With yet another grand prix added to the postponed list, Moody’s says it is “expects” Formula 1 will up its loans in order to pays and cover its own costs.
The 2020 Formula 1 season is under threat as the ongoing crisis leads to venues postponing their grands prix one after the other.
The latest is Canada.
The Montreal organisers announced on Tuesday that the June 14th race would not go ahead as scheduled but they are hoping to slot into the calendar later in the year if possible.
That, of course, is if there is a season.
Canada was meant to be round nine of the championship leaving France, June 28, as the next venue that will have to make the call to go ahead with plans or postpone.
All of this is having a major impact on the Formula 1 teams who are losing revenue on a daily basis.
Helmut Marko, Red Bull’s advisor, claims it costs the teams “100 million” for every five missed races.
This has left some teams worried about the future with Zak Brown fearing as many as “four” may not survive.
There is, however, some good news, if one can call taking out a loan that.
Forbes reports that Formula 1’s owner, Liberty Media, will draw on its ‘$402 million cash reserves in order to pay its ten teams’ if this season is outright cancelled.
Last year’s prize money for the teams was $1 billion, which was 68% of F1’s profit.
And while the teams are unlikely to see such a sum split up as laid out by the prize money table, Forbes reports that Moody’s credit agency reckons Liberty Media can support the teams.
Forbes quotes Moody’s as having said that there is “substantial liquidity headroom of around $900 million, comprising $400 million cash balance and $500 million undrawn committed revolving credit facility.
“Moody’s expects this to be sufficient to absorb cash outflows from…team payments, other overheads and interest costs in the event that the 2020 season is cancelled.
“The assessment of liquidity headroom in a full cancellation scenario is complex and there remains a degree of risk that liquidity would not be sufficient, although Moody’s considers this risk to be low.
“The company may also be able to draw on support from its owner, Liberty Media Corporation which currently has substantial available resources.”