Q3 2019 Earnings Call
Ladies and gentlemen, thank you for spending by.
Welcome to the LIBOR.
Since 2019.
Thanks.
The presentation, all participants will be not listen only mode.
We will conduct a question answer session I forget Stein.
You have a question please press star one on yourself.
This conference is being recorded November 11th.
All right over to coordinate Sean do you Stifel Your office.
Vice President Investor Relations. Please go ahead.
Thank you good morning, before and again, we'd like to remind everyone that is calling for a certain forward looking statements and in the meeting 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 notice much ended our most recent Form 10-K , and 10-Q filed with the FCC. These forward looking to do.
And speak only as of the date of this call at Liberty Media and Liberty Tripadvisor expressly disclaim any obligation or undertaking disseminate any updates or revisions to any forward looking statements contained herein Trust fund any change in Liberty media and Liberty Tripadvisors expectations with regard there too or any change in events conditions or circumstances on which any such statements me okay.
Called him a certain non-GAAP financial measures, including adjusted OIBDA and adjusted EBITDA, the required definitions and reconciliations for Liberty media and Sirius XM wanting to use 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 a rig right, let's say learnings president and CEO .
Thank you corn and good morning.
They became a call we'll also have little ones, Chairman and CEO Chase Carey.
And Liberty Media's principal financial Officer Brent.
During Q1, and we will also be able.
To answer questions related to Liberty Tripadvisor.
Beginning with Liberty Sirius XM, we continued on purchases of Liberty Sirius XM stock buying an additional $60 million.
During August 1st October 31st if you look at that we effectively bought the underlying Sirius XM shares I don't look through price of $4.47 per share.
We will continue to take advantage of the discount to anybody as long as you the marketplace continues to give it to us.
Our ownership today stands and Sirius XM at 71 of the half percent actually it was October 29.
Looking at Sirius XM itself fantastic results, yet again robot subscriber growth solid expansion of adjusted EBITDA and free cash flow.
Pandora acquisition has increased our scalable approximately 100 million users.
Continued focus on distribution and content, we have a new deal with Google, making Sirius XM available on Google Assistant Google maps devices.
Collaboration with Marvel decreed scripted and unscripted podcast.
Your today through October Sirius XM has returned over $2 billion of capital to shareholders.
Well no one.
Made tremendous progress.
During the period regarding the regulations for 2021 and beyond.
Also experience exciting racing on the track Lewis Hamilton, what his six World Championship in Austin and Mercedes.
There are six constructors championship.
Fun to watch for already come back to when three in a row, the thrill of Red Bull and the return of Mclaren clubs battles among the best of the rest.
Like nation.
Continued strong execution, the highest Hawaii quarter, our expected delivered double digit growth for the year.
Man for live events continues to grow.
<unk> 92 million tickets sold through mid October .
Turning the Braves.
It's one their second straight and L. East Division title.
With a host of individual awards, including Donaldson being ml nationally.
Come back player the year, Brian Snicker wasn't nationally manager in the are finalized surrogate was a national rookie of the your finalist and this weekend three players were named Summer Slugger Award winners agreement Communion. All these most pro piece of any caught this season in the first time any club has had multiple winters under 23 years old and once.
Season.
Turning to the more mundane, but importantly, we have X number of exciting new tenants moving into the battery, including indoor top golf type experience any dueling piano bar.
Vaccine H. continue to progress on timing on budget and we look forward to our new Braves Academy at North Port opening in early January .
Over at Liberty Tripadvisor.
Trip had a difficult core.
Trends worsening in the hotel click based auction.
We still see opportunity in experience.
But that's categories, probably it is growing quickly, but slower perhaps than we originally forecast.
Trip advisor does plan to return capital to shareholders.
Now to dividend at $3.50 per share, which will translate into 108 million dollar proceeds.
Liberty trip.
We also announced that they would increase their share repurchase authorization by $100 million to $250 million.
In light of these these are not really in light of the fact that despite the challenges to to some of the click based auction items.
The business does generate and we'll continue to generate strong free cash flow. There also plan to evaluate their cost structure and prudently reduce and reallocate expenses along.
With that I'll turn over to Brian for more on our financial results. Thank you, Greg and good morning, everyone at quarter end Liberty Sirius XM group had attributed cash restricted cash and liquid investments at 54 million, excluding 90 million of cash restricted cash held directly at Sirius XM.
Value of the Sirius XM common stock held by Liberty Sirius XM at November Eightth was 22 billion and we have 950 million in debt against these holdings.
Total Liberty Sirius XM group attributed principal amount of debt was 9 billion, which includes 8 billion of debt that's directly at Sirius XM level.
Formula One group had attributed cash and liquid investments of 65 million, which excludes 354 million of cash at that one.
No one group had attributed public market securities with a market value of approximately 5 billion as of last Friday.
That concludes the intergroup interest in the branch group and our stake in live nation.
Total Formula One group attributed principal amount of debt was 5 billion, which includes 2.9 billion of debt at up one, leaving 2.1 billion of data at the corporate level.
At once total net debt covenant OIBDA ratio as defined in up ones credit facilities for Covenant calculations was 5.3 times at quarter end.
That's compared to a maximum allowable leverage of 8.25 times.
We have set a target total net leverage ratio formula one of five to six times Bank Covenant OIBDA.
Please note these leverage ratios are for the Formula one business nonperforming loans.
Right group had attributed cash liquid investments and restricted cash 210 million at quarter end and attributed principal amount of debt of 549.
Now I'll turn it over to chase to talk about Formula one.
Thank you, Brian we've made tremendous progress on defining the future direction, a formula one and we're pleased to announce unanimous ratification by the F.I. a world Motor Sport Council that new regulations, beginning in the 2021 season.
These rules are the result of a detailed to your process. Then included input from the teams and other stakeholders that we firmly believe achieve the goals we set out to deliver.
2021 on Formula one will have cars that are better able to a battle on the track.
More balanced competition on the truck.
Fully enforceable cost cap of $175 million per season.
And a better and more sustainable business model for participants.
There's a wealth of information online if you'd like to see all the details.
Let me talk a bit more in depth about closer racing.
Current formula one cars can lose up to half their downforce when following in the wake up another car.
As part of the New regulations, we project the 2021 cars, while Louis just 15% of their downforce when they're one car length behind arrival and just 5% at three car links.
The huge difference that will enable the battles our fans want to see.
These regulations around him an important major step. However, this is an ongoing process. The regulations were married to a new governance and price fund structure, which will enable this sport to grow and improve while further strengthening the business model.
These agreements are in advance stages with the teams.
In addition, we plan to address our initiatives around the environmental impact of our sport. We already have the most efficient mentioned in the world. It will be launching plans to reduce it eventually eliminate the environmental environmental impact of our sport business.
We believe we can play a leadership role is critical and issue in the automobile industry.
Now back to season.
Lewis Hamilton claims is six Formula One World Championship been achievement that puts him just one title behind the all time record holder Michael Schumacher.
It was also tremendous season for Mercedes which secured their six F. One constructors championship.
Let's just teammate Val three bodice scored as fourth first place finish of the season in Austin.
And we look forward to seeing be seeing these team mate rivalry continue in 2020 .
For Ari posted an impressive showing after the summer break unsecured three wins in a row, including a Charles Leclerc win at home and mindset.
Not to be out done Sebastian Vettel posted a win in Singapore, and several podium finishes, but suffered a dramatic suspension failure in Austin.
Rounding out the top three teams we've seen some fantastic racing from Red Bulls, Max we're stopping and Alex Alabama, who hasn't finished below six since being elevated to the team from two are also.
Excitement on the track has been drawing crowds and viewers through 19 races, including Austin average weekend attendance is 204000 per event up 2% year on year.
We set a new record in Italy, and Mexico drew a crowd of over 345000.
I had three races that attracted attendance over 300000, Mexico Silverstone in Melbourne.
For TV viewership were up 7% through 15 races in Singapore.
We look forward to our last two races in Brazil in Abu Dhabi.
During the quarter, we announced important race renewals.
Formula One we'll continue to race in Mexico City and will change the net race named to the Mexico City Grand Prix to emphasize the support given by the government of the city.
This event recently won the award for Best Live Sporting event at the 2019 leaders Sports Awards selected from among 450 events in five categories worldwide.
We also announced the extension of the Italian Grand Prix in Montana.
It's rice has been on the calendar since 1950.
The year the World Championship was established in and is an important part of our history.
And we announced that the Spanish ground pre will return in 2024, its thirtyth consecutive season.
These rule renewals along with previous announcements of Silverstone in Melbourne, and the new race in Vietnam and the return to the that it'll is set us up for a record 22 race season in 2020 <unk>.
We continue to pay homage to the rich history formula one, while adding exciting new destinations.
On the broadcast front, we extended our partnership with the SP end until 2022.
Since returning TSB out in 2018 Formula one has seen viewership in the U.S. increased 19%.
The Democrats grass demographic of yours, aged 18 to 34 has grown 81% over that same period.
This new deal, we'll see all Formula one racing continue to air alive, and commercial free on either SP, and yes beyond two or a b C.
As an additional element, yes beyond the port this will serve as the exclusive Spanish language home for all Formula one races.
This renewal rounds out carriage for the 2020 season.
Regarding sponsorship reached we reached a new d. deal with Dubai Expo 2020, which will debut in Abu Dhabi. This year the feature to eight races across 2019 and 2020.
If you watch the U.S. ground pre you might have seen signage from caterpillar.
And the final stages of signing our Master services agreement with them for a long term sponsorship arrangement and are excited to partner with them.
We were also pleased to announce Vin fast as the title sponsor of the Vietnam Vietnam Grand Prix.
Vietnam's largest car manufacturer has signed a multiyear deal for the Grand Prix, which will debut in 2020 on the streets event.
We held our third fan festival in Hollywood Boulevard in Los Angeles prior to the U.S. Grom pre.
This event included our first ever donor contests between Daniel Ricardo Salisbury, Batus Baxter step in and Alex album.
The event was featured on Jimmy Kimmel alive, and Guillermo even stopped by data donor.
We hosted our final fan festival this past weekend in Brazil, with Heineken and the Santa family to celebrate Ayrton Senna and is 25 year legacy.
The event featured modern F. One cars from Mercedes him or no.
And legends Emerson Fittipaldi flipping mass at driving Senates historic cars.
We'd like to bring your attention to our new corporate website website, which can be found at Corp. dot formula one dot com.
We felt we need a site that was more user friendly to cater to sponsors investors media and perspective employees. Please take a look at the site when looking for corporate information and sign up for news alerts.
In summary, we're pleased with our results year to date are on track to hit our 2019 targets and look forward to continued strong growth results in 2020.
After years of effort, we achieved a milestone in the approval of the regulations for 2021 and beyond when we look forward to working on the commercial agreements with the teams now I'll turn the call back over to Greg.
Thanks, Jason Brian on all the great quarter Liberty media.
As a reminder, we will be holding our annual Investor meeting on November 21st in New York.
Linked to register.
On page of our website, we look forward to seeing many of you there and.
With that operator, we'll open it up for questions.
Thank you.
First question.
Vijay Jayant from Evercore. Please go ahead your line is.
Thank you. This is John Belton for VJ two on F. One so first on these commercial agreements you're discussing with the teams anything you can share on timing when you're hoping to get these finalized any regulatory deadlines that that may or may not just with these agreements.
And then the second question on broadcasting. So appreciate some of the details on the FPN deal, but anything you can share about some of the competitive dynamics around that deal.
And then kind of how you're thinking about some of your core western European renewals in light of the positive viewership trends. So far this year. Thank you.
So I guess on the first part timing.
Yep.
Yeah, we'd like to obviously get it done as soon as possible.
So the teams wild up I think that the core business principles they've had for a while the actual underlying agreements what your subsidy they've they've.
They've only gotten the last few weeks, we've had meetings with both the sort of financial legal teams to take them through it.
So they now have had a chance to digest it and certainly we plan to engage with them in coming weeks again, I'm not going but if I'm not going to put up a deadline to what are the grabbing good discussions and we'd like to get things done finalized as soon as possible.
I guess, one the broadcasting you say competitive do you mean competitive interest or I guess I'm not sure what you mean yeah.
Were there other bitter got me I guess scanner, yeah actually we have more interest than we did this was.
It wasn't that long in the last deal. It was only a couple of years. So is it really just two years ago.
We have better interest and we did two years ago.
The step forward for us.
We still have a lot upside in the U.S. Theres no question.
The U.S. I think we said before.
As a long term proposition, we like the momentum there and we saw increased interest we saw from parties and increased interest expressed in offers.
But.
So we feel good about it but clearly we think the U.S. as a market that still has a lot of upside for us.
Great.
And then anything.
Western European renewals.
We will probably just turning to.
Look I again, I think our view is getting where I think we we feel good about the momentum.
Of the sport, we feel good about the interest in this sport whether again its attendance its viewership or just.
General fan research in terms of perception, which is very positive about the direction of the sport.
Where where in the early stages, our agreements that the significant European agreement, you're talking about our in place for 2020 or so.
With that really renewals for 2021.
We're probably in the earlier state early stages of moving forward with those given there's still more than a year away.
Yes, but I think we feel feel positive about.
No matter, what we have going and really the reaction engagement and I'm from from.
Parties about sport.
Great. Thank you Jay.
And we will now take a next question from Bryan Kraft at some point coupon. Please go ahead. Your line is open.
Hi, good morning, Thank you.
I had two one for chase one for Greg.
Greg kind of an open ended question for you podcasts have become a bigger focus for virtually everyone in the audio entertainment space.
Just wondering how you think this segment of the industry evolves from an industry structure perspective, and do you think there any real economic winners and podcasting over the long term and then chase wondering if you can give us any color on the growth outlook in sponsorship and advertising for next year relative to this year just directionally and.
Can you give us any sense for the growth this year in broadcasting relative to the advertising and sponsorship revenue.
Within that primary revenue bucket or those growing at relatively similar rates are the or is the is based materially different between the two thank you.
James do you want to go first and handle the more direct question and I'll Ramble on the open ended one.
[laughter] <unk>.
Okay.
Like I think the sponsorship area, we said before.
Probably from a couple of years ago, I'd say was probably up.
A little slower to develop than initially anticipated I think the advertising market in general.
Probably old.
A little tougher than than it was a few years ago.
Yeah, but actually I think we feel good about the amount of and the interest.
And it's probably taken I think we recognize we had to do more work telling the story about.
What we're doing with us where we're going with the sport.
We had to create capabilities for sponsors.
Yeah to create the type of offerings, they want whether its virtual or reach at all or or other events like EA sports and digital and other vehicles, we can use to create those offerings.
We just.
Referred to the two deals with Caterpillar and Dubai Expo.
Interest right now we feel very good about we always got to turn it into dollars. We are quite busy I'd say the sponsorship group is realistically flat out and I expect them to be flat out the next few months.
Before we get to that 2020 season.
And the significant deals.
Again, I don't want to get ahead of ourselves, we got to turn them into dollars but.
Certainly the the interest and engagement in the sponsorship area has been increasing significantly as we've sort of gone through the last.
The last year and certainly in the recent quarters and they probably never been busier.
To be Frank about it.
I think on the broadcast side. If you look next I mean, the renewals this year well.
Where some we're probably not larger contracts so.
Directionally feel good about where we're going but.
The big the bigger markets are probably in 2021.
So, it's a positive, but but they're not the up.
They weren't to.
They weren't the larger markets that were being being renewed and tooling for 2020.
Great So Brian or thank you that is a a great question and one that you'll hear a lot more about from us and for me at our Investor Day, because I think podcasts are a great example of how audio content continues to expand.
We believe there's a lot of room left to expand your audio day. Unlike your video day, which is pretty much being capped out because everyone's got their device.
The timing, which you can use that device for video is limited.
Has become Max.
The audio day between air pods, and Elecsys and other kinds of distribution devices is only expanding and is well under tap both in monetization and in time.
When you think about how to differentiate that audio day, you moved from a world of music, which is somewhat of a commodity its table Stakes everybody's got a habit to a world where things like podcasts are an example of exclusive something that serious has done so well that with things like Howard stern or.
Versions like CNBC, any SP and having exclusives at least for a window on audio podcast or place where you can really go to exclusives and you think about the economics of that whatever a podcast maker charges and.
They might be pretty good being podcast company right now and try to sell yourself because it's obviously hot it's still far less cost per hour than what you get in video so.
The reality is all these new forms of pot content.
To your content like podcasts, and our judgment are really attractive economically and really attractive for consumers and therefore distributors. So you'll hear probably more than you care to at our Investor day, because it really is one of our key focuses.
Great Thanks to both.
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Pete JP Morgan. Please go ahead your line is.
Hi, Thank you just what the case during the last Concord negotiation in 2012, 13, I did formula one made some upfront payment teams in connection with the future participation. So as you look to finalize commercial agreements with the team is now do you see payments like this is part of the process. There was that really you need to the prior period.
I don't think we're going to.
At this point comment on the specific components.
Of the of the deal while we're still engaged with the teams.
I think we put something on the.
But we've got a proposal to the my structure they've had this structure from an it kind of the business as the business element to this they've largely had for a while we think it's a proposal that's fair to us unfair to the teams but oh.
Yeah, we think it enables us to continue to achieve the growth we expect in the business but.
But I don't think where we're going to get into company or what's what's what's in it and what's not in it didnt get was once we finalized it will provide what provide appropriate color kind of tip, yeah, what the agreement what the agreement is.
Okay, and then you mentioned the agree with Caterpillar before is there anything incremental incremental you could say this is this a central global or regional deal are there just given our track that advertising at Austin should we assume this starts in the fourth quarter.
Yeah, I mean, obviously, just say showed up in Austin. It will start now it will start where they show up.
It's a you know yet that.
More than up it's it's not a global deal in terms of all 21 races, but it's a significant deal and.
It is an important partnership and one that certainly is a.
It is one that we look to build on with them. So it is.
It's a it's a deal are excited about they've.
They've been quite enthusiastic about it and we think there'll be a b a good partner so I'm so certainly its.
It's more that up it's more than just a regional deal. It is a significant multi rate steel.
Thank you.
Well take questions, John Tinker with Gabelli and company. Please go ahead your line.
Hi, Thank you.
Just a quick question on sports gambling, it looks like new Jersey's already got a better books in Vegas, how do you see that playing out in terms of how it might help the Braves.
When we just passed it here in Colorado as well.
So you can see I think state by state you're going to continue to see this chip away.
It will take time.
And there are clearly some states, which are unlikely ever or at least for a long time to pass it.
But major states will do it as a revenue source.
I think here, it's going to be used for water.
But.
You will see it state by state and I do think that's an opportunity. The leaks had been tried to do things around verified data, it's not quite as clear way. How you do that in baseball as you do in something frankly like Formula one where there's a but much more proprietary data and as you may recall, we have a deal to monetize some of that in formula one, but I do think it's both.
Somebody <unk> revenue opportunity, but perhaps even more of a.
Fan engagement opportunity, which will just strengthened.
Baseball and to the degree that more and more of it becomes an opportunity to.
In game bet on parts of a game.
You'll just see continued fan engagement much the way that fantasy built that and particularly in football.
[noise] affects not slow more the you got out of trade channel outdoor very well I know you still have a couple of other small investment I think you may have little Viacom lapse, and some eightseventy and now.
In inform middle one how do you think about them.
So I think we would look at them, mostly as a source of capital at the right time.
Turns out the right time for Viacom was probably earlier than we executed on it but so be it we were probably more bullish that the merger would be positive than it has been on the 18 T in particular.
It's worth noting we actually don't really have 18, t. there a in a real sense and say.
Hedged by and we aren't the hedge the exchangeables that we've issued.
We have a couple of odds and ends that are in there that our capital sources, a partnership or two that is likely liquidating bright Brian you want to add any those of note or or substance no. I mean, none of them are specifically material and they're not they're not liquid.
So theres not call out in particular, but but in general they are.
You asked about our philosophy on them, John where you know.
There are a source of capital at the right time, when we think it's the right moment and something we can probably get out of either tax efficiently or we have a use for the capital that says we want to pay the taxes and go do it now.
Thank you.
Thank you.
Even though.
Question, Jason Zenith.
Please go ahead your line is.
Thanks, I heard you guys sort of reiterate the five to six times leverage target and you guys have made nice progress, bringing that down why or why is that the right leverage for this business I know, it's not cyclical, but it's still strikes me as a.
'cause it pretty high amount of leverage to have on the business or is that just sort of the interim target when you get to.
Five you may lower it beyond that.
I'll I'll comment Chase, if you want to add anything certainly you can.
Our view is that this is an unbelievably secure sustainable financing business 90 plus percent on contract.
Even in the case of a downturn because of the nature of how we share risk with the teams limited downside.
In our judgment few businesses support leverage as well as this business and any in a period of extremely low interest rates and our continued ability to refinances on more and more attractive terms.
We like five to six times.
Thanks, that's all I don't like if I, sorry, one more thing Chase I'd note also.
Two more things that are below the EBITDA line make that only more compelling the low cap capex needs and the very attractive tax structure that we have make both of it probably be the case that five to six times well in the surface may sound large is actually not particularly large if you look at the free cash flow yield.
Sorry. Please go ahead.
Yeah, and I was going out on those and you're going to the only other thing then I'd add.
Yes, I think also from up or from a cost perspective realistically at this point, we probably put the operate we don't really face any increased cost as we've got the we've built the organization to support grow the business last couple of years. So at this point.
We feel good about the cost side of it and took were either.
They're incremental cost about and some variable revenue is like freight where we have both freight revenue in freight costs, they're directly tied to revenues. So you know so I think from up from a margin cost perspective, yes, we really feel very good about the business.
That's very helpful. Thank you.
We will take on next question Bryan Goldberg from Bank of America Merrill Lynch. Please go ahead.
Thanks, I've got a couple on a formula one.
First.
On a your efforts in Miami looks like local politics took another twist down there last week with.
I may oral Vito against the local opposition and I was wondering if there was any kind of timeline you could help us think about within which you'd expect to get clarity on whether or not this integration.
The Miami Crown pre can go forward from a regulatory standpoint, and then I guess if negotiations become meaningfully protracted it at what point would've Miami appearance on the 2021 calendar.
Become a bit problematic and then I've got to a follow up.
Okay.
[laughter] I guess trying to handicap politics is probably.
Really something ill advised.
I think you your head yet your comment on the veto that's leakage is accurate.
There's some steps to go.
They're very short term the reality is for 2021, we really do need to resolve this in the short term say vault next few months.
For it to be a 2021 embrace that we have time.
Yeah. The reality is most of the work most of the premature Don certainly the business the business agreements are done so it really is.
The the political issues around it.
And there are active.
But.
Really not trying to hit trying to handicap local politics is probably beyond my pay grade.
And.
Will you know, we'll see what could be a great rice, we think it be great from Miami, if they would be great for us and great for all our partners. We have other options in the U.S. get up that we think well be exciting, but and we're hopeful about hopeful about Miami, but we'll see where it.
Where it takes us into next.
In the coming weeks.
Great. Thank you for that I get my follow up question is on the sponsorship side of the business really I guess from the global sponsorship side I was wondering you could update us what at what are the key unsold.
Verticals right now as you see them or said another way.
Which categories. There is your sponsorship salesforce team spending the most timeline as you look to shore everything up for a 2020 season.
Well I mean realistically as they said we've got you know.
I got an update yesterday, it's a three page update 'em engagement.
Well with potential partners. So is that we really at this point or flat out in turns engagement a number them being large engagement.
Then there.
There are certainly an array of categories I guess, you know areas like finance technology telecommunications.
Oil industry sort of there there are an array of places.
That are probably obvious and some that I wouldn't have had Dubai expo in them yet on the list a few months ago.
Or probably caterpillar is an obvious place the would have been as obvious so.
There are some that are probably more.
More obvious and historically tied to us and some that are that are less so but.
I think we do we really do we feel it has taken time, but I think we're getting I think we're getting to where we think we shot we were getting to the place. We thought the we could in terms of sponsorships of trolley been a little slower going but I think we've made up we feel good about the the engagement the momentum in the interest.
And the sport and Oh.
And the story, we have to tell.
Thank you very much.
Even though they come next question from drew Borst from Goldman Sachs. Please go ahead your line.
Great. Thank you I wanted to ask a question about formula one.
So when you look at the the race calendar for next year, you do I think you a renewed five races and added two new ones investors have come to expect that the the race promotion revenue is is a fixed right multiyear contracts with FIS fixed escalators I guess I'm wondering if anything has changed after all these renewals.
In terms of the trajectory of that is it less fixed as it is it more variable or is there is nothing really changed there. Thank you.
I think we'd probably today feel.
More positive about the upside in that category certain elements of it.
No one individual races are probably more mature.
But we do think there's upside there yeah I think that.
Probably in many ways is just the fact that I think the demand is.
There's continued tip.
Be a real positive I mean really across the world.
The number of places that are interested again, our we have a pretty full calendar and long term contracts. So their limits to how much you can do but I think we.
We do think there are opportunities yeah, we have.
22 was a full it was pretty full calendar, but we do think there's room still to add a couple I think.
We want long term partnerships, but just as we change this year.
We will add races, and we will selectively probably end up dropping races.
There are couple places on couple issues, we've touched on in the past about races, we inherited.
That yeah, yeah agreements, we inherited that clearly were not reflecting what we think the value should be.
So.
Yeah, I think there is.
There is upside to that that probably more than we would've if we were sort of.
Two years ago more than we would have.
Sort of expected there and.
We think it's a place we can continue to grow and I think.
There are also sort us and I guess, what I call related areas that equally up growth I guess, particularly something like hospitality, which is an important element. The high end customer is increasingly important at these events.
And it has that pad at club the hospitality.
Area. There are few races, where we really maximize that I think there a lot of events, where we've got upside to the hospitality side of it as well as just up.
The basic promoter agreements.
And up and ability to to add dimensions like title sponsors were still not we're still not fully not fall more to sponsor area, but as you add races.
We still have opportunities to take advantage of things like title sponsorships as we talked about.
The Vietnam opportunity so there.
I think the whole arena related to the promoter relationships and the related elements of the promoter relationships as an area that.
I think has more opportunity a more upside at then you know again, we probably would have thought it would it would have set a couple of years ago.
And if I might.
Well appreciating the the upside scenarios. It is there any type of of downside.
Risk like I don't know again, I know you don't want to get into specifics about contracts were just generally.
Like for example, or they are the hinged to serve the attendance at the race or any of those things and if attendance didn't come through or is that not really how that how the deals work.
Yeah, I mean, our agreements today don't don't generally have that type of variable obviously, the Paddick club component of it is attendance based so there is certainly revenue that is.
Attendance space, but yeah, but the.
The base part of it.
As you know generally is not yet it's not.
Attendance based so look on any renewal.
I guess you see wherever it all comes in.
And.
What alternatives exist so.
Certainly not going to say there aren't there aren't risks today.
We feel pretty well positioned given the breadth of interest from the array of places.
That are that we have but you know we still got to get renewals executed. We obviously went through up a number of renewals.
In the last 12 months, yeah. So we feel good about the ability to navigate that space.
And look forward to taking advantage of whether it's adding a race to the calendar or making some substitution is there upside or fixing some of the issues.
We've got but.
But the other than Paddock club, which is a kind of ended I wouldn't say attendance at a race in general.
So that's not generally a part of our agreements.
Okay. Thank you very much.
And do the military can last question for todays call.
Ex fuel there from B. Riley.
Please go ahead your line is open.
Okay, great. Thanks for taking the question I think when you guys first announced video to acquire half one there was some talk around issuing shares to the teams that obviously never happened, but could this still the a possibility down the road and also curious to hear thoughts around financial mechanisms you have to promote higher economic alignment with the teams beyond.
The prize pool.
Today, when I will now be yeah, we're not we're not discussing equity with the teams. This point, obviously, we are discussing a long term relationship.
I guess more generally look one of our real.
Efforts has been to try to create more of a shared vision about where where we can go with the sport and the growth opportunities in it I think the teams.
Our actually quite positive about.
The changes and energy, we brought to the sport, yeah, and they see the bigger crowds they sees the growth in.
The growth in events the breadth of it a things that I've asked whether it's a fan fast or a fan zone.
The energy there is palpable they see the we share with them the research about where we're going so.
And we certainly share with them probably more than would have been shared in the past they make the our partners.
They they the price fund.
That day, Sharon as obviously that they receive.
Makes him a partner.
In the business so they share on the upside in the growth of it and yeah, we're engaging with them on a much more regular basis I mean, I meet with them. Every every race, we have a good sort of a casual meeting on a Saturday morning, Jetstep make sure. We're we're sort of sharing what we're doing sharing the things we're trying to do and addressing any issues that exists. So.
You know a lot of how do you make how do you create a better alignment is just up is dealing with some day to day.
And dealing with them.
And a more transparent.
And at a more collaborative why.
There are obviously going to be it always going to be tough issues, we got to work through.
And that's.
That's true in any business.
But I think we are trying to bring a fresh mindset.
And a fresh perspective.
They all want the business to grow and I think they.
Largely thinking we're not perfect, but I think they believe we're doing a lot of the things we should be doing gum that are really adding breadth and depth and growth to the sport.
So it's a there's no magic bullet to how do you how do you create alignment other than.
But treat them like partners in them.
And.
And then and engaged with them in an honest and transparent way.
Got it that's helpful. One more if I could that.
Hi, everyone Mark.
Sure.
Leverage at the at the F. One.
The opco and sort of at the low end of the target can you talk about your view on buybacks at the F. One tracker and whether this is something that you think it happened in the near term or not.
Well I think you're you're right the restricted payments test that we have and the target leverage that weve.
Discussed is going to start, allowing us to generate free cash flow from the F. One operating business up to the Holdco and.
We're looking at alternatives for that what we might do that capital.
Including share repurchase and I think I'm going to point, a little bit on that talk more about that next week when we get to the Investor day, because we I think we have a little more time, we will spend there on that.
Makes sense. Thank you Beth.
Yeah. Thanks to all the units get we look forward to seeing.
Many of you on next week.
It is veterans day, thanks for the many veterans for on the line into served our country and with that operator, we'll say good afternoon are good morning.
Thanks, a lot guys.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for your participation you may now disconnect.