F1 Reports In-Line End to 2022; 2024 Schedule Likely to Feature 25 Races

Formula One FWONA ended 2022 with an in-line fourth quarter. The finalized 2023 schedule now includes 23 races to be held between March and November as the China Grand Prix has been canceled for the fourth year in a row. We believe that the race will return in 2024 and that F1 will add one more race to bring the schedule to 25 races. While the current cap is 24 races, we expect that race teams will be willing to add another race if the price and location are right. Management remains positive about the progress toward holding the inaugural Las Vegas race later this year. We are raising our fair value estimate to $55 from $49 to include higher contributions from the Miami and Las Vegas GP.

Revenue for the F1 Group fell 4% year over year to $754 million as F1 held six races, one less than a year ago. Despite the lower number of GP, advertising and hospitality revenue continued to benefit from the return of crowds as other F1 revenue improved 8% to $186 million. However, the lower number of flyaway races hurt race promotion revenue, which was down 8% to $562 million. One of the reasons we project a 25-race schedule in 2024 is the higher promotion fees from flyaway races. We think that the new race for 2024 could be a return to South Africa as the circuit has not held a race on the African continent since 1993, and other regions other than South America all have over four races. One possible hurdle to a 25-race schedule in 2024 is the agreement expiration of the Belgian GP after this season. Despite generating the lower promotion fee, the Spa circuit is an iconic racetrack for F1 that is very popular with both drivers and fans, making it likely that F1 will renew the race.

Adjusted EBITDA margin for the quarter fell to 17.9% from 21.3%, due to making team payments on a pro rata basis along with increased Paddock Club costs, higher F2 and F3 costs, and higher headcount. F1 also spent on both headcount and construction to support the Las Vegas GP.