CORONA: Formula 1 Shares Lose 60%

The Coronavirus could cost Formula 1 even more than expected. The share price of the Formula 1 stock lost 60 percent in 30 days. Are teams going bankrupt?

It was clear that the 2020 Formula 1 season would be financially challenging: with 22 World Championship races, it was to be the longest ever, and in addition to the further development of the racing cars for 2020, the greatest changes to the rules of all time was planned to go into effect in 2021. All this costs a lot of money.

Alas, the new rules have been postponed to 2022. The chassis from 2020 must also be used in 2021. The bottom line is to support the teams in reducing the financial burden.

Nevertheless, the coronavirus plunges Formula 1 into a financial crisis. Eight races have already been canceled. Nobody seriously believes that all races can held this year. Every race that doesn’t take place costs money. Five missing GPs cost 100 million euros, according to Helmut Marko calculates. Monaco is an exception – because the Principality does not pay Formula 1 entry fees.

But above all races like Bahrain, Baku or the new Grand Prix in Vietnam are really putting money into the Formula 1 box office. Races in front of empty grandstands are difficult to imagine: The organizers will not pay millions of entry fees if they cannot partially reimburse the costs with ticket sales.

If no wheels roll, no ruble rolls. The Formula 1 share price, therefore, suffered a decline of 60 percent within 30 days. On March 17, the stock was only worth $ 18.80, the equivalent of € 16.60. In the meantime, it has stabilized somewhat: today the price is $ 23.34 or € 21.60. But that’s still only about half the value it had only a month ago.

Formula 1 will survive the loss of course. However, the Formula 1 teams will have problems. 60 percent of Formula 1 earnings are distributed to the teams. It is already clear that this year will be far less money than before.

The Williams team is also a listed company. At a current value of EUR 12.20, the share is experiencing an all-time low. The traditional British team is one of the racing teams that already feels the cold wind of the fallout.

Not only that Formula 1 earnings don’t flow as usual, staff and bills still have to be paid. Many sponsors only pay from race to race. So there is a lack of income from all sides. The biggest expenses, namely the development of the Formula 1 racing car, have already been paid.

History shows that most crises cost Formula 1 money. During the oil crisis in the 1970s, almost all Formula 1 manufacturer disappeared. Almost all teams then obtained their engines from the private engine builder Cosworth. In the 2008/2009 financial crisis, Honda, Toyota, and BMW withdrew from Formula 1. With Super Aguri, a racing team at that time filing for bankruptcy.

The coronavirus could have dramatic consequences for Formula 1 …