eBusiness Weekly
Formula One’s revenue could reverse by as much as $84,3 million due to the coronavirus according to research about the potential impact of the flu-like disease on the car racing series.
F1, which is owned by investment firm Liberty Media and listed on the Nasdaq with the ticker FWONK, is at particular risk from the epidemic as it travels so much and so frequently. Its schedule sees it visiting 22 countries in eight months though this tally could be on track to reduce due to the coronavirus.
Since the start of the outbreak in China at the beginning of the year, it has spread to over 40 countries and territories and infected tens of thousands of people.
In a statement recently F1 said the request to postpone the race came from local event organiser, Juss Sports Group, rather than local authorities and this could prove to be crucial. The longer it takes the coronavirus outbreak to turn the corner in China, the less time there will be to reschedule the race and the greater the likelihood that the authorities will have to give it the red light.
The impact this could have on F1’s fortunes is found in its company documents. As we recently reported in British business newspaper City A.M. the filings state that “cancellation of large-scale public events by a competent authority due to . . . outbreak of disease . . . could result in the loss of revenue under Formula 1’s commercial contracts”.
Our estimates put the Chinese Grand Prix hosting fee at $33,1 million annually with a further $5,1 million coming from corporate hospitality ticket sales at the race. That could just be the start.
In just over five weeks F1 is due to hold its inaugural Grand Prix in Vietnam which has had 16 recorded coronavirus cases. Although this isn’t a lot, the country has a border with China so there is a risk that the number could accelerate.
It explains why McLaren F1 boss Zak Brown said earlier this month that “obviously (Vietnam) is very nearby to China so we are going to monitor the situation.” Others have already made their minds up.
Manfred Loppe, head of sport at RTL, one of Germany’s biggest television broadcasters, has announced that it will not be sending staff to the race in Vietnam because “after careful examination, the risks to their health appear to be too great”. Ominously, he added that “we came to this decision after querying numerous information agencies and the bottom line was that we did not receive what we considered to be a reliable assessment of the situation on site”.
RTL aren’t the only ones which are avoiding Vietnam. Recently the Badminton World Federation postponed the Vietnam International Challenge competition on the advice of the Vietnam Sports Administration. It was scheduled to take place at the end of March but has been moved to June. It is widely believed that F1 wouldn’t be able to do this due to its tightly-packed schedule.
Our estimates show that the loss of the Vietnam Grand Prix could cost F1 a further $35 million in hosting fees as well as $5,1 million in hospitality tickets and $6 million from title sponsor, local car maker VinFast. There could be even more speed bumps to come.
Over in the Middle East, Iran has reported 95 coronavirus cases, which have caused 15 deaths and led to the closure of schools and cultural centres. The infections have spilled into nearby Bahrain where there were 21 new cases yesterday alone compared to two the day before.
The government there has responded by closing all schools and universities for two weeks and suspending all flights from Dubai and Sharjah for an initial period of 48 hours in a bid to stop more infected people from arriving.
In Europe, a serious problem has developed in Italy over the past few days as the number of people infected there has surged to 325 with 11 deaths reported.
The outbreak covers multiple regions including Monza, where the Italian Grand Prix takes place, and Emilia Romagna, home of F1’s most famous team, Ferrari.
The Italian car maker is preventing anyone who has visited the most affected areas from entering its headquarters and has suspended all factory tours as well as most business trips.
There are reports of cases which can be traced to Italy as far afield as Brazil, Tenerife, Switzerland, France and Austria. A total of 17 countries on the F1 calendar have had cases of the coronavirus and car racing’s regulator the Fédération Internationale de l’Automobile (FIA) has taken note.
In a statement, the FIA said it “is closely monitoring the evolving situation with relevant authorities and its Member Clubs, under the direction of FIA Medical Commission President, Professor Gérard Saillant. The FIA will evaluate the calendar of its forthcoming races and, if necessary, take any action required to help protect the global motor sport community and the wider public”. — forbes.com
