races this year, a significant reduction in hosting fees is anticipated.
The hosting fees fund much of the prize money given to teams, who themselves are set to face falls in sponsorship income due to the suspension of on-track racing.
Ferrari CEO Lous Camilleri told investors that F1 was the one activity that would affect the company’s financial results “in the harshest manner” this year, as well as being “by far the hardest to predict”.
But Camilleri said he was optimistic the dip in F1 revenue would only last through 2020 and not stretch into next year.
“While the Formula 1 hit to revenues and earnings is not an easy matter to digest, the good news is that the significant losses incurred should be short-lived and contained to 2020,” Camilleri said.
“Our current thinking in terms of revenues, although it’s somewhat unpredictable, in 2021 they should come back certainly in terms of the races, which is a big part of it, and obviously also in terms of sponsoring.
“We know that the Formula 1 Group has worked a lot in terms of trying to attract new sponsors. Obviously the situation has delayed certain things, but hopefully by 2021 that will have come back.
“At this stage, we don’t really foresee a continued reduction in the commercial rights holder revenues in terms of Formula 1 for next year, all things being equal.”
F1 has confirmed the existing 2020 cars will be carried over to next year to reduce development costs for teams, while a reduced budget cap of $145 million is also planned for 2021.
Camilleri hailed the “substantial progress” teams had made to cut costs going forward, but said there was no way to completely offset the financial impact of 2020.
“There is no way we can offset through cost reductions,” Camilleri said.
“Although we have reduced costs in Formula 1, there is no way we can offset the hit to the revenues on sponsorship fees, and especially on the revenues that are generated by the commercial rights holder.
“The hit to revenue essentially goes down to the bottom line, with some minor offsets. But it’s a big hit, and as I said, the good news is that it’s confined to this year hopefully.”
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