F2 promoter reports 23% fall in income in first year of pandemic

Photo: Formula Motorsport Limited

Formula Motorsport Limited, organizer and promoter of Formula 2 and Formula 3, had its revenues reduce by close to 23% in 2020 according to its recently published financial statements.

The company will control Formula 1’s two supporting feeder series until 2041, and generates revenues from selling cars and their spare parts – rather than teams dealing directly with suppliers – as well as from race promotion and television rights.

In 2020 its revenues were €32.7 million, down from €42.4 million in 2019, a figure impacted by “the cancellation of certain planned events and with limitations placed on activities that could be undertaken at others” during the COVID-19 pandemic.

F3 had to cancel its World Cup in Macau in addition to rounds at Bahrain, Sochi and Zandvoort, which was also a loss for F2 alongside Monaco, Baku and Abu Dhabi.

Although the promoter succeeded in maintaining the number of rounds in both series, 12 for F2 and nine for F3, many rounds were held behind closed doors “in which case the associated commercial terms may be less favourable to the company than originally contracted and certain event-derived revenues may be reduced or eliminated”.

The company’s revenues tend to be highly cyclical, depending to a large degree on the operating lifespan for the cars used. Revenues peak in year one of what is usually a three-year cycle as teams are required to acquire new cars and spare parts.

As a result, F2 generated significant revenues in 2018 driven by the sale of its new chassis. A year later the same occurred with the new F3 series, which succeeded GP3, as it introduced the Dallara F3 2019 car.

There was a boost for F2-derived income in 2020 as Hitech GP joined as the 11th team on the grid, rather than replacing one of the existing entrants, and so additional sales of chassis, engine and other components contributed to a revenue increase of €1.8 million over 2019.

F3 did not have any new teams in 2020, the second year of its current car, so revenues there declined by 51.6% year-on-year to €8.1 million.

The current F3 car was originally intended for use across three seasons, but the promoter now considers it “likely to remain the same for the next three-year cycle starting in 2022”. There are however paddock rumours of an upgrade kit arriving in 2023. The Dallara F2 2018 will remain in use in F2 until at least the end of 2023 to control costs.

The combined impact of having no new car in either series, and the consequences of the COVID-19 pandemic even though “additional costs incurred to mitigate the issues of the COVID-19 pandemic and the revised calendar resulting were offset to a large degree by savings from cancelled events”, resulted in an operating loss of €0.8 million which was the company’s first annual loss since 2007.

With no boost to revenues imminent from the introduction of a new car, 2022’s huge calendar expansion and a return to pre-pandemic levels of commercial activity now appear crucial to returning to profitability.

      Key: Figures are € (millions)   Source: Formula Motorsport Limited