Formula 1 Business : F1 team Ferrari staring at ‘huge loses’ due to the impact of Covid19

F1 2020 season is not going as planned for Ferrari. Be it on the track or on the commercial front, Ferrari is struggling big time. 

One of the most consistent performer among all the teams in the F1, Ferrari is bracing for huge revenue loses this season. According to company Chief Executive Louis Camilleri the loses for Ferrari will be “in the high tens of millions” as a result of the disruption to the Formula One season caused by the coronavirus pandemic, 

Speaking on a Q2 2020 earnings calls this week, Camilleri described the Covid-19 crisis as “a huge challenge to surmount” for the Ferrari group and warned that the iconic Italian carmaker would continue to feel its impact for some time to come.

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“It’s clearly in the high tens of millions, in terms of the hit,” Camilleri said. “We’ll see in terms of next year it should be better, because hopefully, by next year, we’ll be back to a full race schedule, and we will get the necessary revenues in terms of sponsorship and from the commercial rights.

“So it’s a bit difficult to compare 2020 to 2021. But definitely in 2020, it is a very sizeable hit as we had anticipated in early May.”

F1 Ferrari Losses : Ferrari Formula 1 TEAM revenues drop by $56Mn

Formula One’s season is getting hugely impacted by Covid19. The delayed and truncated season at this stage is currently shortened to just 12 races, that too limited only to Europe. This will hit the teams hard and Ferrari along with other teams will receive less prize money and smaller payouts from central commercial revenues.

Ferrari chairman John Elkann has previously said that the team will not be in a position to regularly compete for Grand Prix victories until 2022, a comment echoed this week by Camilleri.

“There’s no denying that we’re facing a very difficult season, with a car that lacks performance on several levels,” he conceded. “Our competitors, Mercedes in particular, are incredibly strong and hats off to them.” 

He added: “Formula One is – this year will be, in terms of the P&L, the biggest hit we face, because of the reduction in the revenues we receive from the commercial rights holder, as well as reductions in sponsorships, given the reduction in races.”

Financial uncertainty at the Maranello-based Formula One team continues at a time when the wider Ferrari group is recording significant losses due to the ongoing pandemic.

Group net revenues for Q2 2020 totalled €571 million (US$669 million), a 42 per cent decrease compared to the prior year, while €9 million (US$10.4 million) in net profit for the second quarter represented a 95 per cent drop compared to the same period in 2019.

Revenues from sponsorship, commercial and brand – within which Ferrari’s Formula One operations are counted – dropped by €48 million (US$55.6 million) to €131 million (US$151.7 million), with that decline attributed to fewer Grands Prix in the quarter, as well as reduced in-store traffic and museum visitors.