Could F1\u2019s 2020 Race Calendar Be Canceled Altogether?

Credit rating agency Moody’s has changed the financial outlook of Formula 1 from “positive” to “negative.”

It is the latest blow for the sport that has yet to race this year and is still sitting on the sidelines due to the global pandemic. The Liberty Media Formula One (FWONK) share price on the NASDAQ has crashed from $48 to as low as $20 in recent months.

Moody’s said it made the “negative” call due to “severe disruption to the 2020 race calendar” and “expectations for weakened earnings and cash flow generation.”

The statement also acknowledges the possibility of “full cancellation of the 2020 season,” and said other downsides are expiring TV deals, the Concorde Agreement and a “dependence on a relatively small number of key events and broadcasting contracts.” The Concorde agreement dictates how prize money and broadcast revenue are divided among the teams and Formula 1.

“Formula 1 has strong liquidity and a sufficiently flexible cost base to manage through a severely curtailed 2020 season, which Moody’s consider would likely be able to support a full cancellation,” it said in a statement.

Moody’s said F1’s debts could be a problem.

“There is a relatively high probability that the company will breach its leverage covenant in 2020,” the statement said.

However: “Moody’s considers that Formula 1 is relatively well placed to recover post coronavirus crisis, underpinned by its contracted revenue nature, strong franchise, large fan base and high cash conversion.”

Wednesday, McLaren became the first F1 team to lay off staff and put drivers and senior management on reduced wages.

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