Formula 1

$1.4 billion cash injection to support Formula 1 from Liberty Media

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Credit: Octane Photographic Ltd

Liberty Media has provided a $1.4 billion lifeline to help Formula 1 and its teams overcome the current economic downturn.

Liberty Media announced on Thursday a re-allocation of assets, transferring the stake in Live Nation Entertainment from the Formula One Group to its SiriusXM trading stock. The move accounted for $1.5 billion in net asset value and has significantly reduced Formula 1’s debt and provided cash injection for $1.4 billion.

During a call with Wall Street analyst, the Liberty Media CEO, Greg Maffei, claimed that the asset exchange between the two Liberty’s entities was the best way to inject fresh liquidity into the Formula 1 ecosystem.

“We looked at a range of opportunities to see how F1 could secure incremental liquidity, Including potentially selling a stake to others, including raising capital in other formats. And we believed this was the most efficient,” claimed Maffei.

Maffei continued remarking out the new resources would allow acquiring businesses that are currently suffering. The American executive did not mention what sort of distressed assets Liberty media might be interested in.

“I’m certainly not going to discuss acquisitions that are a particular target, but there are live events, in particular ones around motorsports, that could be attractive.”

“There are ones around other kinds of sports that could be attractive and synergistic. I think a lot of other companies are not going to have the flexibility, either in the strength of their operating business nor in the strength of the balance sheet that FWON now has,”
he said.

“We think we have a great asset in F1, we certainly don’t want to dilute that, but we’ll be judicious and thoughtful about what will be attractive to add on, what would be synergistic, and what would take advantage of our strength.”

Formula 1 shuffles now any possibility regarding the 2020 calendar. The season is expected to start behind closed doors in Austria in July. However, nothing is yet confirmed and, the situation may change rapidly, as Maffei talks for no races. If there are, some may not be profitable.

“If we have races without live audiences, we will obviously have less profitability, and perhaps even no profitability at all.”

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