Liberty Media has made changes in its business strategy as well as “pouring money” into Formula 1 going through this extremely challenging period with the COVID-19 pandemic.
Orders must have revenue
Recently, Liberty Media, the current F1 management unit, “redistributed” its “assets” among its subsidiaries to bring money to Formula 1 during the COVID-19 pandemic. continue to have great impact on the tournament.
Liberty restructures to pour money for F1 support
The deal was made between FWON (F1’s holding company of Liberty) and SiriusXM, a communications company based in Manhattan, New York, USA, which is a subsidiary of Liberty. The main change for the deal is that the company promotes the organization of events – Live Nation, previously “in the same house” as F1, will now join SiriusXM.
In addition to the purpose of bringing more money to F1, the main reason for this decision of Liberty is because both F1 and Live Nation need to take place events to bring about revenue. However, given the current situation, both are becoming a big source of risk for the parent company. From there, Liberty was forced to “put one egg in another basket” to divide the risks evenly among its subsidiaries.
On the other hand, it is also a logical move to put a company promoting events (concerts) in conjunction with a media company, rather than on motorsport like F1.
Approximately USD 1.5 billion of assets were transferred from F1 Group to Liberty SiriusXM, totaling USD 2.8 billion assets and USD 1.3 billion outstanding loans. Of which, shares of Live Nation accounted for USD 2.6 billion in the above data.
That conversion is balanced by a net of $ 1.5 billion of net assets transferred from Liberty SiriusXM to F1 Group, including cash of $ 1.4 billion, of which 50% of which is considered as an inter-bank loan.
How to keep the racing team from bankruptcy?
Liberty expects this change will help them in the stock market related to F1 business. That brings liquidity to F1 in case the season continues to be delayed.