Formula One Has Paid Off $1 Billion Tier of Debt, CEO Says
Liberty Media was left with a plate full when it took over from Bernie Ecclestone in January.
Liberty Media hasn't had any lull time since it acquired Formula One from Bernie Ecclestone in January. The American company has been structuring plans for fan interaction, expanded race calendars, and more with CEO Chase Carey at the helm. While the business has largely shifted focus towards drawing in crowds and capitalizing on newfound ventures, Liberty also been at work to pay off leftover debt from the fallen supremo's tenure. According to Carey, however, the firm has been able to pay off $1 billion in debt over the last seven months.
The company released its quarterly report for April through June, and things are looking up as F1 revenues have climbed 3 percent since this time last year. Operating income was cut in half once Ecclestone sold off the racing series, meaning that Liberty only had $45 million to work with in comparison to $90 million in 2016, according to Autosport. A significant chunk of that budget has been used on fan affairs like the F1 Live event in London, all in order to bring new fans to Formula One.
An initial offering of 12.9 million shares of common stock created net proceeds of $388 million, aiding Liberty's efforts to pay off a second lien term loan. Refinancing other debts have allowed the aforementioned agreement to be paid in full, freeing up some cap space in the budget.
As a result, F1 is left with a remaining $442 million to pay, but Carey claims his team has "successfully eliminated an expensive $1 billion tier" of debt.
Carey continued to note that F1 has "repriced our remaining debt, and have also received upgrades from the ratings agencies. The combined effects will be to reduce annual interest expense by up to $90m going forward."
Expenses are expected to rise, however, as Carey plans to add senior staff to his team. "The corporate head count has been sort of 70-75, and it has probably about doubled," said Carey. "We're still building it out. We've hired most of the senior executives, but we haven't built the team out fully."
Additionally, Liberty looks to build a digital platform in order to broadcast events to a wider audience. "We don't really have an appropriate digital platform today, so there are investments that we've made to support a digital platform for us going forward. In the next few months for the first time we're refining our plans around that."
Carey's salary will be tied to the performance of F1, making sure other fields are taken care of before his personal earnings.
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