Formula One Group - Earnings Call - Q3 2024

Transcript

Speaker 0

As a reminder, this conference will be recorded November 7. I would now like to turn the call over to Shane Kleinstein, Senior Vice President of Investor Relations.

Please go ahead.

Speaker 1

Thank you and good morning. Before we begin, we'd like to remind everyone that this call includes certain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent Forms 10 ks and 10 Q filed by Liberty Media with the SEC. These forward looking statements speak only as of the date of this call and Liberty Media expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained herein to reflect any change in Liberty Media's expectations with regard thereto any change in events, conditions or circumstances on which any such statement is based. On today's call, we will discuss certain non GAAP financial measures for Liberty Media including adjusted OIBDA.

The required definition and reconciliation for Liberty Media Schedule one can be found at the end of the earnings press release issued today, which is available on our website. Now, I'd like to turn the call over to Greg Maffei, Liberty's President and CEO.

Speaker 2

Thank you. Good morning. Today speaking on the call, we will also have Formula One's President and CEO, Stefano Dimnicali and Liberty's Chief Accounting and Principal Financial Officer, Brian Wendling. So let me start with a couple of corporate updates. As you may recall, we completed the LSXM Siri merger on the September 9.

I look forward to remaining involved as Board Chair and a shareholder at Siri, but Liberty's ties are cut. We also announced updates to our voting and governance at the Atlanta Braves Holdings and we are transitioning services directly to the Atlanta team. They held their earnings call yesterday. This is the next step in their evolution as a stand alone private company. And I want to thank all the Braves management team for their partnership over the years.

It's been so fruitful. Now let me turn to the underlying businesses beginning with Formula One Group and looking at it from some corporate update perspective. We refinanced the F1 date. The term loan B was refinanced at SOFR plus 200 bps. We expect to step down to SOFR plus 175 bps upon the deleveraging post the MotoGP transaction.

We raised an incremental $850,000,000 term loan B and $150,000,000 term loan A commitments to fund that MotoGP transaction. All of that is deal contingent. We also issued $949,000,000 FWOX shares replacing the equity consideration to the sellers in the transaction, so we'll directly pay them cash. We issued that stock at only a 4% discount to the market price and it was placed with long term holders. That completes those transactions complete the necessary funding for our MotoGP acquisition and we expect F1 leverage to be between 3.5 to four times assuming a year end close on that AutoGP deal.

The F1 season itself remains highly competitive both the Constructors and Jivars Championship are coming down to the final races. We've seen also similarly incredible financial performance at Formula One year to date with revenue up 15% and adjusted OIBDA up 21%. We've seen double digit growth across all of our revenue streams boosted by two additional races. And we benefited from new partners signed, contractual uplifts in our contracts and the Performance F1 TV and our hospitality products. I know we signed several new commercial agreements which begin next year.

LVMH and Amex were introduced to F1 through LVGP in terms of their relationship, but now they've become broader partners with F1. We feel that partners continue to be attracted to the growth of the sport in the EOS and our younger demographic, which has also grown. And correspondingly, we feel good about the pipeline for commercial activity in 2026. We all look forward to the LVGP in the coming weeks. We'll expect there'll be another great spectacle for fans attending and watching at home.

We will have a free daytime fan experience, which will bring energy and welcome local Las Vegas fans to F1 and we expect great entertainment including Ludacris, Alesso and One Republic. Now let me turn briefly and give you a MotoGP transaction update. We are making progress with the European Commission, which is our only remaining regulatory jurisdictional hurdle and we continue to expect the year end close. And looking at the underlying MotoGP business, the Valencia race was canceled due to the tragic flooding in that region. Our thoughts were the entire community.

We give credit to Carmelo and the management team at MotoGP for their quick and thoughtful response. They will pivot, so the final race will be in Barcelona, will be hosted there in solidarity with Valencia. And that will be the final race of the season. Various initiatives are also underway there to support relief efforts for Valencia during that weekend. MotoGP racing has continued to be great with only 24 points separating the title fight participants.

Attendance is trending well with 2,900,000 attendees year to date, which is plus 9% on like for like races and six races have set all time attendance records this year. And looking at the business updates, MotoGP extended its rights agreement with FIM their regulator until 2060. They've announced their 2025 MotoGP calendar with 22 races across 18 countries and they expect to release a new brand identity post season. We look forward to more exciting racing and Liberty's involvement. Turning briefly to Quick.

As you may recall, Q3 is a seasonally light quarter. We've seen strong F1 experiences during the quarter and we are also seeing positive movement across MotoGP products that they are selling. Profitability in the quarter was partially offset by softness at a different sporting event and there was an agreement with a rights holder, which was subsequently terminated by a mutual agreement, which impacted our third quarter results. And just touching on Live Nation, they've had strong performance through the first half despite fewer stadium concerts. They are set up very well for 2025, which will be a monster stadium year.

But I won't comment further on results because LYV did not release their earnings until Tuesday. And with that, I'll turn it over to Brian for more on our financial results. Thank you, Greg, and good morning, everyone. The merger of Liberty SiriusXM with SiriusXM closed on September 9. Please note that SiriusXM Holdings is presented as a discontinued operation in Liberty's consolidated financial statements.

Please also note that due to the timing of the Live Nation release of their reported results, as Greg mentioned, Liberty does not expect to file its 10 Q until Tuesday, November 12. At quarter end, Formula One Group had attributed cash, liquid investments and monetizable public holdings of $2,700,000,000 which includes $1,400,000,000 of cash at F1 and $65,000,000 of cash at Quinn. The cash balance as of ninethirty also includes proceeds from the previously mentioned long share issuance. Total Formula One Group attributed principal amount of debt was $2,900,000,000 at quarter end, which includes $2,400,000,000 of debt at F1, leaving $530,000,000 the corporate level. F1's $500,000,000 revolver is undrawn and their leverage at ninethirty was 1.1 times.

During the quarter, Liberty entered into additional interest rate swaps. And as of quarter end, $2200000000.02200000000.0 of the $2,400,000,000 of F-one debt was at a fixed rate. In September, F-one refinanced its term loan B and extended the maturities of its debt facilities. The term loan A and revolving credit facility now mature in September 29 and the term loan B matures September 2031. The margin on F1's term loan B was permanently reduced from 2.25% to 2% with the potential to step down to 1.75% if certain leverage is met after the Moto acquisition closes.

In connection with the refinance, F1 secured incremental funding for the new MotoGP transaction and all acquisition related financing is now complete. Reminder that we also obtained commitments for an incremental 150 term loan A and an upside €100,000,000 revolver at Dorna to be entered into subject to the transaction close. Turning to the F1 business, I'll make comments on Q3, but remind you that the business is best analyzed on an annual basis given the impact that both the race count and mix can have on quarterly results. During the third quarter, F1 recognized a lower proportion of season based income with seven out of 24 races or 29% occurring during the period compared to eight out of 22 or 36% in the prior year period. Sponsorship revenue declined due to this lower pro rata revenue recognition.

The recognition of sponsorship income varies based on the mix of races during the quarter including the allocation of title sponsorship and other race specific sponsorship packages. To a lesser extent, this also contributed to the sponsorship revenue decline for quarter. This was partially offset by revenue from new partners compared to the prior year period. The decline in pro rata recognition of media rights revenue was partially offset by contractual fee increases and continued F1 TV growth. Race promotion revenue increased in the third quarter despite one less race being held due to the mix of events year over year with Azerbaijan this year compared to Austin Austria pardon me and Japan last year.

Other revenue increased due to the higher licensing revenue and revenue from third party events at Grand Prix Plaza. Hospitality and Experiences income decreased due to the mix of events in Q3, though note that the Paddock Club is seeing very strong growth year to date. Adjusted OIBDA grew in the quarter due to the lower pro rata recognition of team payments, partially offset by the expectation of increased team payments for the full year over 2023. Team payments represented 62.2 percent of pre team adjusted OIBDA year to date through Q3 compared to 64.6% in the prior year. Reminder that Q2 and Q3 tend to have the highest percentage payout ratios based on the greater mix of European races.

We continue to expect slight leverage on team payments for the full year 2024 relative to our year to date payout as a percent of pre team share OIBDA. It's consistent with the message we communicated on our Q2 call. Other cost of F1 revenue and SG and A should be viewed as a percent of total revenue. And looking on a year to date basis, the adjusted OIBDA margin improved from 24.4% to 25.8% through Q3 twenty twenty four. Looking briefly at corporate and other results in the third quarter.

Corporate and other revenue was $70,000,000 which includes Quint results and approximately $7,000,000 of rental income related to the Las Vegas Grand Prix Plaza. Corporate and other adjusted OIBDA loss was $14,000,000 and includes Grand Prix Plaza rental income, Quint results and corporate expenses. Quint results in the third quarter were primarily driven by F1 experiences across the seven races held. Note that Q3 is a seasonally light quarter for Quint. Turning to the Liberty Live Group.

There's attributed cash of $388,000,000 There's $400,000,000 of undrawn margin loan capacity related to our Live Nation margin loan. As of November 6, the value of the Live Nation stock held at Liberty Live Group was $8,800,000,000 We have $1,200,000,000 in principal amount of debt against these holdings. In August, Liberty issued a redemption notice for all of its 0.5% Live Nation exchangeable debentures. Approximately $12,000,000 of debentures were redeemed and settled in the third quarter and the remainder were exchanged by holders in September, but did not settle out until October. The $50,000,000 remaining debentures that settled in October were funded with cash on hand.

Liberty and F1 are in compliance with their debt covenants at quarter end. And with that, I'll turn it over

Speaker 3

to Stefano to discuss Formula One. Thanks, Brian. It's been a fantastic season at F1. The competition across the grid is captivating audiences in the stands and on the screen. We just completed a triple header in The Americas with amazing action exciting on and off the track.

We have a three way battle for the Cross Trucker Championship between McLaren and Ferrari Red Bull and the Drivers' Championship is still very alive as we head into the final races between Verstappen and Norris following three events in Austin, Mexico and Brazil in front of huge crowds. It has been great to see the variety of winners this year, something that is treating fans and raises excitement and the participation for a special season in 2025. Looking at our engagement across the season, 5,800,000 fans have attended Grand Prix through Brazil. Attended is up season to date with sellout crowds on many races and seven races setting new attendance records including the British Grand Prix, which welcomed four and eighty thousand fans over the weekend, the largest crowd for the season. In the third quarter, we had massive crowds over 300,000 at the Hungarian, Belgian, Dutch and Italian Grand Prix.

We have also had strong Pardo Plleb result this season with attendance up across almost all races and 14 sold out. We have been expanding and innovating our hospitality products like the F1 Garage and the Monaco Yacht to continue to provide premium experience to our fans. Our promoter partners are investing in improved infrastructure and enhanced fan experience with live entertainment and outside activation. Better fan experience benefited the promoters and the broader F1 brand. In Silverstone concert with Kings of Lions and Stromsy drew crowds on Thursday and Friday evenings.

In Singapore, they had the festival styling up with over one hundred hours of live entertainment in addition to the on track action including concert with Kylie Minogue and Lenny Kravitz. In Austin, over 100,000 fans attended Zeminin and Perforce. The sprint races are also successfully drawing incremental notices. Attestors on Friday of springs weekends are up approximately 30% compared to non Sprint's weekends. TV viewership on Sprint weekend is also on average 10% greater than non Sprint's Discounted offers incremental benefit for our promoters, broadcast partners and sponsor with increased exposure.

The Offspring's average viewership for Ace We Can through Singapore averaged 65,000,000 on Leader TV channels with around 20,000,000 of incremental viewers on digital channels including YouTube and F1 TV. Viewership on digital channels continued to increase year over year. Looking at few races in particular, the British Grand Prix was the most viewed European race ever in The U. K. And drew record viewership in The U.

S. For the event. F1 TV subscriber growth continued to be robust with subscribers up 10% year over year and particularly strong in The U. S. Market.

We continue to innovate on digital platforms with creative ways for fans to experience the world of F4W-one. For example, this season we introduced video episodes for our F1B of the Grid podcast and watch time is up over 30% since this format was introduced. Social media followers grew 38% year over year to 94,000,000 in part due to the new platform launches like Threads and WhatsApp. Our WhatsApp partnership enables a closer direct relationship with fans through the Messenger platform. On the F1 app, we registered a 6,000,000 unique user in the third quarter and we are seeing continued growth on the platform contributed to a younger audience and higher engagement.

F1RK was thrilled to open their Washington DC location on October 13, the second venue in The U. S. Their opening party on October 9 and nearly 1,000 guests. The DC location is hosting a number of Grand Prix watch party this season, including one last month for the Orson Grand Prix and it is inviting fans for other F1 inspired gatherings like the live recording of the F1 Explained podcast during the Mexican Grand Prix. F1 Arcade is on track to open its Las Vegas location in the 2025.

The F1 exhibition reached the full stop of its global tour in London opening on August 23 with greater reviews from visitors. The location is already seeing incredible demand with 135,000 tickets sold. And as a result, the exhibition stays at the location has been extended to the 2025. Turning to commercial updates. We have had incredible momentum in 2024 and that continues this quarter.

Most notably, our new partnership with LVMH for 2025 and expanded agreement with American Express and Lenovo demonstrate our ability to bring an iconic brands and scale our partnership into broader and larger deals. LVMH first partnered with Formula One for the last year's inaugural Las Vegas Grand Prix with representation primarily from its Vodka tequila brand. We will now welcome LVMH as a global partner under a groundbreaking ten years deal beginning in 2025, which we'll see as partnered with their iconic Maison Louis Vuitton, Moyen Nessie and Taco Bell. We will provide additional details on specific activation by this brand early next year. American Express initially partnered with F1 in 2023 as a regional sponsor with branded and activation rights in The Americas.

Beginning 2025, we will expand our relationship globally with American Express becoming an official partner and Compass in Australia, Asia, Europe, The Americas and The Middle East. Similarly, we have announced that beginning in 2025, Lenovo will be expanded to a global partner from their previous official partner sponsorship. We are also actively adding partnership in the new verticals. Santander joined us as our official retail banking partner in a multiyear agreement beginning in 2025. This partnership supports Santander's Openbank product, their digital bank that is particularly focused on U.

S. Market expansion. Formula one success in The U. S. Market was a key factor in securing the Santander partnership.

One other area of focus gaining momentum is licensing. We were thrilled to announce recent partnership with both LEGO and Mattel, both of which bring the world of F1 into our fans day to day lips and extend our brand to new audiences. The LEGO product range feature all F1 teams engaging content across LEGO digital platform and presence at F1 races weekend including a fan zone activation. Our Mattel partnership kick off this season with the release of a one of kind F1 car and the full range of Hot Wheels product we released next year. Looking to the rest of the season, we are weeks away from the second Las Vegas Grand Prix.

The Las Vegas race has continued to serve as a test bed of innovation that we can leverage across the broader F1 calendar, including opportunities in the hospitality, territory sponsorship and licensing. Just last week, we announced the first of its kind special merchandise collection for Las Vegas ranging from a streetwear collaboration with the Peter's brand to one of a kind Vegas Golden Knights and Raiders Club. Since posting this merchandise collaboration on LVGB social channels, we've garnered over 1,200,000 organic impression across the post with more than 93,000 engagement and 86,000 lives. This year's Las Vegas Brophy leverages learnings from last year across the whole event including hospitality, logistics, ticketing and more. We will continue to test, learn and innovate this year ahead.

We are proud of our sustainability strategy and continue to make progress throughout the organization on our environmental, social and governance effort. In September, we made our first investment in sustainable aviation fuels working with our partner DHL. These purchases cover approximately 11% of the estimated cargo flight emission across the 2024 season. And flights powered by sustainable aviation fuel have an estimated 80% reduction in carbon emission per flight. We look forward to more progress through the end of this year and into 2025.

In closing, Formula One is in a great position with the strong financial growth and incredible on track action. It's looking like the three way battle for the constructor will come down to the final races. We thank our fans, Thieves and Partners for their support in this record season and look forward to more action to come. Avanti Tutta full speed ahead. And now, I will turn the call back over to Greg.

Thank you. Ciao.

Speaker 2

Thanks, Stefano and Brian. I want to clear up one thing I might have misspoken during our corporate upgrade on the Braves. They are transitioning to a stand alone public company. We look forward to seeing you on Thursday, November 14 for our Annual Investor Meeting. You can tune in virtually or join us in person at our new location Jazz At Lincoln Center.

If you plan to attend in person, please make sure to register by Monday, November 11 as there will be no on-site registration. The link to register can be found on our website. John Mueller and I will be hosting our annual Q and A session. If you would like to submit questions in advance, can e mail investordaylibertymedia dot com. We appreciate your continued interest in Liberty Media.

And operator, with that, I'd like to open the line for questions.

Speaker 0

Thank you. Our next question our first question, sorry, comes from the line of David Karnovsky with JPMorgan. Please proceed with your question.

Speaker 2

Hey, thanks for the question. First for Greg or Stefano, just on Concord. Any potential updates you can provide there on progress, tone of talks or expected timing? And then a second one for Brian. Just on the team payment accrual in the quarter or even year to date, the figures do imply a lower full year figure relative to what you had given at Q1 or Q2.

Just want to see if there's anything specific to call out intra quarter that shifted as far as your assumptions on pre teen profit for the year? Thank you. Stefano, I'll let you take a first cut at the Concord.

Speaker 3

Yes. Thank you, Greg. Thanks, David. I mean, as we said, first of all, it's very important to remember that we have still plenty of time under this in cold quarter, so there is no urgent rush. Conversation are progressing very well.

And as we said before, very positive because at this moment, it's the ecosystem is very solid and also all the teams and all the developers to put as a huge benefit from everyone in this moment. So the financial securement for the future and stability that

Speaker 2

we have

Speaker 3

today, it's underlining into what we are preparing. And as soon as we have everything ready, of course, we will inform everyone. But as always, as I said, we want to do the right thing and consider there's no rush. Everything is progressing well as we said and looking forward to confirm to you when we're going to announce something concrete.

Speaker 2

So I would just add that to Stefano's point, the most important thing for everybody including ourselves and the teams is to get it right. And so we're progressing at a good pace with the expectation that everyone will sign with glee on their face. Yes. And David on the T payments as you rightly point out they've come down just a little bit on a per race basis. I think that represents some conservatism towards Vegas because really that's the last remaining uncontracted revenue stream that we have for the year.

And it largely reflects typical year two trends that promoters see. So that would be the primary reason. Thanks.

Speaker 0

Thank you. Our next question comes from the line of Kudgun Marell with Evercore ISI. Please proceed with your question.

Speaker 2

Good morning and thanks for taking the question. Just on Formula One sponsorship, clearly there's a lot of momentum there. You've announced a number of new and expanded agreements. It seems like 2025 is going to be a banner year. And Greg, I think you commented that you feel good about the pipeline for commercial activity in 2026 as well.

Can you help us just think about how meaningful the sponsorship revenue growth outlook can be in the coming years? Thank you. I'll take a first cut if it's okay, FNL. You've seen the announcements here that are mostly '25 related. It's unusual one would not expect to be making announcements yet about 26 related deals.

But we have a lot of activity going on around potential sponsorship, around licensing and other activities. So it's very hard. You're still quite a ways out from those, but I feel good about the progress. I don't know if you'd add anything Stefano.

Speaker 3

No, I would say for sure. And as always, we need to remember where we were just couple of years ago in terms of quantity and also for our partnership. Now we have grown significantly in terms of quantity. And of course, now the time is really to check terms of restructuring the deals in terms of global, regional, official partner, due to the fact that we have a strong interest in our market so far. So there are for sure other that we will exploit in the future.

But the only thing that I can confirm as Greg was mentioning is really we are really bringing in the interest that we are having from partners that are high value in the market. And that would be another leverage because through B2B business growth within the relation we can create with all the partners, we can create even more interest in our platform. So as I said, look back and see where we were and look where we are and I think that the future is always it will be very positive again.

Speaker 2

Yes. And one thing I would add almost more towards David's question that the sponsorship that we've announced for 2025, you've also seen that's all moving into 2025. So any expectations that we had for those new agreements for 2024 also had that impact on fee payments. Perfect. Thank you.

Speaker 0

Thank you. Our next question comes from the line of Steven Lachek with Goldman Sachs. Please proceed with your question.

Speaker 4

Hey, great. Thanks for taking the questions. Two on Formula One. Maybe first for Greg on meteorites. Just curious for your latest thoughts on the sports meteorites landscape heading into The U.

S. Renewal next year and maybe how you're approaching your negotiations with ESPN? And then second on Vegas. Brian you mentioned the Las Vegas Grand Prix being the last uncontracted piece of the puzzle here. Just curious if there's anything more you can say on demand for Vegas heading into the final few weeks and any expectations around revenue and profitability for the event this year?

Thank you.

Speaker 2

Stephen, thanks for the question. I'll start on the media side. As I think it's well known, we have a partnership with ESPN that runs at the 2025. It would be not atypical that there is some negotiating period with them. I'm obviously not going to disclose the specifics.

ESPN has been a great partner. We will look to see what we can do with them, but there's also a lot of other interest from both partners and we'll try and construct the deal that manages to bring both the best economic opportunity for F1, but even more importantly perhaps expose our fans to the best experience in a logical way across as much breadth as possible. So as always, we're going to play between economics and reach and hopefully come up with the best result for our F1 fans and ourselves. I'll let Renee talk a little bit about Las Vegas.

Speaker 1

Thanks, Craig. Maybe we could just take a step back, focus on what we've been working on here in year two. Obviously, year one, we were very much focused on the quality of the fan experience. Year two has been a lot of focus around cost structure and optimizing our product ladder. We do expect that to continue going into years three and beyond.

We made a number of improvements coming into this year, which have allowed us to continue to be dynamic in adjusting products and pricing based on real time feedback we're receiving from the market. We would note the all in cost of a Vegas race weekend has come into line with the other U. S. Races and we would refer you to the commentary from our wholesale partners Wynn and Caesars regarding continued strength of F1. In terms of recent activity, as expected, we are seeing an uptick in traffic and conversion rates around ticket sales and we expect that to continue as we get closer to the race weekend.

We are of course benefiting from the very competitive championship this year and we have seen success with our recent promotions including the Lewis Hamilton package and some special offerings that we've run-in partnership with our sponsors T Mo and Amex. We still have room to grow on ticket sales, so we are very excited to see year two come together over the next couple of weeks. And of course, we remain very positive on the benefits that Vegas is providing to the broader ecosystem of Formula One, including the LVMH deal American Express and getting back to the media rights renewal. We're looking to see the benefit of Vegas next year as well when Greg starts those discussions.

Speaker 4

That's great. Thank you both.

Speaker 0

Thank you. Our next question comes from the line of Ben Swinburne with Morgan Stanley. Please proceed with your question.

Speaker 5

Thanks. Good morning. I'm not sure Greg how much you'll be willing to comment, but Live Nation stock has been quite strong last few months. Some of that I think in anticipation correctly I guess of the election outcome. What do you think a Republican DOJ means for the range of outcomes for the lawsuit against Live Nation and its ability to navigate that successfully from a shareholder point of view?

And then at the risk of beating team payments to death, Brian, I think you've shown over 200 basis points of leverage year to date. How are thinking about the full year versus that? And how much of a swing factor is Las Vegas? Is that sort of a larger than normal variable when you think about your business as we think about the full year? Thanks so much.

Speaker 2

Ben, it was nice of you to set up and acknowledge it would be very difficult for me to comment on it. Look Live Nation continues to prosper as a business and continue to believe it serves customers well and there is no basis for the lawsuit and I don't think that's going to change. Their view is not going to change regardless of administration. Brian? Yes.

On team payments, like we said last quarter, Ben, slight leverage. I think de minimis might have been the words I used when we were at 61.9% at year to date Q2. So we're going to stick with that. In terms of Vegas being a swing factor, I mean if you think about our business most of the revenues are contracted most of the costs are contracted. The two big swing factors in any given year are the sponsorship GoGet and then Vegas ticket sales, because those have the highest volatility.

So, yes, as you get closer to the end of the year, you start to get more clarity on both of those. Although Vegas being a last minute market as we pointed out many times, there's lots of work to be done as you enter Q4. So it can be a swing factor, but we continue to be optimistic here.

Speaker 3

Thanks a lot.

Speaker 0

Thank you. Our next question comes from the line of Ryan Perdette with UBS. Please proceed with your question.

Speaker 2

Great. Thank you. Not to look too far ahead, but I guess how are you thinking about the opportunity for race promotion and the race calendar in 2026? Is that a year when we could start to see some new venues added to the calendar? Just more broadly how you're thinking about your positioning for renewals given the elevated attendance you've seen over the past few years?

Thanks. Stefano, do you want to take a cut?

Speaker 3

Okay. Thanks, Greg. Of course, twenty six race promotion. As you know, we have Madrid that will be part of the calendar. We have long term deals on the other side, as you know, that is represented the vast majority of our situation today.

And this allow us of course to work with them in order to promote better quality to make sure that what we want to offer to our customer at the level is the highest standard. In 2026 and further beyond, of course, we have some news to share very, very soon with regard to the possibility in the midterm to have some rotational European Grand Prix and some other new option coming later. And this is something that of course will clarify in the due course. It is true that we have a large demand of even new possible venues that wants to come in. And our choice will be always balanced between the right economical benefits that we can have as a system and also to leverage in the growth from the market that we can see potential will be beneficial for us to grow even further our business.

So it's something that we are managing in the right way. And as I've got today, we have a quality problem to handle that was not the case just a couple of years ago.

Speaker 2

Great. Thank you.

Speaker 0

Thank you. Our next question comes from the line of Brian Kraft with Deutsche Bank. Please proceed with your question.

Speaker 5

Hi, good morning. Two if I could. First on media rights, are there other major markets in The Americas coming up for renewal around the same time as The U. S? And might we consequently see an Americas media rights deal rather than just The U.

S. Contract this time around? And then also related to that, how has what you value from your U. S. Media partner changed since the renewal of ESPN given just how streaming has become such a larger part of the business now?

And then just separately sort of a follow-up on Vegas. Maybe to ask a little more bluntly, I mean it sounds like promotion revenue is clearly going to be up, but ticket prices are going to be down. So probably overall ticket revenue is going to be down. Is that a fair interpretation of what Renee was going through before? Thank you.

Speaker 2

So if it's okay, Stefan, I'll take a cut on the media. We would love to find a partner who would take on more markets that's always very interesting and make ease of perhaps for them and us. There are no huge renewals in The Americas that make it logical. Not to say it wouldn't happen, but I don't think it would be an enormous economic swing in any case if we bundled with somebody for all The Americas. We certainly have had rumors of larger deals.

And in some cases, we certainly do have regional deals. But I'm not sure that's going to work for The Americas that way that there's some partner who's going to take all of that way. As far as streaming, obviously, we see the rise of streaming. We've noticed a couple of costs across a couple of our businesses we certainly noticed. The reality is we have a great stream product in F1 TV ourselves, which has shown tremendous growth.

And we would look to consider whether a media partner, how we interacted with them on both a linear side of the existing and the streaming side and how our F1TD fit in. But clearly streaming is going to be a more major component of all sports rights packages going forward.

Speaker 5

Thank you. And on Vegas or sorry Sure. Go

Speaker 1

Yes, happy to. So I guess just to reiterate, we generally do not give race specific economics. But with regard to your question on ticket revenue, aggregate ticket revenue will be down from what we originally budgeted in Q1. However, throughout the course of 2024, we have also continued to reduce costs from what we budgeted in Q1. So I would say that we're working hard to focus on getting the best profitability that we can from Vegas.

And again, we would refer you to the broader benefit that it does bring to the F1 ecosystem.

Speaker 4

Thank you.

Speaker 0

Thank you. Our next question comes from the line of David Joyce with Seaport Research Partners. Please proceed with your question.

Speaker 6

Thank you. Two little questions please. One was just a little bit more on the media rights. Just given that some of your recent deals have been extended beyond the typical kind of three year period we used to see and other sports leagues have done that as well. Just wondering how you're thinking about your objectives with these upcoming rights deals?

And then the second question is on just a little on the accounting of how you'll be recognizing the F1 movie next year? Thanks.

Speaker 2

So I think on the media rights deals, I outlined some of our goals in terms of growing reach and making it a great experience for our fans as well as payments to us. So I think all of those goals remain the same. We've chosen market by market longer or shorter deals based where we stood in the market, what our growth was, what our partners were doing and what we wanted to go. And obviously, one of the reasons we cut a shorter deal in The U. S.

Last time is we were confident and really betting on ourselves that we would get a larger renewal down the road. That did work the first time we did a three year deal. I'm optimistic it will work again. I'm not projecting whether the deal will be shorter or longer. I would note it's likely particularly if you went to another partner which not sure that's going to happen.

You probably would cut a longer deal just because that partner would want to have some period to grow into it and work together. But that's just observing on the media market. That's not projecting what we will or will not do on The U. S. And on the F1 movie, we've been paid in 2023 and 2024 for their use of the paddock building and having access to certain races.

I think going forward the revenues that you would expect there would be pretty small. Okay. Thank you.

Speaker 0

Thank you. Our next question comes from the line of Barton Crockett with Rosenblatt Securities. Please proceed with your question.

Speaker 2

Great. Thanks for taking the question. I guess a couple if I can. One is turning to Vegas. Looking beyond the race, I know there's been some hope that the off season could be monetized at Vegas and that could help maybe the margin profile.

And I was just wondering if you could give us an update of your progress there. Are you really doing anything meaningful in the off season? You mentioned the film. I'm just wondering if there's anything else meaningful happening?

Speaker 1

Sure. So we are working hard to launch the year on business beyond just the event conference segment. Beginning in I'd say 2025, it's going to be actually very much focused around educating new fans, bringing the new fans deeper into the sport. Obviously, Las Vegas is a destination, and we want to try to leverage that and bring these visitors to learn more about Formula One coming deeper into The U. S.

Culture. There will be a carding business there. There will also be a fun interactive experience sort of three d, four d type offering, which will also include a little bit of the legacy F1 exhibition type educational experience as well. And then we will be looking to package those experiences to enhance the event conference space. So a lot more to come and we hope to be giving more specifics around that business during race week.

Speaker 2

Okay. And then if I could just follow-up also on sponsorship. Just to be clear and with all these announcements starting in 2025, it sounds like 2025 is going to be a strong year for sponsorship. But I was just wondering if you could comment on that more directly. Is that what we're seeing?

Yes. Okay, great. Thank you. It's going to be a good year, Barton. You called it correctly.

Okay. Thank you.

Speaker 0

Thank you. Ladies and gentlemen, our final question this morning comes from the line of Jonathan Navarre with TD Cowen. Please proceed with your question.

Speaker 7

Hey, good morning. Just my question is around the new markets and expansion. Are there any plans to expand the rate calendar, especially in emerging markets? Or and what I'm trying to get at is, I'm trying to get a sense for what your approach to balancing market expansion, while maintaining the exclusivity or the allure of Formula One?

Speaker 2

Stefano, do you want to talk about expanding I think I know the answer, but I'll let you go off on it.

Speaker 3

No. Thanks. Thanks, Reg. I would say, as we said, we believe that the balance we have in terms of numbers is the right one. So 24,000,000 is the balance number that we feel is the right to keep exactly what you say Jonathan.

And I do believe that all the propositions that are coming on our table is just giving us the possibility to make even the better choice for our future. So as always need to be balanced knowing that we cannot follow only the pure direct financial proposition because that is different from region to region, but it's up to us to propose to our stakeholders the right choice. I And think that we are in a good momentum to make sure that the strategy for the future is even stronger. And that's why we are so confident about the fact that this will help to enhance our platform on the sport and social and business perspective.

Speaker 2

Thank you. So I think that operator we're done on questions and we're done with the conference today. As I mentioned, we look forward to seeing many of you either virtually or in person next week at our Investor Day. Thanks for joining and your interest in Liberty Media.

Speaker 0

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.