Liberty Media Corp
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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 Year-End Earnings Call. [Operator Instructions]
As a reminder, this conference is being recorded today, February 26. I would now like to turn the conference over to Courtnee Chun, Chief Portfolio Officer. Please go ahead.
Thank you. Good morning. 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 Liberty Media's most recent Form 10-K or Liberty Media Acquisition's Form S-1 registration statement filed with the SEC.
These forward-looking statements speak only of the date of this call and Liberty Media and Liberty Media Acquisition expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Liberty Media or Liberty Media Acquisition Corporation's expectations with regard their due or any change in events, conditions or circumstances on which any such statement is based.
On today's call, we will discuss certain non-GAAP financial measures for Liberty Media and SiriusXM, including adjusted OIBDA and adjusted EBITDA. The required definitions and reconciliations for Liberty Media and SiriusXM Schedules 1 and 2 can be found at the end of the earnings press release issued today, which is available on the Liberty Media's website. Now I'd like to turn the call over to Greg Maffei, Liberty's President and CEO.
Thank you, Courtnee, and good morning to all of you. Today speaking on the call, we will also have Formula One's, new President and CEO; Stefano Domenicali; and Liberty's Chief Accounting Officer and Principal Financial Officer, Brian Wendling.
I'd once again like to recognize and thank our management teams and employees for the tremendous job they have done manning through COVID in difficult circumstances. Beginning with Liberty SiriusXM, I'd note we continued our share repurchases, repurchasing $99 million across both LFX and AMK shares in the November to January time frame.
As you know, the discount persists, and we repurchased at a look-through price on SIRI of about $3.70 per share. We do expect to take advantage of discount opportunity, in part driven by some recent balance sheet improvements we have at LSXM.
In November, we raised $920 million of a live exchangeable bond at 50 bps to repay our live exchangeable maturing later this year and from the call spread, between LSXM and 1 that originated when we did the reattribution. In tandem, we amended the live margin loan and unencumbered a substantial portion of our live equity. Also, after quarter end, we amended our SIRI margin loan, increasing our borrowing capacity from $1.35 billion to $1.75 billion.
Accordingly, we have generated substantial incremental borrowing capacity to go after that discount and continue to take advantage of it. Our ownership of SiriusXM as of January 29 stood at 76.4%. We do expect to get to 80% ownership in this year, and we recently announced a tax sharing grid between SiriusXM and Liberty SiriusXM. The SIRI Board of Directors evaluates capital return strategy every quarter and we'll continue to do so if Liberty gets to the 80% ownership level as we expect later this year.
So looking at Sirius itself. We welcome Jennifer Witz, who assumed her new CEO role in January. The new car penetration at SIRI at 80% in the fourth quarter, and we have line of sight to get to 82% in 2021. SiriusXM hardware is now in one out of every 2 cars on the road and the number continues to climb. SXM self-pay households listening in the digital environment, i.e., out of the car, grew 40% in 2020, and Stitcher have the largest share of U.S. podcast listening audience available to advertisers. Please do make sure you listen to the podcast of the year, Office Ladies. For those of you who have been to our investor days, you know how much we love the office.
Turning to Live Nation. We continue to have great demand for concerts, perhaps notably the weekend, sold over 1 million tickets worldwide for his 2022 tour just 1 week after housing the tour. Clearly, there is robust demand as we noted for live music. Live also acquired a majority stake in Veeps, a ticketed live stream platform, I encourage you to check out the series they have on Rufus Wainwright.
Turning to the Formula One Group. As I mentioned, we have a new CEO there, Stefano Domenicali, from whom you'll hear in a minute. We are planning for a record 23 races this year. Notably, the Orange Army is ready to welcome the Dutch GP and local hero Max Verstappen in September at Zandvoort. 2020 showed we have ample demand for hosting races, even on short motors from both new and historic tracks.
And now for many of you who have seen everything you want to see streamed to online this year, get ready to tune in for Season 3 of Drive to Survive, which drops on Netflix on March 19.
In January, we introduced LMAC with SPAC. We raised $575 million, that's the largest corporate SPAC to date, according to banks who are involved and maybe they're right, it was the most oversubscribed SPAC of all-time and the first trade at 13 20 was the highest initial trade for any SPAC to date. Stock has continued to trade well, but admittedly on thin volume. We are actively in discussion with a number of targets in the TMT space.
The 20% interest in LMAC is attributed to the Formula One Group. And I would remind you that the Formula One Group has committed to Board purchase $250 million, a $10 increase -- per unit in connection with the initial business combination when it occurs.
Turning to Braves. We sadly lost some icon to the Braves in this off-season, and we'd like to start by paying tribute to them, notably, Phil Niekro, and of course, Hank Aaron. We started a fund named after Hank Aaron, seeded with $1 million from the Braves plus $1 million from Major Lease Baseball and the Major League Baseball Players Association to help grow diversity in baseball.
We are excited about our enhanced 2021 roster coming off of winning BNLAs for our third straight season. We did resign Marcell Ozuna to a 4-year deal. As you may recall, we came within 1 year -- 1 win, rather from going to last year's World Series. So our guys are ready to go. Freddie Freeman coming off of his 2020 NL MVP, Ozhaino Albies and more are hungry and ready.
Sprint training did start recently on Tuesday, and our first sprint training game is this Sunday. We expect fans to be in attendance at 25% capacity. Turning back to the home front at Three Ballpark Office Tower. We are near completion and 70% leased. Both Kristin Kreuk and Papa John's will fully occupy their space by the summer of 2021. 97% of the Battery tenants are operational, which speaks to the relative openness of Georgia, and we believe bodes well for fans at Truist this year.
We do expect to have fans in the stands but are not yet sure of the seating capacity restrictions. And we do have significant demand for both tickets, at Truist and Spring training, as I noted, we look forward to a great 2021 season and including hosting the MLB All-Star Game on July 13.
So with that, let me turn it over to Brian for some more financial results.
Thanks, Greg, and good morning, everyone. At Liberty SiriusXM Group, we've taken a number of steps to boost liquidity and strengthen the balance sheet. In the fourth quarter, we issued $920 million of Live Nation exchangeable bonds and amended our Live Nation margin loan. Unencumbering substantial Live Nation equity value as part of the amendment, decreasing the shares underlying the loans from $53.7 million to $9 million.
Subsequent to quarter end, we amended our SIRI margin loan, increasing borrowing capacity to $1.75 billion, up from $1.35 billion at year-end and borrowing an additional $125 million. Inclusive of this additional margin loan drawn, Liberty SiriusXM Group had attributed cash, restricted cash, and liquid investments of $1.1 billion, excluding $83 million of cash and restricted cash held directly at SiriusXM.
We also have $1.1 billion of undrawn margin loan capacity at the parent level. Note that approximately $850 million of our cash will be used in 2021 to settle the call spread between the Formula One Group and the Liberty SiriusXM Group and to repay our 2.25% Live Nation exchangeable bonds. This value is based on estimates of the fair value -- the fair value of both liabilities at year-end.
As of February 25, the value of the SiriusXM stock held at Liberty SiriusXM Group was $19 billion, and the value of our Live Nation stock was $6 billion, excluding the value of the Live Nation call spread held at Formula One, valued at $371 million at year-end. We have $3.2 billion principal amount of debt against these holdings. Total Liberty SiriusXM Group attributed principal amount of debt of $12.8 billion, which includes $8.6 billion of debt at SiriusXM directly.
Formula One Group had attributed cash and liquid investments of $1.4 billion, which excludes $265 million of cash held at Formula One. And the total -- and total Formula One group attributed principal amount of debt was $3.6 billion, which includes $2.9 billion of debt at F1 making it $727 million at the corporate level.
At year-end, Formula One $500 million revolver remains undrawn. At quarter end, Braves Group had attributed cash and liquid investments and restricted cash of $185 million and attributed principal amount of debt of $674 million. We are currently in compliance on all debt covenants across the portfolio.
With that, I'll turn it over to Stefano to discuss Formula One.
Thank you, Brian. I'm thrilled first of all and honored to lead Formula One. Thank you to Liberty. The FIA, the teams and all of our partners for the warm welcome. Before I start, I want to thank Chase for his tireless work over the past 4 years and building an organization that gives us the very strong foundation for the growth in the decades ahead.
Last year was a challenge for everyone around the globe, and every business of the sport felt the impact of the pandemic. Formula One delivered what many thought was impossible. A 70 races calendar delivered safely and with huge enthusiasm from our fans. 72% think F1 has improved over the past 2 years. 68% believe F1 is in good hands on the Liberty Media. 71% rate their satisfaction with being an F1 fan as 8 or higher. Furthermore, fans believe Formula One handled it safely, very, very well during the global pandemic.
With 90% believing the safety measure put in place to allow races to go ahead have been handled well. 81% believe in F1 has communicated well with fans during the shutdown, and 73% believe in F1 has handled the absence of fans of the race as well. And 88% feeling positive above the calendar in 2020.
We all continue to navigate the challenge of COVID-19 this year. However, that will not preclude us priorities and opportunities we see in front of us, which are: number one, putting the drivers at the central F1, as they represent the soul and are the ambassador of the sport. The level of talent we have today on the grade is 1 of the highest F1 history, and we should celebrate that. Number two, delivering an incredible product that strengthens competition and action on the track, included 23 races this year.
Number three, enhancing the long-term perspective of sport and ensuring an attractive business model for all participants and attracting new participant. And number four, remaining committed through our action to our We Race As One platform, focus on sustainability, diversity and inclusion, and community. To reflect on 2020, we were extremely proud to complete a successful 17 race season. The last few races brought some new faces to podium, including the Sakhir GP which saw Sergio Pérez claiming his first win, alongside Esteban Ocon, Lance Stroll. In the same time -- in the same race, we were relieved to see Romain Grosjean walk away from a fiery crash, a testament to Romain to support teams on the track and improve safety measure in the sport. Max Verstappen secured the win of our last Grand Prix in Abu Dhabi, which capped a very successful season for Red Bull, who placed second in the constructor standing.
On the financial plans, clearly, we were impacted by COVID-19, by working in collaboration with our partners to mitigate these impacts. Due to the reduced number of races, duration of the season and almost no fan attendance unsurprisingly primary revenue declined in all categories. However, we work with our promoters to extend complex where mutually agreed and work with certain sponsor to the fair selected right in for future years.
We approached this agreement with a spirit of partnership and largely isolated all contract impact 2020. This spirit of collaborations, together with the ongoing terms of our contract, leave us well positioned with all of our material commercial partners as we enter in 2021.
For the full season, we are pleased with the reaction from our fans across multiple platforms. We made significant gains across social platforms, making us the second fastest-growing major sport league in several follower across the 4 major social platforms ahead of major sports, such as NFL, MBA, PGA Tour and WWE. We have seen the fastest growth in the digital engagement compared to all our major sports within a 99% decrease in 2020. On TV, our average audience per Grand Prix was 87.4 million, very marginally down on 2019, but still higher than the average audience in 2018, are compared February to other major sports with an international footprint that experienced bit decline in 2020 due to the pandemic.
We plan to engage more fans in 2021, and we have set forth an exciting 23 races calendar. This includes the addition of Saudi Arabia and much anticipated race in Netherlands. We will mitigate the challenge of the pandemic but are pleased with how we have already been working with our partners. We were able to restable Australia later in the year and announced the return of [ Wilmot ] and Portimão to the schedule. All compensation with promoters have been positive since the start of the year. And every 1 of them has made it clear that the events should be going ahead of schedule.
We'd love to welcome fans back on the track, and we'll be working with the local organizing and governments on that approach.
We are also grateful for the efforts made by the government to allow Formula One to continue to travel to our events during the time of global quarantine. Our highly robust safety procedure have proven we can travel and raise safely. Furthermore, we are evaluating the race we can with a proposal to try a new Saturday sprint race format of some races in 2021, the result of which would determine the grade for the main event on Sunday. This was supported by the teams in principle at the meeting a few weeks ago, and we will work with them and the FIA to finalize the details before the start of the season.
On the sporting side, we are expecting an exciting season with Lewis Hamilton with Mercedes is fighting for a unique and historic 8th World Championship. We hope to see Ferrari with that all their history in the sport been there tied back and are excited for all the new phases and lines up on the grid.
For most of the season, we were wondering where Sergio Pérez would find the driver seat, and we can't wait to see him pair up with Max Verstappen. McLaren, who had spectacular 2020 season finished third in construction standing. We'll see Daniel Ricciardo and Lando Norris line-up together. We welcome Aston Martin an iconic brand with a seasonal Champion Sebastien Bellin behind the wheel.
We also welcomed the return of Fernando Alonso to a renamed Alpine team. He is doing well, by the way, following his recent accident and looking forward to seeing him at the start of the season in Bahrain. And of course, the world will be watching the major season of Mick Schumacher.
Last year, was momentous for Formula One signing a new concrete agreement and reaching agreement on the introduction of a cost cap taking effect this year in 2021.
The next major rider to cover relates to the power unit or engine. In a demonstration of a collaboration, the FIA, Formula One and the teams voted to face power unit development from the start of 2022. A high level of working group has been established which includes power unit manufacturer and full supplier. As we look to the next generation of the power unit for 2025, the key objectives are carbon neutrality, truly sustainable fuels, hybrid power units, significant cost reduction and, of course, attractiveness to the new power unit manufacturers.
We believe that the sustainable fuel of hybrid engine will be a very attractive offer for the OEMs and their portfolios and provides another solution to the automotive decarbonization drive across the world. I feel very positive about this product in this area and have already had very productive conversations with existing and potential OEMs about the direction Formula One is moving in.
Continuing on this topic, we confirm the We Race As One platform will become our official ESG platform with the 3 core pillars of sustainability, diversity and inclusion, and community. We are proud of the impact this platform as last year and will continue with our action to push forward as a sport. In the coming weeks, I will meet with all the drivers to discuss with them our new races and plans for this year and beyond, included the rollout of our apprenticeship, internship, and scholarship in our sport for underrepresented groups, and very important are heroes, role models, and champions of progress in our sport that inspire fans around the world.
We are looking forward to Season 3 of Drive to Survive, hitting Netflix on March 19. The 2 once again captured all drama and story lines of 2020, and there's no question that series continues to bring new fans to the sport. I can't express enough my excitement for all the opportunity Formula One have in front of us, and I look forward to update you on our progress. But please be sure to watch the season opening Grand Prix in Bahrain on March 28.
And with that, once again, thank you so much, and will turn it over to you, Greg. Thank you.
Thanks, Brian. Thanks, Stefano, and to our listening audience. We appreciate your continued interest in Liberty Media. And hope you're all staying safe and healthy. And operator, with that, I'd like to open the floor to questions.
[Operator Instructions] Our first question today comes from Vijay Jayant of Evercore.
I have 2. First, Greg, obviously, with the tax sharing agreement with Sirius, that sort of kicks in at 80%. Obviously, you mentioned that the Board will decide how capital allocation works post that in a moment. But given the flow will be pretty small. And I think your dividends will be tax rate both that. Is there an expectation that we should assume that will shift more towards dividends or buybacks? Or are we perfectly on a path to sort of taking the company private? And are there any obstacles sort of on that path? Is there like a squeeze out requirement at 90%? Anything you can share on sort of what happens to the capital -- equity capital structure sort of post the 80% level?
And second, for Stefano. I just wanted to sort of get your perspective, you've been mentioned in the press suggesting that you're looking for more quality over quantity in terms of races, and obviously, you're talking about a sprint race, but do you really think you need to change the format of the race where you can -- [ where you need ] free practices and making it the biggest practical. Can you just talk about what you really think is the opportunity to make the weekend bigger event broadly?
So I'll go first and chat a little bit about dividends, capital allocation and the like. First of all, it really is a decision of the full board. You would note correctly that on the margin, we would probably have a slight tilt towards dividends, we at Liberty Media, Liberty Siri compared to where we once were. But it's really not that bigger tilt. While we're looking at the discount to NAV running about just under 28%, substantially tightened from the 45% when the GME world blew up. And we were running more like in the mid- to low 30s. So we have tightened it.
But that's still quite large compared to even the 7% rate we would normally pay with the DRD exclusion. So I don't think a huge thumb on the scale for Liberty, we are marginally more oriented towards dividends, but not massively, but that decision really will be driven by management and the Board.
As far as triggers that might involve. I would say the independent board will have to make their own decisions. But 1 thing that I think would likely be in the back of their minds is if we get to 90%, we could do a short form squeeze out merger of the remaining 10%. So some directors might think about the pace at which we would get to that kind of a number. But again, those decisions really will be made by the full Board. And at some point, the independent directors will have voice about ensuring that the minority is appropriately protected.
Okay. That's my goal to answer to the question with regard to the format on what we are thinking to improve in term of show. First of all, let me say that our objective is to try to offer to the people that are coming to the event, to the people that are watching television, to the people that are really fans of Formula One, something that is exciting.
So the idea that we have shared, and I think that we have received a great feedback from everyone in the sport is that, we will try to figure out something that we give as a qualifying on Friday, Saturday sprint race that will determine the grid order for the Sunday race. So that will give the thrill of a great weekend that will be beneficial to all the parting boats. And this is something that we are detailing with the teams and the FIA in the next weeks in order to present the final format before the start of the season in the rain. But that's the aim of what we try to do this year in that respect.
Our next question comes from David Karnovsky of JPMorgan.
Can you discuss the freeze on engine development and how you think this might impact on track competition? And then just maybe expand a bit on your view of F1's long-term engine goals in light of some of the OEMs like GM and Jaguar moving toward all-electric vehicles?
Well, thank you, David, for the question. I think that what is important to say that this idea of freezing 1-year in advance is connected to the new business sustainable approach that Formula One has taken. We have taken this year with the cost cap that is related to a certain part of the cost of managing the team. The other part was, not margin, but very important was how we can capture the control of investment cost as in a normal business and the power unit.
Therefore, by associated the fact we would anticipate the end of spending new money for a new engine, we were thinking how we can capture the attention of potentially manufacture, but also making sure that the ones that are involved today are interested in the future. So we do believe by being hybrids in the future is the exact position that would allow all the manufacturers to have an access to a different portfolio, not only electrification to their normal business.
So therefore, I think that what we are putting in place in that respect having carbon neutrality, fully sustainable fuels at the center and being hybrid gave us a really great position in terms of package in terms of being always at the pinnacle of technology advanced research in Formula One and making sure that everyone can benefit from this activity also to have a sort of road relevancy, extra activity that can be beneficial to all the automotive management factory. And by doing that, we're going to have a win-win situation.
A lot of attention of power unit in a different way of only being electric and having the cost control under control, and of course, being aligned with our value being sustainable for the future. So these are the base thinking that we're taking when we decided to go and follow this path.
Okay. And then I believe there is a number of race promotion contracts expiring at the end of this year. I think Singapore and the U.S. Just wondering how you are thinking about F1 then to these regions versus maybe adding new races and other flyway markets, I think you mentioned South Africa recently, and then with regards to the non-duty is there any update you can provide on whether we might see that race at some point in the future?
Well, yes, I mean for sure we're in the great moment because despite the pandemic we are achieving an incredible number of requests by -- that shows that, yes, one of the center of the interest not only from the organizer around the world but also from the Motorsport Community. Therefore our strategic plan is to decide, first of all what is the right dimension in terms of races in the year.
The contract you're mentioning are expiring but there are discussions ongoing because the ones that you are considering are really important and there is lot of interest to progress in -- and keep them also in the future. We confirm, as you know that U.S. is very important and strategic market for us. And we have the aim to add another race in U.S. We have already great partner in Austin, but we are looking for other solutions that would be very important for us.
What I can say, with Vietnam for whatever reason happened, you see we didn't have the race but for sure that is an error -- sorry, in general that is very important for the strategic growth of our business in the future. And for sure that's an area where we're going to exploit out that opportunities for the future.
And if I could just add to Stefano's comments which I agree with, we do not have an unusual number of promoter contracts expiring this year or pretty much in any year. We have a portfolio where certain number get renewed every year, just like we have a certain number of broadcast contracts that are renewed every year, and in general because we think demand will rise for our sport, we all feel that, we actually appreciate that. Because we think there's more opportunity ahead than behind.
Our next question comes from Ben Swinburne of Morgan Stanley.
I want to ask both Stefano and Greg, just a question around sports rights. And sort of the state in the market right now. Maybe Europe and U.S. You guys had a very successful lease space on the press reports renewal in Germany with Sky last year. But we've seen some of the other deals that have happened or happening, have gone backwards, EPL, Bundesliga and at least the press suggests Serie A may rollback. And even in the U.S. there has been some -- probably more tension than usual and Greg, obviously with Sinclair what's going on there in FOX Sports is clearly tricky with 30:32 code cutting. So maybe can you guys just give us sort of a sense as you move through '21 and '22, how you're feeling about your position both with F1 and the Braves? And if you think the market's gotten even more complicated and more challenging than it was a couple of years ago?
Stefano, do you want to take a cut or I'm happy to?
Okay. I mean, in my opinion, the situation we're living today is, for sure, interesting from one side, but very, very good on the other. I mean, what we can see that, as you know, on our business model, the broadcaster partners are hugely important for us. But we can see a very good opportunity to extend and explore different models to, as I said, to be complementary platforms and provide direct connection to the fund by sport in the OTT world that is still an area that we will, for sure, give an eye, a very important night for the future.
But to be honest, I do believe that if you are able to attract as we are doing the sport, the commercial account, because the interest is there, and we need to make sure that the sport we are shaping up for the future give the context to make sure that it's deliverable to the fans.
And that's why we have a lot of activity connected to make sure that, first of all, of course, we don't lose the traditional and very religious fans, but we need to speak to the language of the new supporters, the new fans, the young generation. So we have a lot of programs to make sure that this is happening already this year. So I'm positive on that, to be honest.
I agree with Stefano's comments, but I had a couple more, if I could, Ben. First, we've done a lot over the last few years. Thank you, Chase. And now thank you, Stefano, to try and build fan interest and fan excitement. And that's -- that are on track competition. That's a more balanced field that we -- as we go into '22 that's a lot of ancillary things like fan festivals, like programming, like Drive to Survive, all of those building fan interest.
Obviously, Esports component as well. That's an important component when you obviously go for renewal. How much fan interest, how much excitement there is? Probably the most important component is how much competition there is among potential bidders, distributors of your product. And candidly, the best deal we have probably is our U.K. deal, and it was largely because there were several bidders highly interested in getting our product.
I do feel, as Stefano notes, we have a relative value. You've seen declines in some of the other higher cost European alternatives. But if you look on any kind of basis about what cost per eyeball, cost per hour, et cetera, F1 looks at like a relative value.
And I make a side note then, which I'm sure you can appreciate, with the rising cost of alternatives like scripted content if that gets more expensive in some ways, it provides a floor on what the value of some of the live sports can be. Historically, live sports look so expensive, maybe not quite as much when scripted continues to rise.
So I'm excited about F1's prospects but above all, we would benefit from increased competition, which is potentially some of the new digital players entering, and they have sniffed, and we'll see if we can get them excited. I do believe, ultimately, they will become bidders, and that will be to our benefit.
As far as looking back at U.S. rights and the Braves, obviously, we've had a world with a bundle has caused a lot of overbuy, whether it be for sport of -- all kinds of sports program, including the RSNs and if that bundle breaks, there is risk around what the total amount paid to teams will be including the Braves. I feel relatively good about the Braves, our contracts from 27, first.
And secondly, we have a good contract, but far and away, not the highest, well below somebody like the Dodgers. But in contrast, we have the largest broadband household audience. So the Braves have the largest territory with 12 million broadband households. Sort of degree you look at digital alternatives and the like, we are probably in the best shape compared too many to benefit as new alternatives arise in the bundle potentially weekends.
Good luck in the NL East this season.
Our next question comes from Bryan Kraft of Deutsche Bank.
A couple of questions. First, can you -- Greg, can you talk about your current expectations for what I'll call the path to normalcy for your live event businesses looking out over '21 and '22?
There's obviously a lot of focus in the market by investors on how quickly businesses like these are going to be able to bounce back and whether back half of '21 looks normal or '22 looks normal. So would just love to get your thoughts on what Formula One, Live Nation, the Braves, what that path looks like for them?
And then just quickly on the leverage target for Formula One. Can you just remind us what your target leverage ratio is? And is there any thought to running that balance sheet more conservatively in the future, just given the experience with the pandemic? Or are you still comfortable with that?
So I'll start on the opening. It's certainly not binary, and it's not binary in a lot of ways because instead F1 and the Braves, we have multiple sources of revenue. F1 has got 3 big pillars right, broadcast, which was impeded, but probably will be impeded less in '21 regardless of the pandemic. Sponsorship and advertising, which was impeded less in 2020 than certainly the fan component, the promotion component, but again, probably less in '21. And then fans, and we're going to have a variety of alternatives where fans will be to some degree there. And I don't think, again, it will be binary. We're not necessarily going to see 0 to 100, it will be somewhere potentially in between. So I'm more optimistic as we go to the end of the year, we're going to get to 100% of capacity.
And the same thing with the Braves, multiple revenue streams, both television and on site, but we don't really have a -- we do have sponsorship. It's not as large a component as it is in Formula One. I think, again, not binary. The expectation is we'll probably start out at 25%. I mentioned already that Georgia is relatively open. We will be in far better shape in terms of the fan attendance than if you were in New York or California or some other locales. And it will be decided not by baseball, but by the local rules and authorities.
So the expectation is we will have increasing numbers there. But again, not binary. I don't think we're going to go from 25 to 100 in the space of a flip of a switch. And obviously, Live Nation doesn't have as, obviously, advertising and sponsor doesn't have the broadcast element, so it's the most responsive or vulnerable or affected by shutdowns. Offset to that is global business, really with the potential for very different responses depending where you are in the world. So I think Formula One in particular is preparing for a balance sheet that is invincible, whatever comes, and we're fully supportive of that.
The -- I do think they will have fans at events this year. Certainly, you've already seen some of that, and it will grow. They announced earnings slightly ahead of expectations, I think, just yesterday. But meaningful efforts, there will still be definitely work to be done throughout '21. So that's kind of -- that's probably somewhat of a non answer, Bryan, because we certainly are in the crystal ball business exactly, but we are in the business of trying to prepare to make sure we benefit when it does open. And that we're prepared if that doesn't happen at the rates of pick or change or pace that we would like. And I think all 3 of those businesses are well prepared.
And that sort of turns the balance sheet question. I think one of the things about being part of the Liberty Group is you can -- we have the ability to hopefully look ahead and be thoughtful with the benefit of our operating companies. The Formula One balance sheet is very, very strong. I think the operating levels that we have, and our agreements are fine. And I -- obviously, they're strong growth at the F1 operating level. And then when you look at the cash F1 level, it's quite strong. So I'm not really worried about the balance sheet.
And just to answer your question real quick on the leverage target. As stated, leverage target of Formula One is 5x to 5.5x. And as you will recall, we have a 8.25 max leverage has been waved through March 31, 2022. And when we bought the business, we've had that approaching that 8x leverage, and we substantially delevered it not only through cash operations generated, but we did have a primary equity issuance as well. So both of those reduced the leverage even prior to the pandemic.
Our next question comes from David Beckel of Berenberg Capital.
Sort of piggybacking on your commentary about reopening. I was wondering if you could help us think about revenue recognition for the promotion side, really all the revenue streams under a variety of different scenarios, it seems as if the vaccine rollout, for the most part, is going better-than-expected in many parts of the world.
Should we be thinking about race promotion revenue being materially affected in H1? Or is that somewhat protected given the concessions you made last year?
And then sort of as a follow-up to that, I'd love to hear your thoughts to the extent you're willing to share on how the team payment structure might affect earnings or EBITDA to F1 this year? Specifically, maybe if you could frame in reference of 2019 levels that if your EBITDA level, preteen EBITDA exceeds 2019, should we expect marginal upside in the current year?
So I'll -- I think promotion will be still reduced in '21 certainly versus what we would have in a non-pandemic year. We will have restricted audiences and restricted fans at some of our events. So I do expect, and we're not here to make a forecast in part because some of this is still up in the air, floating around, but also because that's where we like to let you do.
So how much will be -- it will definitely be impacted the amount to which we'll see. And going forward, we have -- with the new Concorde Agreement, we have a structure which, as we increased profitability. We have the opportunity to take back some of what historically F1 earned comparably over the years. The rates get a little more attractive for us. Whether we'll hit that in '21, given the risks around pandemic. I'm not as confident. But in the years going forward, as we continue to have a fully healthy business, I do believe our share of the margin will slightly increase.
Stefano, would you add anything.
I couldn't agree more. And I think that what is important that with the new government, so with the new Concorde Agreement, with the new cost control measure, it's given the sustainability approach that allow us to think bigger. And this is something that I do believe that is really the right fundamentals that drives the right way, both from the commercial point of view and also from the feed perspective to be part of this incredible championship.
The next question today comes from David Joyce of Barclays.
A couple of questions. One, on the broadcast side of the Formula One business for this year. Would there be any lingering COVID-related impacts? Or should we think about it as being sort of comparable to 2019 and grossing up for step-ups, escalators, and number of events?
And then secondly, on the Braves. With the Sinclair RSN agreement, and this was already touched on a little bit earlier in the call.
Where do you stand with them moving towards having a hybrid over-the-top model? How does that play into your economics? And what could that do for further fan engagement even as that could tie into sports betting once that becomes something on the horizon in Georgia?
So we expect a fairly normal broadcast revenue stream in lightest our 23 races now. Again, crystal ball about exactly how COVID plays out. But our goal was to try and take the pain in '20 to the degree that we rightly had to make concessions to or some of our broadcasters. Our goal as much as possible was to make that a '20 event and bring '21 back to normal. So that is our hope and our expectation.
But COVID could change that as a warning. And on the -- thinking about the RSNs. As I said, we have our contract runs to '27. I know Sinclair is trying to do some different things. It's not clear to me exactly what rights Sinclair has to do some of the things that they think they can do or want to do. I know there have been some discussions with baseball about new alternatives. But I do not expect a major change, assuming we can run a full 162 game schedule on a normal pace, I would expect we would have normal revenue streams from Sinclair in -- certainly in '21 and through the rest of the contract.
And I -- whether their new engagement model would help us to Sinclair that could be additive. We'll see. Again, I'm not exactly sure what Sinclair thinks their rights are to do some of those things, but that's a terrific job.
And just finally, on the COVID impact on Formula One, in broad strokes, how should we think about those promotion and sponsorship contracts in the mix between fixed and variable components. Is there a general algorithm that's baked into the contracts? Or how should we think about that?
Well, I think -- look, most of them probably do not have triggers or any trigger that they do have, we will likely be able to meet. On the other hand, take a partner who's a large international airline doing who basically gets shut down for all foreign travel, you can decide whether you're going to be a good partner with them or not for the long-term. And that's been our goal. So we'll work with them in the way that we appreciate that they have worked with us during the difficult time.
Our next question comes from Jason Bazinet of Citi.
I guess having extra liquidity is always a big thing. But I was wondering if there's any color that you might add in terms of these amendments that you did an unencumbered some of the passive equity stakes. Was there something specific that you were looking to do, or some need that you have? Or is it more just general optionality?
Well, you know we're into optionality, Jason, but I'll let Ben Oren, our relatively new treasury to answer.
Sure. With respect to the SIRI margin loan, we did do an upsize, but we kept it to the same 1 billion shares collateralizing that loan as we had previously under the $1.35 billion. So we're just maximizing our ability to access dollars. With respect to Live, it's really a function of what happened in the previous margin loan, where we repaid it, and we had a substantial number of shares that were underlying that collateral pool and so when we rightsized the loans to $200 million, we appropriately took the amount of shares underlying that to something that's closer to a realistic LTV for a margin loan.
The next question comes from John Tinker of Gabelli.
Terrific numbers in the Battery and the Brave, which unfortunately, I think, get a little loss, given most people focused on the same. Do you have any -- would you ever consider in any way highlighting that valuation, would it be your property in any different way?
John, when we have great analysts like you writing up the value for us, we don't need to deal with the work, come on. That's -- no, I think you're right, there is value in the Battery, it is impressive, and it's a function both of Georgia being a relatively open place as we've noted.
And I think really a great job that the Braves management team has done to create a secure environment, 1 where people are willing to come and it's open and doing well. We -- I'm not sure we're going to create a tracker or do something different around that, but we'll try and make sure we highlight appropriately that there is value in the Battery and our real estate developments.
And the final question today comes from Matthew Harrigan of Benchmark.
Even though Formula One probably generates more data than any other sports in concert with AWS, and Intel, and Qualcomm. It was really underdeveloped under the Ansan that we're seeing with Bernie. You had a lot of success at Universal Grand Prix now.
I think you've got a lot of laude, to maybe having more look angles and all that on cameras and the races eventually. But can you talk about the potential there, and how you see that developing? It feels like you made some strides, but there's still a lot of headroom in terms of what you could do on the TV side and the video game side?
Yes. No, I think that's a great point, Matt. If you think about the -- an evolving world where we have increased -- starting on the sort of the broadcast side, where we have potential for increased digital players. The number of cameras we have, the angles we have, your ability to dial up what angle you want. That really plays perfectly to strength of those kind of digital players and different than a straighted linear feed.
So I think we are a sport that will benefit from that increased attention on the digital side in terms of viewing. Different experience and one that the fan can tailor, I think you can see that opportunity ahead. It will be great.
The other point is that all that data, proprietary data, we have begun -- we began to take advantage of our contract with ISE. That did not turn out as well as we like. But as we go forward and look at the opportunities around that, I do believe there is quite a lot around gambling, around fan information that is valuable and that we are in a very strong place relative to most sports because the amount of data and the amount of which of it is proprietary. So I think on both sides, that's a huge asset.
So with that, operator, I think we're done. Thank you to our listening audience for your continued interest in Liberty Media, and we look forward to speaking with you again next quarter, if not sooner.
Ladies and gentlemen, that concludes today's conference call. We thank you for your participation. You may now disconnect.