A reallocation of assets by Liberty Media has handed F1 a massive $1.4 billion lifeline that will help the sport and its teams navigate the current economic downturn.
The reallocation announced on Thursday by Liberty re-attributed the holding's stake in Live Nation Entertainment from the Formula One Group to its SiriusXM tracking stock, with $1.5 billion in net asset value moving from each entity to the other.
The change has considerably reduced Formula 1's debt while also providing it with a cash injection of $1.4 billion that, according to Liberty, "strengthens FWON [Holdco] balance sheet, provides potential liquidity for F1 in event of continued delay of season, including preserving health of ecosystem" and "reduces potential exposure to live events."
In a call with Wall Street analysts, Liberty Media CEO Greg Maffei said the asset exchange between Liberty's two entities was the best way of injecting fresh liquidity into Formula 1.
"We looked at a range of opportunities to see how F1 could secure incremental liquidity, Including potentially selling a stake to others, including raising capital in other formats. And we believed this was the most efficient," explained Maffei.
Interestingly, Maffei said that F1's boosted finances could allow it to acquire businesses that are currently struggling amid the coronavirus crisis, although the American executive offered no insight into which depressed assets could be seen as acquisition targets for F1.
"I'm certainly not going to discuss acquisitions that are a particular target," he said. "But there are live events, in particular ones around motorsports, that could be attractive.
"There are ones around other kinds of sports that could be attractive and synergistic. I think a lot of other companies are not going to have the flexibility, either in the strength of their operating business, nor in the strength of the balance sheet that FWON now has.
"We'll be judicious and thoughtful," Maffei added. "We think we have a great asset in F1, we certainly don't want to dilute that, but we'll be judicious and thoughtful about what will be attractive to add on, what would be synergistic, and what would take advantage of our strength."
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