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Liberty Media Corp
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Ladies and gentlemen, thank you for standing by. Welcome to the Liberty Media Corporation 2020 Q1 Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we’ll conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, today May 7.
I would now like to turn the conference over to Mr. Courtnee Chun Chief Portfolio Officer and Senior Vice President of Investor Relations. Please go ahead, ma'am.
Thank you. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties including those mentioned in our most recent forms 10-K and 10-Q filed with the SEC.
These forward-looking statements speak only as of the date of this call and Liberty Media expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty Media's expectations with regard thereto or any change in events conditions or circumstances on which any such statement is placed.
On today's call, we will discuss certain non-GAAP financial measures including adjusted OIBDA and adjusted EBITDA. The required definitions and reconciliations for Liberty Media and SiriusXM Schedules one and two can be found at the end of the earnings press release issued today, which is available on our website.
Now, I'd like to turn the call over to Greg Maffei, Liberty's President and CEO.
Thank you and good morning. Today speaking on the call, we will have Formula One's Chairman and CEO Chase Carey; and Liberty's Chief Accounting Officer, Brian Wendling. First let me say, I hope you all are healthy and safe. Second, I'd like to thank and salute our employees and management teams who have done an impressive job managing through this COVID crisis.
Now on to Liberty Media. We completed the reattribution of our Live Nation stake and other assets and liabilities between the Formula One Group and Liberty SiriusXM on April 22. We've spoken to many of you since this announcement and obviously we had a conference call right after that. So, I won't go into detail, but I'd like to reiterate why this was a benefit to both equity shareholders. For the Formula One Group, first, creates a pure play; provided additional liquidity and reduced debt and for Liberty SiriusXM, acquiring Formula One Group's Live Nation interest with the complementary business with us at SiriusXM tracker at a compelling price resulting in ample liquidity. We are pleased with the stock market reaction since. All the stocks have outperformed the ads and fees since we made the announcement.
Turning to Liberty SiriusXM, including the LSXM shares that we acquired as part of the reattribution, Liberty SiriusXM repurchased $98 million of stock from February 1 through April 30 and effectively bought the SiriusXM shares at a $3.73 look-through price over this period including the reattributed shares.
Our ownership of SiriusXM as of April 24 stood at 72.2%. I'd note that we have stopped our repurchases prior the reattribution. But I expect, post close of the planned rights offering in early June, we will look to start repurchasing LSXM stock again. The nagging discount to NAV is an opportunity and one we will continue to take advantage of. As SiriusXM continue to repurchase stock and we approach 80% ownership of SiriusXM, I expect the opportunity may wane.
Now looking at SiriusXM itself, it continues to operate very well during the COVID crisis. It has launched innovative new program including a 24/7 COVID-19-focused channel on Hotline, nine new limited run channels with iconic artists including the Prince Channel with music and exclusive content like a never-before-heard demo of a conceptual radio show Prince created for the SiriusXM channel back in 2005.
Howard Stern has done great and innovative including a two-hour plus session with Tom Brady from Derek Jeter's House in Florida. The subscription-based business model we have at SiriusXM has proved resilient. Self-pay net adds grew 69,000 to nearly 34.8 million total subscribers. And the very strong liquidity and cash flow of SiriusXM has shown through. We still have $1.75 billion of available on our revolving credit facility which has not been drawn.
Turning to Formula One Group. I'm sure you have all missed the Dubai F1 racing. Hopefully, you've gotten a little taste by watching or rewatching both seasons of Drive to Survive on Netflix. And we expect all of you watched the Virtual GP this past weekend. There was an epic battle between Alex Albon and Charles Leclerc. They passed and repassed each other several times with Albon finally taking the win.
The final results highlighted the next-generation of F1 drivers, Albon, Russell and Leclerc exciting and going to be thrilling next for years to come. The F1 team has done a great job navigating the crisis and working on the 2020 calendar. They are planning an early July start in Austria and Chase will talk more about that. We continue to evaluate the needs of the business, but definitely want to be opportunistic and find synergistic assets that we can add. And we think we are well positioned to do so.
Turning to Live Nation. It does not report until after the market today, so I obviously won't comment on results, but I want to say, we are pleased with the announced actions they have taken to build liquidity. And on to the Braves, we are working closely with Major League Baseball to see how we can put a season together.
We appreciate how the commissioner teams and players are working together towards that solution. Everyone is eager to see baseball return. The Braves players are eager too. They've been doing Zoom sessions with the trainers', medical staff and manager Brian Snitker. They've also been in celebration of 25 years since the Braves' 1994 World Series title. The 95 players joined a Zoom reunion while watching the final Game six on FOX Sports Southeast. Fans were able to watch the Zoom live on YouTube as well.
So with that I'm going to turn it over to Brian for more on our financial results.
Thank you, Greg and good morning everyone. The earnings release has our cash and debt balances by tracker as of March 31. Since we completed the reattribution in April as Greg discussed and repaid the margin of the F1 revolver today, I'll walk through liquidity and debt of Libery SiriusXM and the Formula One Group as of March 31 on a pro forma basis for these two transactions.
Liberty Media, SiriusXM, Formula One and the Braves are in compliance with all that covenants as of March 31. Given the uncertain impact of COVID-19, F1 and the Braves are monitoring their ability to comply with their debt covenants in future periods and we are in positive discussions with their respective lenders. On a pro forma basis, Liberty SiriusXM Group had attributed cash, restricted cash and liquid investments of $139 million, excluding $52 million of cash and restricted cash held directly at SiriusXM. And we have $870 million of undrawn margin loan capacity at the corporate level.
The value of the SiriusXM and Live Nation stock held at Liberty SiriusXM as of May 6 was $21 billion, which excludes the value of the Live Nation call spread held at Formula One Group which was valued at $165 million at the time of the reattribution and will be marked to market quarterly. We have $2.1 billion in principal amount of debt against these holdings.
Total Liberty SiriusXM group debt is $11.1 billion, which includes $7.9 billion of debt at SiriusXM. This debt balance excludes the $750 million intergroup loan owed to the Formula One Group, which is expected to be repaid with proceeds from the rights offering which we intend to launch on May 18.
Today, F1 will fully repay the balance under its revolving credit facility using cash on hand, restoring its full capacity of $500 million. Pro forma for this repayment, Formula One Group had attributed cash and liquid investments of $1.4 billion at the corporate level. This excludes $536 million of cash held directly at Formula One. Total Formula One Group attributed principal amount of debt was $3.6 billion, which includes $2.9 billion of debt at Formula One leaving $688 million at the parent level.
F1's total net-debt-to-covenant-OIBDA ratio as defined in F1's credit facilities for covenant calculations was six times at the end of the quarter as compared to a maximum allowable leverage ratio of 8.25 times for both the term loan and the revolving credit facility. Please note these leverage ratios are for the Formula One operating business not the Formula One Group.
The term loan financial covenant is in current space and not maintenance. We are having positive discussions with the RCF lenders under to temporarily move this covenant from an EBITDA based to a liquidity base. Payment of the RCF combined with the reattribution gives us more flexibility in renegotiating the maintenance covenant on the revolver.
Lastly to the Braves. At quarter end the Braves group had attributed cash liquid investments and restricted cash of $343 million and attributed principal amount of debt of $698 million.
With that, I'll turn it over to Chase to discuss Formula One.
Thank you, Brian. We entered 2019 with great momentum and were ready for our biggest season yet with 22 races. We were ready to race at Australia, but it was necessary to cancel the event at the last minute for reasons related to COVID-19. This global pandemic has had a significant impact on Formula One and we're adjusting and responding in numerous ways that are in the best interests of our fans, employees, partners and constituents, while focusing on the Formula One business for the long term.
Let's walk through all the actions we've taken. One of the first actions we took as a support was to move the team's summer break up to March and April as we wanted to have ultimate flexibility to race during the normal summer break in August. On Tuesday the 28th of March, the FIA's World Motor Sport Council approved a further extension of the shutdown period from 35 to 63 days to be taken during the months of March, April, May and/or June. During this break of the season, we were inspired to see several U.K.-based Formula One teams come together for Project Pitlane. This is part of a larger U.K. industry-wide focus to manufacture and deliver respiratory devices to support the national need.
Formula One has the unique ability to rapidly respond to engineering and technological challenges and is focused on its core skills of rapid design, prototype manufacture test and skilled assembly. These efforts have proven fruitful and the go-ahead has been given for two of Project Pitlane's initiatives, including ventilators that are being produced by several teams, plus a breathing aid being manufactured by Mercedes. We're grateful for the team's efforts in supporting the national need.
In further actions F1 the FIA and all 10 teams unanimously agreed to delay the introduction of the 2021 technical regulations until 2022 and to keep the majority of their existing 2020 cars into the 2021 season. This will reduce costs for all teams at this time, when they would usually be investing and working on the cars for the 2021 season.
We have further been working with the FIA and teams to strengthen the long-term future of Formula One, with an array of new technical, sporting and financial regulations that will improve the competition and action on the track and make it a healthier business for all involved, particularly as we work through the issues created by COVID-19.
One of the key areas of focus has been the cost cap on team expenses. We've previously implemented a cap of $175 million for 2021, but now expect to move forward with a significantly lower cap.
Just like our teams Formula One has been evaluating our cost structure. We made some difficult decisions and furloughed over 50% of our workforce on April 1st, with senior executives taking a voluntary cut in pay. We froze all hiring and pay review plans and also deferred a number of initiatives we plan to pursue this year. We recognize we may lose a bit of time in implementing some of these plans. However, we felt the current uncertainties warranted the actions.
As Brian mentioned, we're actively engaged with lenders of our revolving credit facility to address potential issues related to our quarterly leverage covenant. They've been very supportive as we work together to identify potential changes to the covenant to enable us to navigate through the possible scenarios, including the remote possibility of no racing in 2020, and we expect to agree to necessary changes in due course.
We've been working tirelessly since Australia and we're actively engaged with our promoters in putting together a potential 2020 race calendar. We have two primary challenges. Identifying locations where we can hold the rice and determining how we transport all necessary parties and their equipment to that location for a race. We're in discussion with all of our promoters, as well as some tracks that are not currently on our 2020 calendar, to ensure we explore all options.
Our goal is to launch the season on the weekend of July 4th and 5th in Austria. It is likely that we race the weekend of July 11th and 12th in Austria as well. We're in the advanced stages of putting together a schedule of additional European races through early September, including races during the traditional August break. We will then plan to race in Eurasia – in Asia and the Americas in September, October, and November before finishing in the Gulf in Bahrain and Abu Dhabi in December.
We hope to have a calendar with 15 to 18 races. We expect the early part of the calendar to be races without fans, but we hope to be able to allow fans to attend in the latter part of the year. We are working with the FIA, local authorities and other experts to determine the steps and procedures necessary to safely transport everyone to each race location and to enable those individuals to operate and be housed in a safe and secure manner. We feel increasingly positive about the number of locations that would be able and want to hold the race this year.
Our work in the travel and other logistical issues related to each country are a work in progress. The economics of races, particularly ones with fans will clearly vary from existing agreements and we're actively engaged on this front too. We've been working closely with the FIA with the consent of all the teams to change the calendar, without a formal vote amongst the teams and this was formally approved by the World Motor Sport Council and Formula One. This will allow for a stream process as we reshuffle the calendar and appreciate the team's support.
With the postponement of the season, we are pleased that our teams quickly pivoted and launched a new Formula One Esports Virtual Grand Prix Series featuring a number of current Formula One drivers and celebrities. To date, Charles Leclerc, George Russell, Antonio Giovinazzi, Lando Norris, Alex Albon, Carlos Sainz Jr., Nicholas Latifi have all been on the grid along with former F1 drivers such as Jensen Button, Johnnie Abraham, and Nico Hülkenberg. They've been joined by England's Cricket World Cup winner Ben Stokes; musician, Liam Payne; professional golfer, Ian Poulter; and six-time Olympic Gold Medalist, Sir Chris Hoy to name a few. These races have run in place of every postponed Grand Prix. The series utilizes the official Formula One 2019 PC video game developed by Codemasters and the visuals are impressive. The races have provided great racing and entertainment value with lively commentary.
Charles Leclerc won his debut race after receiving the game just three weeks earlier. Then he won the next race as well and we're excited to see new rivalries emerge. The broadcast is available on the official Formula One YouTube, Twitch and Facebook channels as well as Marquee TV broadcasters such as Sky Sports in the U.K. and ESPN in the U.S., and we've experienced strong engagement.
Through the first three races digital cumulative views reached 12.9 million, and total viewership including TV estimates reached 16.3 million. The Virtual Grand Prix even trended number one on YouTube U.K. We will continue with these virtual GPs until we return to racing.
We were also pleased with the response to the second season of Drive to Survive, which debuted on Netflix at the end of February. The season provided unprecedented access to the teams and drivers. We saw the drama of the driver switch from Gasly to Albon mid-season at Red Bull behind the scenes action of the wet race in Germany and learned more about Williams' challenging season. We are in advanced discussions for season 3 and the team is ready to capture footage in 2020.
In news that may have been overlooked due to COVID-19, we welcomed Aramco as a long-term global partner to Formula One. We announced this agreement on March 10 and Aramco as our sixth global partner alongside DHL, Emirates, Heineken, Pirelli and Rolex. We look forward to sharing our expertise to identify opportunities for the advancement of sustainable fuels, enhanced engine efficiencies and emerging mobility technology. This deal includes trackside branding at most races and title rights to three Grand Prixs in 2020 and exposure on our digital platforms.
Further in this area, we welcome Bem Pincus as our new Director of Commercial Partnerships at the end of February. Ben joins us from Heineken, where he managed their worldwide sponsorship team and partnership with Formula One.
On the distribution front, we announced a multiyear media rights deal extension in Canada with Bell Media's TSN and RDS, which goes through the end of the 2024 season. Our fan base continues to grow in Canada. The 2019 season audiences across TSN and RDS grew 19% year-over-year and coverage across the two networks reached nearly 5.3 million Canadian viewers.
We've been in regular contact with our commercial partners, broadcasters, sponsors and other partners. These partners have almost all been very supportive. Our conversations with them regarding the 2020 season are not as advanced as those of promoters, as we need to determine our modified calendar to have more substantive conversations. A number of agreements have provisions related to the number of races, although, that number of races is well below our originally planned 22. These are all valued long-term partners, and we expect to resolve any potential contractual issues in a fair and straightforward manner.
We had been in the final stages of completing the Concorde Agreement when the coronavirus crisis turned everything on its head. We decided to put the Concorde on the back burner for the short-term and prioritize addressing issues related to 2020 first. As we move forward with the 2020 calendar and finalize regulatory changes with the teams, we will once again return to completing the Concorde Agreement in the immediate future.
Obviously, we are still dealing with a lot of uncertainty regarding the short-term and the coronavirus. We're increasingly confident although there are no guarantees that we will have a 2020 championship season. Fan support has been great and there seems to be an incredible pent-up enthusiasm for racing to begin. At the same time, we're also looking beyond this year to a 2021 season. The long-term contractual nature of Formula One helped provide long-term stability at a time of uncertainty.
We continue discussions for potential new races or race renewals for 2021 and are going well. We also continue discussions with other new or existing commercial partners. We expect the impact of the coronavirus crisis on the broader world will extend into the future, but we feel we're well positioned to return to the growth curve we were on a few months ago and look forward to the better future for all of us.
I recognize everyone would like revised projections for 2020. At this point, all we have are sensitivities with a range of potential results based on many variables. What is clear is that 2020 results will be significantly below original expectations, but we believe it is equally clear that we can manage through 2020 with or without racing and more importantly that our business can quickly return to our prior expectations in 2021 and beyond.
Now I'll turn it back to Greg.
Thank you, Chase and thank you Brian. And to the listening audience, we appreciate your continued interest in Liberty Media and hope you all stay safe and healthy.
And with that, operator, I'd like to open up for questions.
Thank you. [Operator Instructions] We'll take our first question from Jeff Wlodarczak with Pivotal Research Group.
Hi. Good morning guys. I had one for Greg and one for Chase. After -- you had a very strong result at Charter yet again and they're obviously aggressively -- continuing to aggressively retire the shares. I wanted to focus on your 25% ownership cap in Charter, which correct me if I'm wrong you're sort of bumping up against. When you hit that cap are you comfortable participating in Charter's share retirement, or do you feel like you can work with Charter management to potentially allow you to go over that cap?
And then Chase, if you could provide more color broadly on racing without fans the effect on race promoter fees and sponsorship and advertising fees? And obviously, the race fees are going to decline materially, but are there benefits to racing on tracks to where the promoter fee is subsidized or paid by the government? Thanks.
So I'll go first. Jeff, thanks for the question. First, there's -- since our holdings are really in two buckets, it's not clear that we're soon to be up against the cap. And it's not clear what the buckets are both how it's counted. Secondly, there is some time on that purchase until we come up against that.
Third, we have had begun some discussions about how to adjust that, because it's not necessarily in the interest of the shareholders of Charter or Charter to have us selling.
So we'll see how that goes. We are long-term holders of Charter. We like Charter. We certainly don't want to be in a position of being required to sell Charter stock.
And I guess on my front, I think, clearly races without fans have a much more significant impact on the promoter side than the broadcasting and sponsorship side in many ways. I think racing without fans is first and foremost for the broadcast digital sponsorship side. The fans will all connect through various platforms and in many ways actually when you watch a race even at a live race. Many people watch it on television, television screens anyway.
I think in terms of the rate of the promoter side, clearly, these are very different events without fans and that will be reflected. I mean, we've talked about these being week-long spectacles, multi-day events, the city involved, the track involved. Without fans at any of that, it's clearly a very different -- it's a very different opportunity. It's a very different event, and we recognize that.
So, I think, these are unprecedented situations. And so I think with the promoters, there's a more significant change I think. With the broadcasters and sponsors, they do look at it as a season as a whole. As I said, there are contracts that have provisions tied to a number of races. It's below what we'd have. So, we have some room there. But we feel we can deliver a quality event for those. We think we can make a great event but live fans won't be there. And so again, the impact is going to be significant -- more significant on the promoter side.
Thanks.
Next, we’ll go to Bryan Goldberg with Bank of America.
Thanks. I had a couple for Chase. Just a follow-up on the promoter side of F1. I'm just curious given all the complexities involved for promoters either without fans or even when fans start to return, what are some of the measures that F1 could potentially undertake to work with promoters to ensure it's both a good spectacle a safe event? And do you expect any changes -- long-term changes to the race promoter revenue contract model as a result of this?
And then secondly just on sponsorship I was wondering if you could give us some more color. I mean a lot of marketers have been in triage mode the last several weeks. But as the world starts to reopen in sports content it looks to be more in demand than ever. Just wondering if you could just update us or give us more color on the tone of the sponsorship market right now around events such as yours? Thanks.
So, I mean first on the long-term impact, I mean whether it's promoters or sponsors we kind of look -- we're planning to be business as we planned it in 2021. So, that's our expectation. In terms of managing through these events, right now we expect the European events to largely be without fans. So, that's how we're planning it without fans. We're obviously dealing with different issues. We still have to deal with how do we get the teams there. How do we get the necessary personnel there and secure they're safe?
We're working with the country host regulators. We're working with the appropriate authorities. We need testing procedures transportation and procedures. I actually had a fairly long conference call this morning with an array of parties putting that in place focusing first on Austria because it's the first race but talking through all our tentative European races.
So, I think we feel we're making good headway on having races that can be secure and safe for everybody without fans which again is what we expect in Europe. I think as you get to events with fans that's probably -- we've probably made -- because it's a little further on the schedule we haven't made as much headway into some degree. It's tough to have those discussions because we can't -- you don't really get guidelines yet. I think this issue has so little visibility and it is so fluid. It's difficult to have discussions with authorities.
I mean we can sort of start to work through what we think may be possible in terms of spacing and other ways to manage traffic flows if we had them. But you're really not going to -- if you're trying to talk to people about what you can do in September and October right now that's -- September, October, November, those are more difficult discussions because they're still -- they're trying to figure out what to do in June and July.
So, I think the issues in terms of how we'd manage the fan part of it are probably ones we'll have in the -- as we get closer to that -- races where that would be a realistic possibility. But since they're not in the -- again they're not in sort of the July, August, I think we're planning races that are races without fans and making sure we can go forward with those.
And to some degree nobody knows what the landscape is and you pick up -- you get different stories in different places. As you look at China today, they're opening up an array of places that have public gatherings.
So, I think we'll this is a situation where in terms of dealing with larger crowds you clearly know more week-to-week as you go forward. And so it's very much managing up a real-time process.
In terms of the sponsors they've been great. Look, I think in many ways sponsors we've been in touch with them all. Until we know what the calendar is, it's tough to have a substantive conversation about how do we modify their -- what races. They have title races that they all have components to their agreements. So, this is why we've sort of mostly been keeping them up to speed.
Again, we could not feel better about the support we've got and the enthusiasm from them. I think in many ways like we're dealing with global companies but I think -- well clearly our big sponsors are -- they're not -- when you think first and foremost where is the real impact everybody talks about in the coronavirus? It's small business.
Reality, we don't -- that's not our core sponsorship. Our relationship are big brands, entities that know they have a future and just looking to figure out how do they get back to business as it was. So, our sponsors are quite enthusiastic quite supportive. And again we look forward to advancing discussions with them as we know more about the specifics of our 2020 calendar.
Thank you very much.
And we'll take our next question from Bryan Kraft with Deutsche Bank.
Hi. I have two questions for Greg. I guess first is there a scenario where you consider an RMT of your Live Nation stake, particularly now that the value you have to make up to get to 50% pro forma ownership is smaller than it's been in a few years, or is that strategically critical to keep inside of the -- or underneath the Liberty Media umbrella?
And then the second question is on Liberty Sirius. You mentioned that you suspect the NAV discount to narrow once you get to 80%. Is that because of tax consolidation or relative trading liquidity between the shares or that there might be a change in capital allocation at SiriusXM once you get to that 80% threshold?
So, on the first one Brian, thank you for the questions. To do an RMT, our shareholders would need to end up with 51% ownership of the spun company. And I don't think we would use -- our priority right now for the capital we would use at LSXM is to capture the discount go after that. I don't think we would want to use that to RMT the stock.
And I think over the long-term one of the reasons why we did this reattribution is we think it's strategic and there are things and ways that Live Nation and Sirius will be able to work together with the benefit of both.
So, I don't think -- while an RMT is not you're right mathematically easier it's still a reach and would require to put up capital that we have other ideas for what we want to do with it. On why the 80%? Yes, I think you'll see a lot of potential for all of the things you mentioned to drive the factor including free flow of capital up to the LSXM will probably on the margin make us more willing to consider dividends and push for dividends at Sirius, particularly if the gap sits where it is today and you can look at the relative value of which stock is more attractive to purchase SXM or LSXM.
Great. And maybe just one follow-up. Can you quantify what the tax rate would be on the dividends today, once the dividends received the exclusion that you're getting?
Albert are you on the line?
I am. So it's roughly 7% to 8%. So it's pretty low.
I was going to say that, but I want to get the authority to verify. Thank you, Albert.
You always want Albert to bless it.
Yes. Albert blesses everything. Thank goodness.
Thanks, Greg, thanks, Albert.
Next we'll go to Vijay Jayant with Evercore.
Thanks. So Chase couple of questions. So obviously, you're targeting to get a schedule for 2020, but is December 31 sort of the end of the race calendar, or could you move to January? I know the new season typically starts in March. So are we sort of looking at basically December 31 to try and meet all your requirements on contractual commitments also? And second, obviously there's been a lot more liquidity at Formula One, post the reattribution. And at the same time some of your teams, probably with no prize fund or working capital may be in trouble. Have you been approached on subsidizing these teams or sort of bankrolling them until the season starts? And is that something that Formula One would do?
So on the first, I think we -- right now our current targeted plan has us finishing in December -- later in December than the original plan so sort of more like the 13th, 14th of December. But we are evaluating and will consider. So certainly finishing in January is an option. We could do that. We can do that. I think if we can, we'd like to finish in December. We'd obviously have to take a fairly long break through the holidays. You're not going to race in the holiday weeks. But it is an option available to us that we'd again have to work through with our promoters and work through an array of parties to get there. But it is something we've considered and talked about. But I'd say at this point our goal is again to finish a couple of weeks later than our original date, but to finish in sort of mid-December ahead of the holidays.
I think in terms of the teams obviously as I said ,2020 for us and the teams is not going to be what we're not going to have the results, we're going to have when we started the year or expected to have when we started the year. And I think everybody is doing what they can to shore it up. And I talked about the cost-cutting initiatives, as we move forward and can solidify what we are doing. Right now there are too many moving parts. So we're not -- you got to -- there's so many what ifs. I don't think you can -- it's constructive to try to address parts of it. I think we need to get far enough along in these plans to know where we're at. We expect the teams to be taking the right initiatives to get them through it.
I think all of us recognize many ways -- priority one in many ways is to -- when we get to 2021 is to have just more -- get back on the track it was on at the beginning of the year for 2021. And that's our goal and that's what we're committed to get to and certainly manage through this year as best as possible. What we need -- there's been speculation at this point on to what degree do we need to help support select teams. We care about the teams, but those are discussions we've not had to date. I think we'll see where things are as we go along. But I think there are too many moving parts right now to really engage with any specificity on that.
Thank you.
Now we'll take a question from Ben Swinburne with Morgan Stanley.
Hi, good morning. Chase just continuing this discussion. Can you give us any sense for what the sponsorship revenues will look like this year with a 15 to 18 race calendar, at least relative to your original expectations? I assume it's lower, but I'm just wondering if there's any way to dimensionalize that. And on the race promotion, if you have races with fans later this year as you mentioned is your goal, would there be any impact on race promotion fees for Liberty? It would seem like that's pretty close to what we used to consider normal. And then I just wanted to ask Greg. Greg you made a comment on the call a couple of weeks ago about the cash at Liberty Formula One. I think you used the word potentially at the opco sort of benefits liquidity at the holdco and potentially the opco? I don't know if there's any restrictions on cash moving back and forth that we should be thinking about? Thanks.
So on promotion, the promotion is probably more tied to sort of obligations whether it's signage time on screen titles. So -- and certainly we have excess -- we've said before we have excess capacity, material excess capacity at the 22 race level. We're raising it. Obviously, as the number of races goes down. it puts some pressure on that capacity. Clearly they're at the margins. There's some issues we've got to manage through whether it's without races their hospitality that won't exist at some. But I think at its core, we feel we can go a long way towards -- I think our plans are to go a long way towards meeting what our sponsors would want to be gaining through the sport this year. So I think we are working to achieve what we think would meet the expectations of our sponsors.
But at the end of the day -- I mean these are relationships. And these are long-term relationships. Most of our sponsors are long-term. We'll sit down as partners and find a fair path forward. We want them to feel good about what we do. But equally, we have an obligation to deliver certain value. If we deliver it, we expect to receive fair value for it. But we will approach it as partners. I think as you get to promoters with fans, certainly that does get much closer to the business at norm. There are different cases. Is it a race that was going to be held in the spring and has moved to the fall? That obviously has implications in terms of selling tickets and the like.
Right now probably most of our promoters even the ones on the schedule aren't really selling tickets given the uncertainties and probably nobody is buying a lot of tickets given the uncertainties. So it's not -- with everything that exists out there it's not sort of -- it's not business as usual. But I think to the degree we have races with fans. And I guess, you also get the question is it a race with fans as you know it, or is it race with fans with certain conditions around those fans? So I think all those things we have to engage on. But I think the way again we approach 2020 is, we -- yes we have agreements in place, but these are long-term partners. We expect the great -- indeed they've all been very supportive. We want to be fair in addressing this. We want to get fair value, but be fair to them. And first and foremost, make sure in 2021, we've got the business in 2020 looking like we expected it to look four months ago and have the same future we expected to have four months ago.
And really what we're managing through is a short one-time event for us. We think the strength in this support, the interest and the support the support -- the support and the interest we've got, whether it's from fans or partners, can enable us to get back there. I think there won't be some lasting impacts, but I think the strength of events like ours, I think, fans will come back. I think events like ours will continue to rise in strength. And, I think, the type of partners we have seem to be more supportive than ever, even if you have a degree of a shakeout in the economy.
So, we will certainly expect to get fair value this year. But, again, we're not going to play hardball. We're going to deal with things as partners, but with a priority to making sure, so in kind of giveaways, whether it's the teams or promoters or sponsors, we're not going to be handing out candy to everybody. We're going to be expected to be treated fairly. But we're going to deal with it as adults and with the expectation that 2021 is going to, again, look like the business we all knew four months ago.
Thank you. Greg, anything on that language?
I'm not sure what language your -- just about the up and down, sorry. Because [Indiscernible] language part. There are no restrictions on one holdco pushing money down to the opco. There are or can be restrictions under certain circumstances for the opco pushing money up to the holdco.
Got it. Thank you
All right. Next question comes from Zack Silver with B. Riley.
All right. Great. Thanks for taking the question. The first one for Chase, you talked about 2021 potentially being a big year for broadcast renewals. And certainly, the global pay TV ecosystem is not immune to COVID. So I guess what I'm curious about is whether you can give us a health -- a sense of the health of some of those pay TV partners and their ability to renew deals with you guys at attractive terms for both parties.
Yes. I mean, we're -- obviously, a lot of discussions, as people are navigating through the short term, has sort of gotten put a bit in the back burner or everything sort of become very short term. Look, I think, the pay TV universe will come through this. I mean, in many ways, if you talk about pay TV, which is really part of a wider digital universe, one of the few winners in this period seems to be digital platforms and -- that are -- the increased importance, increased value on great content on these array of platforms.
So we're continuing to have discussions with them. I think we feel good about that space. But I think everybody is I think in the very short term, which really means the last month, whatever it is, six weeks since this really occurred. Clearly, everybody would like to have a little more visibility towards what things are going to look like in three months, six months, what have you.
But I think discussions and interest, the themes we've had about the value of unique sports content, unique event content, sports content like ours of a global nature seems to be realistically as strong as ever. What is the impact to the platforms we deal with varies a bit around the world, but they're mostly big entities. We're not dealing with again small businesses. We expect them to come through this.
I think the subscriber side, certainly the advertising world seems to be more impacted by the subscriber side, sports generally has sort of leaned to -- the businesses that buy sports are probably leaning more heavily on the subscriber subscriptions to be supporting it, then the ads. The ads matter. But I think advertising and sports will come back, because I think again the type of entities that advertise in sports, I think, are ones that are looking if anything anxious to come back and support their product.
Got it. That's helpful. And then, for Chase, Greg or for Brian, in the release and apologies if you missed this, with the reattribution announcement a couple of weeks ago, but you guys disclosed that you were paying down the remaining revolver balance today. Is there anything that we should read into that regarding your confidence in managing cash burn when valuations are going on? And also, any implications for talks you're having with the lenders?
Yes. I'm happy to comment. And then we have Laurel Baldi [ph] here as well for that. Look, we have obviously a lot of confidence in our cash position at the Formula One Group. And we certainly in the interim didn't need the extra money that we had drawn on the revolver prior to the reattribution. We don't need that money today.
We'd drawn it in a surfeit of caution and now we're not in that need. So rather than run a negative spread on the borrowings, we've paid that money down. We are in fruitful discussions with the lenders, likely to have covenants which are less -- or at least for some period of time based not on EBITDA, but on liquidity. And I think it's a measure of our confidence that we'll be successful to pay down the revolver. Laurel, would you add anything?
No. You've covered it.
Got it. Thanks, Greg.
All right. Next question comes from John Tinker with Gabelli.
HI. Could you just talk about baseball? I think they've actually started playing games already in Korea and Taiwan. And how you see that might go and the impact of not having spectators? And secondly, development revenue was up and the battery because of retail. Could you talk a little bit about how that's going now given that everything is closed down? Thanks.
Yes. On baseball, I guess, there are people now following the Korean leagues with new interest and there are primers on who to watch and how to watch the Korean League. I have not embraced it yet fully. And I'm still waiting for our domestic lead to come forward at LMC. I think they're looking, as I said, at a range of opportunities, but most likely -- while nothing is resolved, it appears most likely there will be not the bubble concepts which have their own things, but some late June start spring training, early July without the fans.
There are still issues to be resolved about what the payments will be to the players. There were agreements about paying them $170 million and then sort of looking at pro rata with a creditor for the $170 million. But some of these things were based on the idea that fans would be attending. If fans are not attending and there are reduced revenue streams there still need to be some negotiations about what the splits are. I obviously can't comment on, any of that.
It's, Chase. My line went dead. Sorry. I just called back in.
Great, talking about baseball for one sec. And then, so I think, that's to be determined John and worked through. But I think there's a positive attitude on all parties to try and get some positive resolution. But that will obviously impact profitability, even on a pro rata basis, if we are -- if we're not able to have fans present which is certainly the expectation in the early games will not have fans. We have obviously had a major drop in activity at the battery. I don't know Brian, if there's any commentary, you want to make in addition to that.
No. I would just say we're trying to work with our tenants there. And we can't comment on specifics but we're trying to work with them where appropriate. To the extent we're having gains. But we don't have fans there could be some impacts to their businesses and therefore how that translates through to us. And also, we have parking revenue in there which obviously would go down to the extent we don't have fans showing up. But none of these are overly material to Liberty Media as a whole and not really material to the brands either.
Thanks.
Next question comes from David Karnovsky with JPMorgan.
Thanks for taking my question. Just first for Chase on, the Concorde Agreement, is there something that has to be completed prior to the 2021 season? Could Formula One move to instead maybe extend the existing agreement even for a short period? And then for Greg, I think, in your prepared remarks you mentioned, looking at synergistic assets I think for Formula One Group, just wondering if you could expand a little bit on this. Would this be focused mainly on motor sport, or could it extend into some other sports, or live event categories? Thanks.
I guess, on the Concorde agreement, the reality is once you get to 2020 – 2021. I mean, I'm sorry. We can with -- actually on the Concorde we can just unilaterally just sign these with them. These are the rules of the road where this is the structure that exists. So we don't have to extend anything. We can essentially implement and say that's -- if you're racing that's the terms on which you're racing. Obviously, that's not -- we're looking to conclude it with the teams. But the Concorde Agreement, when we put it forth, will be the Concorde Agreement that goes into effect in 2021. And we are able to unilaterally do that.
Wait a minute. We lost a question there. Can you repeat, just to make sure, we got it?
Yeah. No. The question was just -- can you hear me? Am I still on the line?
Yeah. Yeah, we got you on the line. I am sorry. Go ahead.
Yeah. The question was just on, your prepared remarks I think you mentioned, looking at synergistic assets...
Synergistic or -- I'm sorry. Just making sure of what I heard…
Yeah, just wanted to know, if this would -- yeah, go ahead.
Yeah. Look, there have been assets in the motor sports space that have traded that we've looked at. We'll continue to look at ones that are around that. I don't want us -- our goal is to create a focused F1, and if we saw some unbelievable opportunity that was synergistic outside of motor sports when we look at sure.
But our goal is to try and create things that are towards the Formula One, operating business the Formula One ecosystem for things we have around Formula One where we can provide synergistic value. So that would be our first priority.
Thank you.
Okay. Next, we'll go to Brandon Ross with LightShed Partners.
Thanks. Good morning. For Greg, one of the rationales for putting Live Nation in the LSXM tracker is it opens up opportunities, for Sirius and Live Nations to work more closely together. Can you just explain what you could do now that they're under the same umbrella that, you couldn't do before and why the tracker structure influences, what you can do operationally? And then just for Chase, is it reasonable now to assume that you could be at 22 races in 2021? Thanks.
Well, Brandon I think you know the answer to that question that, there's nothing structurally that was prohibited before that is now permitted. But I do think, that putting them together and doing things like bringing Michael Rapino on to the SiriusXM Board continued interactions continued alignment potential for further working together is enhanced by being on the same tracker.
And simple answer to 2021, I mean, we don't have a magic number. But the answer is yes. I mean realistically again, we expect 2020 -- our goal is to have 2021 look like, the 2021 we planned back in January. And we have – ultimately, we have renewals put in place and we have some ongoing discussions with a couple of potential new races that we think would be a positive enhancement to the business for fans and our shareholders.
But yes, we expect 2020 -- as I've said, we expect 2021 to look like the 2021. We were looking at in January. And so certainly, if we plan on 2020, 2022 races then again we don't have the magic number but we'd be planning on 2022 -- we'd still be planning on 22 races.
Thank you, guys.
All right and we'll take our last question from Drew Borst with Goldman Sachs.
Thank you. I had a couple of questions, for Chase. Firstly, I wanted to ask about, the prize fund for this year. I think in normal course it's usually variable to PTS EBITDA. Is the intention to keep it variable, or are you intending to maybe have a deal a little bit higher at some sort of fixed component because it would seem like PTS EBITDA is likely to be a lot lower? That's the first question.
So, again, the price point is a contractual formula. So the prize fund is what it is. We realistically -- we can't -- we couldn't unilaterally change it if we chose. So I think, the question which I guess was a part of the question earlier is would we do something? And I guess to expand to that since it's a percentage of profits and profits will be down it means the prize fund will be down. The question is would we do something to support certain teams? Again, we're not in the business of handouts, but we want to -- but that being said, we -- I think we'll engage with all our partners and figure out how do we go forward in a way that makes sense for everybody. But the prize in itself is defined by a contract that is a percentage of EBITDA.
And as we know what that is, I don't we really move to the next level until we know what that EBITDA is, obviously, we still have a lot of moving parts. As I talked before, we haven't settled the calendar. We don't know how many fans have races. So at this point, we'd have a wide range of potential outcomes on the ultimate prize fund. I think when we have a better handle on that, we'll see where we are and see if it's appropriate or right for us to do anything whether it's again with them or with the team or with any of our other partners. But we expect to be dealt with fairly and expect them to deal with us fairly.
And then you mentioned earlier about the budget cap probably coming down a little bit more beyond the $175 million. Is the idea that that's just a one-time reduction, or is that something you think will be the new permanent on a go-forward basis? And if it is permanent, is that creating some new tension between the big and the small teams?
I mean, certainly what we're putting in place is a cost cap, I'd call it is a long-term construct. So it's not to bring it down and have to go right back up. It's a construct that is for the long-term. And I don't think it creates tension. It creates, I think, respect the fact that there are a number of teams that spend significantly more and respect that they will obviously have to manage through challenges to get to the cap.
I think we -- all 10 teams have agreed the intent of the cap was to improve -- the goals that were driven that drove the cap, which were improved competition, better action and a healthier business for everybody in it. The cap helps achieve that. They've been different. As I said all along, there have been different thoughts about the specifics. It's a much more complicated sport to put a cap into than the team sports in the U.S. well, where you just add up salaries. You've got all -- here you've got all the moving parts that come out of the technology of the sport and the engineering of the sport. And so how you implement that cap is probably more the discussion than does the cap makes sense.
And again, I'm sure there will be pressures on teams that have to make significant changes to get to the cap. But I think there's been unanimous agreement that the goal of the cap and those broad-based goals are goals we all share and that we have -- that it will help make the sport better for fans and everybody in it.
Thank you very much.
So operator I think we're done with our questions today. Thank you to the listening audience and for your continued interest in Liberty Media. And we look forward to speaking with you again next quarter if not sooner. Thanks very much.
Thanks a lot.
And that does conclude today's conference. We thank everyone again for their participation.