Formula One’s teams will get their full prize money despite nearly half of its events getting the red light due to the coronavirus pandemic, owner Liberty Media is expected to announce on Thursday. The prize money came to $1bn last year.
Prize money is the biggest single cost for F1, which is listed on the Nasdaq. It represents 68% of F1’s profit which is expected to reverse sharply this year from the $1.5bn that it generated in 2019. The first indication of this will come on Thursday when Liberty announces its results for the three months to the end of March.
The payment should support the teams during the downturn as prize money is their biggest single source of revenue, followed by sponsorship. Both usually depend on races taking place but Liberty has had to postpone or cancel 10 of the 22 on the calendar due to the pandemic.
According to Zak Brown, boss of the McLaren team, Liberty is paying the prize money in full anyway. The teams received a payment forecast before the pandemic began and Brown says that “Liberty is paying out against their forecast. They are paid up 100%.”
It is believed that the prize money payments are being funded with a $1.4bn windfall that F1 received last month when it transferred a 33% stake in event promoter Live Nation to another division of Liberty. “I think the move they made to put $1.4bn of cash into the bank was the responsible thing to do and they are not living in denial,” said Brown.
However, he adds that the teams still won’t have an easy ride as “it is going to be really tough” to find sponsors.
Brown said he thinks it is “achievable” for racing to resume in July and added that F1 “is looking like the first race will be in Austria. We will have a couple of races there then a couple in the UK at Silverstone. All behind closed doors. If that can all go off without a hitch I think you have got some momentum and energy back.”