Moody's downgrade F1 outlook to 'negative'
Credit rating agency, Moody’s, has announced it has changed Formula 1’s outlook from ‘positive’ to ‘negative’ due to the ongoing lockdown.
Formula 1’s last race was in December 2019 at the Yas Marina in Abu Dhabi and the current global crisis has ensured that the first eight races on what was supposed to be a record-breaking 22-race calendar have been postponed or cancelled.
With the prospect of no racing until June at the earliest, Formula 1’s financial outlook has been changed to reflect the uncertain times we live in.
The statement from Moody’s did not rule out a complete cancellation of the 2020 season, an event that Formula 1 would be able to survive.
The rating agency said: ‘The negative outlook reflects the high levels of uncertainty over the 2020 race season and Moody’s expectations of increased leverage and weakened liquidity in 2020.
‘This results in risks that the company may not be able to restore its Moody’s-adjusted leverage to below 7x within around one-two years following the coronavirus crisis.
‘Formula One 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.
‘As of 31 December 2019, Formula One had 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 potential refunds of advance payments from promoters, sponsors and broadcasters, team payments, other overheads and interest costs in the event that the 2020 season is cancelled.’
Formula 1 has retained it B2 corporate family rating (CFR) and its B2-PD probability of default rating.
Owners Liberty Media, at this stage, are still hopeful of pulling together a calendar which consists of 16-18 races.
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