Q4 2022 Liberty Media Corp Earnings Call
Speaker 1: R tr.
Speaker 2: Welcome to the Liberty Media 2022 year-end conference call. During the presentation, all participants will be in a listen-only mode. Afterwards we will conduct a question and answer session. At that time, if you have a question, please press star one on your telephone. Keep it.
Speaker 2: As you remind of this conference, we will be recorded today, March 1st. I would now like to turn the call over to Shane Kleinstein, Vice President and Guest Relations. Please go ahead.
Speaker 3: Thank you. Good morning. Before we begin, we'd like to remind everyone that this call includes during the four-looking statement within the meeting of the Private Security's litigation reform act of 1995. Actual events or results could differ materially due to a number of risk standards, certain views, including those mentioned in the reading media of the most recent form 10K filed with the FEC.
Speaker 3: These four-looking statements speak only out of the date of this call and liberty media expressly explains any obligation or undertaking to disseminate any updates or revisions to any four-looking statement contained herein to reflect any change in liberty media's expectations with regard there to or any change in events, conditions or circumstances on which any such statement is based.
Speaker 3: On today's call, we will discuss certain non-gaxtonential measures for Liberty Media and Zero-Sex M, including Adjusted Oibira and Adjusted E to Dot. The required definitions and reconciliation for Liberty Media and Zero-Sex M scheduled one through three can be found at the end of the earnings press release issue today, which is available on Liberty's website.
Speaker 3: Now I'd like to introduce Greg Muffin, Liberty President and CEO . Thank you, Shane, and good morning to all of you.
Speaker 4: Today speaking in the call, we will also have Formula One's President, CEO , Stephanie Odominicale and Liberty's Chief Accounting and Principal Financial Officer, Ryan First, let me start with an update on the split-off of the braves and the creation of Liberty Light Tracker. We filed the amended S4 and we still expect completion in the second quarter.
Speaker 4: Let me try to eliminate serious XM.
Speaker 4: We expect we will have a simplified structure following the recapitalization of LSEXM and the creation will have a delay tracker and we are focused on rationalizing this structure in the near term.
Speaker 4: Looking at its serious XM, the underlying asset reported strong, fourth quarter results with record height, RPU and EBITDA and record low-turn. Management did give more cautious forward-looking commentary given.
Speaker 4: Multiple headwinds were experienced in hearing really part of 2023.
Speaker 4: The top of the funnel in terms of news for subscribers is still pressured as the SAR has dropped from about 17 million in 2019 to something like 13 and a half million last year.
Speaker 4: The ad market remained soft, especially in the first half of 2023.
Speaker 4: and we are seeing moderating marketing spend ahead of the fourth quarter app Re Family International Store Open Service. One year later.
Speaker 4: Plus, we've had some cash impacts. We expect peak satellite cat-backs in 2023, and we are now a taxpayer, something which previously we had not yet.
Speaker 4: We do expect these incremental satellite CAPEX will moderate in 2024 with nearly no incremental satellite CAPEX by 2027.
Speaker 5: by the end of the year.
Speaker 4: We're also stepping up some tech investments for long-term success.
Speaker 4: We are building improvements around commerce and identity to reduce friction and the new app will have more personalization as it has within 360L.
Speaker 4: We do expect these negative trends in the ad market and so our will turn.
Speaker 4: and we have a resilient business model with meaning free cash flow. So we still remain optimistic about our longer term prospects.
Speaker 4: We have a resilient business model with meaning-free cash flow, so we still remain optimistic about our longer-term prospects. Turning to live nation.
Speaker 4: Continue seeing credible demand. 2022 attendance was up 24% over 2019.
Speaker 4: We are at all time high for concert attendance.
Speaker 4: despite many markets they'll be enclosed during part of the year.
Speaker 4: We've seen especially strong international markets with 70% of net new tickets sold in 22-22, where two international clients.
Speaker 4: And we expect another record year of demand in 2023.
Speaker 4: Ticket sales in 2023 are up 20% versus the same time last year.
Speaker 4: And last year it also benefited from 20 million of tickets that were rescheduled from prior period due to COVID.
Speaker 4: Formula One Group.
Speaker 4: Formula One Group. Great end of the 2022 year.
Speaker 4: attendance records were set, we wrote 36% over 2019. Our fan base is increasing in the first.
Speaker 4: With news fans being younger
Speaker 4: And the share of females within the fan base, 40% larger than the share in the established fan base. That's the new fan base.
Speaker 4: The US is especially strong.
Speaker 4: One in three fans globally started following F1 in the last four years and the US is even higher at one in two.
Speaker 4: This refunds globally started following F1 in the last four years and the US has even a higher at 1 and 2. This is a result of many efforts.
Speaker 4: And most of them related to our efforts to drive.
Speaker 4: The access to our drivers across the poll channel not only drive this revive
Speaker 4: but the driver pretends on social pages, coverage in large use, publications, late night comedy appearances on people like Jimmy Kimmel.
Speaker 4: And it's interesting to note, for example, look at our Instagram followers and comparing both.
Speaker 4: Lewis Hamilton has 31.5 million versus Tom Brady at 13.6 million.
Speaker 4: F1 is clearly getting into the mentality of America.
Speaker 4: and looking at the younger talent.
Speaker 4: LeClerc has almost 10 million and LeCodon chick is at 8 million. Again, we're doing pretty well.
Speaker 4: We will have three U.S. races in 2023, the second year of Miami, capitalizing on the first year's success with several improvements around hospitality and security.
Speaker 4: We expect the sporting world to be super excited as we are for the inaugural Las Vegas GP.
Speaker 4: F1 Las Vegas social media garnered over 170 million impressions and over 5 million engagements since September of 2022.
Speaker 4: And we launched LVGP TikTok last weekend.
Speaker 4: The first post had over 500,000 views in the first 24 hours.
Speaker 6: Let me turn to the braids.
Speaker 4: We reiterate that we believe the split-off will better highlight the value of the braves.
Speaker 4: We grew baseball revenue in 2022, even though we had experienced less postseason gains, capitalizing on the tailwinds from our 2021 World Series win.
Speaker 4: We had year-over-year growth across ticket sales, sponsorship, concessions, and retail.
Speaker 4: We sold 3.1 million tickets.
Speaker 4: and lead Major League Baseball with 94% of our inventory being sold.
Speaker 4: 94% of our inventory being sold.
Speaker 4: Demand for the season and single ticket game set, ticket remains high for the 2021-2023 season.
Speaker 4: Bleacher's report called the braze front office, the number one, in Major League Baseball for the 2023 season, and we tend to agree. We were happy to extend manager Brian Siddger through 2025.
Speaker 4: and GM Alex Anthopolis invested smartly in the off season.
Speaker 4: Adding to the already core talent we have by locking them up in multi-year deals.
Speaker 4: This team is built on young talent and is positioned for long-term success and we very much look forward to the opener on March 30th.
Speaker 4: And with that, let me turn over to Brian to talk a little bit more about our financial results.
Speaker 4: Thank you, Greg. Good morning, everybody. At quarter end, Liberty Series 6M Group had a trivited cash and liquid investments of approximately 305 million, which excludes 57 million of cash held at Series 6M. There's also 1.3 billion of undrawn margin loan capacity at the parent level related to our Series 6M and live nation margin loans. As of February 28th, the value of our Series 6M stock held at Liberty Series 6M Group.
Speaker 4: Group had attributed cash, liquid investments, and monetizable public holdings of 1.8 billion a quarter end, which includes 752 million of cash at Formula One.
Speaker 4: Total formula one group attributed principal amount of debt was 3 billion and this includes 2.4 billion of debt down at the formula one level, leaving 565 million at the corporate level.
Speaker 4: 3-4 F-1 refinanced its tarvalon ever baller to track the brakes.
Speaker 4: and an extended maturity. F-1 repaid $477 million of its term loan being in connection with this refinancing using cash on hand. And at year end, $4 million, $500 million revolvers are drawn. $4 million on leverage at the end of the year was 2.7 times.
Speaker 4: On the F1 operating business, given quarterly variability in the year over year of race calendar, reminder that this business is best analyzed on an annual basis. Total revenue grew 20% in 2022 with growth across all primary revenue streams.
Speaker 4: Other F1 revenue grew 63% to $180 million with approximately 110 million of the revenue growth coming from hospitality and experiences in approximately 55 million coming from increased rate. Team payment is a percent of the pre-team Oibida as reported with 66%
Speaker 4: percent in 2022 down from 68 percent in the prior year, benefiting from the team the terms of the 2021 Concordia Agreement. As a reminder other costs the Formula One revenue are largely variable in nature and relate to both primary and other F1 revenue opportunities.
Speaker 4: Other costs increased from 20% of total revenue in 2021 to 23% of total revenue in 2022.
Speaker 4: primarily driven by compression and freight margins with significant air charter cost inflation inflation during the year as well as increased cost of servicing our additional hospitality offerings.
Speaker 4: SGNA as a percent of total revenue was basically in line with historical averages in 2022. As mentioned in Q3, we did have some modest increases in personnel costs due to change in the company's LTIP from a stock to a cash-based long-term bonus program, and increased headcount to support growth.
Also included in SGA in 2022 was 19 million of costs from the Las Vegas Grand Prix, mostly related to personnel and marketing initiatives.
Looking at 2023, we look forward to a record 23 race calendar. The calendar will consist of 14 fly-away races compared to 12 fly-away races in 2022.
As we've discussed before fly away races typically pay higher fees than the European races.
And on Las Vegas is previously communicated, we expect total revenue approaching $500 million, looking at total rate-specific economics, Vegas is projected to be in the top five of all races in year one in terms of total profit to the company.
The paddock building is progressing on schedule and the concrete structure will be completed by the end of March. CapEx related to the paddock building will be incurred at the formula on corporate level and track related capEx is expected to be incurred at the F1 off-co level.
The majority of our CAPEX span will be incurred at the corporate level primarily because year-round activations at the PADEC building will be separate from four minutes.
We will not be providing a forward looking allocation between F1 off-co and Formula 1 corporate calculations of F1.
But you'll be able to see it in our historical numbers as they get reported.
LVGP will pay rent and other fees out of Formula One op-code to the Formula One corporate for use of the building during the race period, which will show up in our financial statements as revenue at the corporate level, but will eliminate and consolidation.
We also expect the receipt of advance payments primarily related to ticket sales to impact your over your comparability and working capital flows in the first year of the Vegas race.
Nearly all LVGP revenue will be recognized in the fourth quarter when the race takes place. We'd expect grandstand and GA tickets as well sponsorship revenue to be recognized in primary F1 revenue as race promotion and sponsorship revenue respectively. We expect hospitality tickets will be recognized within other Formula 1s.
revenue. On cost recognition we expect the vast majority of the racial related costs to also be recognized when the race takes place as cost of that one revenue.
So there will be some SGNA incurred throughout the first few quarters of 2023.
Finally, at the Braves Group, at quarter-end, they had attributed cash and liquid investments of $151 million, which excludes $22 million of restricted cash. Braves Group had attributed principal amount of debt of $546 million at the end of the year.
Liberty and Arkansas Day subsidiaries are in compliance with their debt covenant at quarter-ant and with that I'll turn it over to Stefano to discuss four milla-one. Thanks Brian . 2022 was a fantastic season on track commercially with our partners and financially in our results. Maxis was top in 15 wins broke records with the most wins in the singles
is also in the track. This action, during the season, fueled our growing fan engagement.
2022 show record attendance at Grand Prix Vests. We welcome more than 5.7 million fans to raise weekend. Up 36% compared to 2019.
The man is continuing in 2023 with sell-out crowd expected at the number of racist individuals to perché desista presidential democracy in camouflage symbolizes cath ?? ed
For more one, was once again the fastest growing major sport league on the planet in 2022 in terms of social media followers. We have 60.6 million total followers, out 23% from 2021. And so significant growth in markets like the US, where social followers were up 42% and thus 2021 too.
4.5 million. Additionally, across F1.com and the F1 app, UNIC users were up 11% best 2021 225 million.
On viewership, cumulative TV audiences for the 2022 season was 1.54 billion, and average viewership a raise was 70 million.
US viewership was up 36% compared to 2021, with an average of 1.2 million viewers tuning in on race days.
Looking at some other markets, eat the new viewership grew to 22%. Australia was up to 20%. And Germany viewership grew 9%.
With our newer, younger democratic, the digital share of F1 video minutes consumed grew from 16% in 2021 to 34% in 2022.
As an endosment of F1 growing global popularity, technological relevance has to sustainability of forts.
Fort announced their return to F1 from 2026 in a new partnership with Rebel.
Ford is a celebrated name in motorsport with the storage F1 history dating back into the 60s and they are the third most successful engine manufacturer in F1 history.
We expect force involvement as a technical engine provider, we will bring value not only to Red Booth but to the sport.
The growing fan engagement has benefited both new and renewed commercial agreements.
F1 grew revenue across all primary sources. Promotion, meteorite and advertising and sponsorship.
In addition, our Father Club Hospitality Product performed especially well in 2022. It's first full season of operations since the onset of the pandemic.
We welcome 50,000 guests over the season with sell out at 12 out of 19 events.
In 2023, we are focused on optimizing the value of our PADOC lab by expanding the premium services we offer, continuing to enhance the guest experience and adjusting pricing. Turning to recent updates on our commercial agreements. For race promotion, we extended our race example from 2024 and 2025.
and the 23 Dodge Grand Prix is already sold out. The promoter has focused on sustainability on travel. With 99% of general admission ticket holders in 2022, arriving by public transportation, bike or on foot.
We signed a number of large broadcast agreements throughout 2022, including renewing our partnership with Sky in major European markets and with the ESPN in the US.
More recently, we entered into a multi-year media write agreement with B-InSport to exclusivity broadcast F1 in 10 territories across Asia.
Our FOX port agreement in Mexico was extended through 2025. We also renewed our partnership with Placeport in Belgium for 2023 and 2024, and our agreement with that zone in Japan through 2025.
F1 TV continues to grow in popularity among new and edited fans.
The project is now available in 120 countries. On sponsorship, just last week we announced the addition of Qatar's ways as a global airline partner and the multi-year agreement.
There will also be the turtle sponsor at three races.
Looking forward, there are a number of areas we continue to explore for additional sponsorship opportunities, including travel, financial services, food and beverage, telecommunication, and more.
Our team is continuously building financial engagement opportunities to capitalize on our momentum. The fifth season of dry-to-surveyed Aida on February 24th. The 2023 F1 is 425 round, is being held through May 25th, and we hope to be done, the strong engagement from last year when 1.5.
Ocean Racer Simulator.
The second venue will open in Birmingham, in the fourth quarter of 2023, with additional locations planned to follow. A new F1 exhibition will also launch in Madrid later this month and remain there before moving to Milan in time for the Italian Grand Prix. This is a 90 minutes immersive experience guide in visitors.
through the past, present and the future of the sport, and is planned to visit 25 cities around the world over the next decade.
We are counting down to the start of 2023.
Bahrain testing finished last week and with another year of improvements to the track we are expecting even fiercest competition on the track
Ferrarium Mercedes are simply eager for their comeback. There will be new faces on the grid, with Nick DeVries, Oscar Piafri and a promising young American driver Logan Surgeon as well as the return of Nico Huck.
The 23 race calendar is a wake up for Formula 1.
We made the decision not to replace China on the calendar, and the most economic benefit of a replacement race was not worth the logistical and sustainability consideration for F1 and our teams.
There will be six sprints events held in Azerbaijan, Austria, Spa, Qatar, Austin and Brazil. The sprint series have been successful in driving attendance and engagement across the entire weekend for our promoters and broadcast partners. The 2023 calendar will feature three races in the US, including taking to the streets of Las Vegas and the The 2023 calendar will feature three races in the US, including taking to the streets of Las Vegas and the
for a night race in November .
We announced HyniConsumer at the title sponsor and theme of IME as the exclusive wireless provider.
The plan to deploy an advanced 5G public network on race weekend that will power our customer and app and enhance the efficiency of the fan experience. Our second wave of public ticket sales will launch soon, and in spring the world begins on resurfacing the track roads.
with digital plans in place to minimize disruption through the last biggest flow of traffic in the process.
We have made a long-term investment last day, which we expect to set us up to the race for the day gets to come. And finally, we made several announcements for the in-hour opposing sustainability, diversity and inclusion.
F1 recently announced a global charity partnership with UNICEF to help bring quality education to the world's most vulnerable children.
with the known F1NL history of promoting STEM education worldwide. We also look forward to the boot of F1 Academy 2023. The series intend to maximize the potential of young female drivers to reach the highest level in motorsport, providing those counseling, go-carting or other junior categories
with access to the phonumentalist, previous needed preparation F3 and working out to form R1.
The series will consist of five teams run by current F2 and F3 teams, each entering three cars to make up 15 cars grid. The first season will comprise 21 total races, ending as a support event at the Austin Grand Prix in October .
I'm delighted that today we have announced Susie Wolf as the managing director of the F1 Academy. She has a wealth of experience as a driver and team principal and will provide huge value to the project. Rapp in 2022 and look in 2023, I think F1 is the strongest position it has ever been.
This year we launched a new brand campaign demonstrating F1 plays in the sporting and entertainment world, giving new fans a reason to actively engage with the 2023 season and keep coming back for more. F1 is an admissible and extraordinary spectacle, an adrenaline-fueled and intoxicating world of action, innovation and entertainment.
both on and off the track where the extraordinary potential of technology and teamwork comes together to make the difference between winning and being forgotten.
This is not ordinary sport, this is Formula 1. Avanti Tutta, so full speed ahead.
And now I will turn the call back over to Greg. Thank you. Ciao. Thank you, Stefano, and thank you, Brian .
And to our listening audience, we appreciate your continued support of an interesting Liberty Media. And with that operator, I'd like to open the line for questions.
Absolutely, thank you. At this time we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad.
A confirmation to help indicate your line is in the question queue.
You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Vijay Janat with Evercore. Please proceed with your question. Good morning.
Greg, with the Braves hot spin about to get done and the recapitalization, the reattribution of Liberty Live, and you sort of talked about the rationalizing the structure of Liberty Sirius, I think. Can you sort of talk about the prospect of doing a hot spin of Liberty Sirius post-
the reattribution, is there any limitations on that? When you did Liberty Entertainment many years ago, even before you talked about a combination with DirecTV, you did a hot spin and then over time. Is that something that's something potentially possible structurally and from a tax efficiency perspective? And then for Stefano, we have a question from
You have, I think, 10 global sponsors. You talked about a lot more opportunities in different verticals. Is there more opportunity to have more global sponsors, or are we sort of tapped out at that? And if I could, one final, looks like the logistic costs that is sort of paid by the teams, but the teams sort of elevated and...
Thank you. So look, we have lots of things we could do, including a spin of Siri, but I think there are probably... So let me really start positive and let's just wrap things up here.
Thank you. So, look, we have lots of things we could do, including a spin of theory, but I think there are probably discussions to be had with.
the Sirius XM independent board members about the best structure moving forward if we were to do something. But all elements are on the table, all options are on the table. And as we said, we looked, we're looking at those with renewed vigor and we believe we're much better to execute on any of those post the Liberty Live reattribution and the Brave Spin.
AREK frame could Spark
Okay, yeah, thanks, we did for the question. I start for the second, but this logistic cost is through last year, was a combined factor that we had to pay for that and included the team. But I would say that first thing, although we see already this year is going in the right direction.
of these logistics cars to be reduced. And on that respect, there is also the other element that we're trying to be even more efficient in order to make sure that the things are done in the proper way. And this is very, very important to share that. And on the other side, we regard to the partners.
Of course, we want to keep the exclusivity as a main value. And we don't want to put on the other side the final number of that. It's important that we give the right value to the global power, but also to the other verticals that are coming into the equation. Because we never had such a strong pipeline. So it's up to us really to make sure that everyone is the right visibility and value.
for what is the invested related with us.
Thanks, guys.
Thanks, guys.
Our next question is from Ben Schwinburne with Morgan Stanley . Please proceed with your question.
Thanks. Good morning.
Two Formula One questions, I guess first for Greg or Stefano, whoever wants to take it or both, but certainly both. It's pretty clear, and I think Stefano made this point last year, that the value of the teams has significantly increased, especially from where you, you know, bought the business years ago. But I don't know if I have a clear idea of how that benefits.
F1, the company and ultimately shareholders. I think it does, but I'd love to get your perspective. And in particular, I'm going to be the award of asking the first Concord Agreement question for 2026. But does this allow or enable or support your ability to sort of continue on this path of System?
don't like to give guidance but I just wanted to take another take a stab at the G&A commentary because we're getting a lot of questions on that this morning 80 million opco in q4 is there a way for us to think about how sort of recurring that level of G&A is as you move into 23
And you mentioned marketing. And I guess when you guys talk about a top five economic race for Vegas, are you including these incremental G&A costs that are happening outside of a quarter? That's it. Thank you. So, Stefano, I'm happy to take a cut and then...
or let you lead other way. One of the things we're...
Credit chase and credit stephenos, what's easier for me to go first to give them the credit. One of the things that we at Formula One with Liberty's health have been trying to do is build a mentality that I'll credit the NFL for, which is one league that we benefit when everybody benefits.
And yes, the teams compete very hard on Sunday, but on Monday we need to think about growing the entire ecosystem. And it was critical that we have healthy teams so that we could have a healthy league.
And it was critical that they had a prospect of making money, even the teams towards the back of the grid.
so that we could have a prospect of also making money. And they've seen radical increases in their value. We've seen pretty good increases in our value. But we're here to play the long game. And doesn't mean we won't have disagreements with the teams about how much of the pie is ours and how much of the pie is theirs. But trying to build the mentality that as you gain, we gain, and vice versa and that we're playing the long game here is really part of our goal. And we're playing the long game here.
And so I think we will have, you know, a strengthened hand in the next concert agreement. Not!
A whip hand, but a hand saying, hey look, we're here to grow the value and you're going to be benefit from it and we want to see your team values grow dramatically.
Stephano, please correct me. Now, I totally agree, Greg. If I may add just two considerations. Some things financially, means also the strength of the entire system to invest with also the strategy to gauge more with fans and partners.
will have an undirected effect to the growth and the strength of the business itself. And we do not have to forget that not many years ago, the teams were suffering and we as F1 were there to support them financially. And this is something that we do not have to forget. That's why...
We didn't believe that the more value we get to the things, the more value we'll go back to the system and to the entire business.
Yeah, Ben on the on the SGN APs I'll talk about it from the full year basis first but
You've seen an increase, obviously related to the Las Vegas Grand Prix, that's 19 million. That was elevated in the fourth quarter because we had our launch event and marketing activities around initial ticket sales. We also talked about the L-Tip moving from stock compensation expense to a more like a personal expense. That's in there now. You won't see that.
You won't see that increase, so it's in the base. And then there's other one-time items in there. There's higher legal and professional fees associated with a couple different matters, and ERP implementation, and a few other one-time items that are affecting SG&A. Thank you very much.
So, on your question about whether SGNA is included in our statement on top five race, it most definitely is.
Great. Thanks everybody. Thank you. Our next question is from Barton Crockett with Rosenblatt Securities. Please proceed with your question.
I'm here to switch gears to sports teams and just wanted your kind of views, Greg, on what's behind the kind of vibrant activity we're seeing right now in acquisitions of sports teams in many sports at premium prices.
You know, I'm thinking of the talk around Manchester United, Milwaukee Bucks.
Phoenix Suns, maybe Washington Commanders, certainly Denver Broncos. There seems to be a lot of prices coming in that are way above what were kind of the values that these teams were carried out in things like Forbes or Sportico. And I'm just wondering if you have any thoughts about why.
And, you know, if this could be applicable to baseball and your view and, and, and is there any potential for this to be disrupted by all of the noise around local TV rights and the risk that carries to, you know, an important revenue stream?
A couple thoughts. I mean, I don't have any...
Probably unique thoughts on the value of sports teams. You've seen a lot of commentary about
These are trophy assets, there's a limited number, they've been good stores of value, that increase in global popularity only means that they have more interest globally and more potential investor interest globally. I think those are all true. Isolating which of those factors is hard for me to say.
I think that's certainly going to be true of the Atlanta Braves is true of them as a under-training value. The longest and the opportunity to operate in franchise in the United States.
Story history, winning, story history of economic success, hard to think of a more perfect franchise in many ways.
Obviously, there are changes coming in the ecosystem.
I feel pretty good about those changes for a bunch of reasons.
I feel pretty good about those changes for a bunch of reasons.
I do think you will see net revenue declines across all of baseball with the decline of the RSNs. I think that's in the short term at least that's almost inevitable with some of these contracts there may be operations which prevent that but it seems more likely than not. But about our relative position I feel very good having the largest...
a cable household or a broadband household territory, having a very large dedicated fan base, having a relatively modest RSN fee given the scale of that territory. All Anecdotal evidence we know suggests that we have the most profitable RSN.
for the RSN owner and distributors. So there's plenty of confidence that there are reasons why they would want to stay engaged. And there are a lot of other broadcast outlets which would want to be involved with the braves given the strength of all the things I started with. So, you know, the disruption is certainly there, the potential.
But I feel very good about our relative position and frankly the financial health of the Braves gives me more confidence in that too Okay, that's great. Thank you
I feel very good about our relative position. And frankly, the financial help of the Braves gives me more confidence in that, too. OK, that's great.
Our next question comes from Stephen Alezdik with Goldman Sachs. Please proceed with your question.
Good morning. Maybe for Greg on F1, I think you said that roughly a third of the fans started following F1 over the last few years. I think that certainly makes sense with looking at the attendance increases. Maybe looking ahead, could you talk a little bit more about your confidence in converting the fans that have come into the sport maybe because of drive to survive or social media over the last few years into lifelong fans of the sport and maybe more broadly if you
track ensuring more competitive racing with new innovations around the weekend like the Sprint Races. Lots of ways to grow fan interest on the track. Lots of ways to grow fan interest in some of the things we do off the track and to expose the drivers. Drive to survive was obviously a key part but not the only one I think you know.
We're helping and the teams are helping create what will be a very exciting movie next year with Brad Pitt and the directors of Top Gun Maverick and the producers of Top Gun Maverick, all of which we think will be another thing to sustain growth. The Las Vegas race is going to be a massive.
No, he's maker for our sport and know it and it'll open up our sport to many people who previously were not aware While there are 16 and 17 year olds who were crazed and get up every Sunday morning to watch There are many people who really do not follow formula one. It will be hard to miss formula one after Las Vegas It will be loud and we will get a lot of attention
So we're not only thinking about things which are current, but we're thinking about things for the long term to try and sustain that interest, convert that interest into long-term fans, and I think we have a lot on the plate and many more in front of us that we're working on to do that. Stefano, what would you add, please? Yeah, I would say that Greg…
The main sporting pillars are for short covered. We talk about racing on the sporting side, on the technical side, on the financial side. These are elements of which we really are focused because we have shown in the short term that we've found the ideas to improve the spectrum of the racing itself. But if we have to add
another dimension related to the fact that we are an entertainment platform that is growing. We are working on a new form of funding engagement with different social countries, we new way of connecting with media, but also we don't have to forget one thing that I would say is getting more and more relevant. The way that we are doing our sport in the context where we are talking about
very important values, when we are talking about the diversity in our project, when we are talking about our social responsibility, when we are talking about our ideas to develop on the sustainability side of it. I think that all these new elements of discussion are elements that are tracking new people, new fans of Formula One, and also we have the opportunity to talk about these things with a different voice.
And the tone of voice, of course, is different depending on who we want to engage with. But we are a platform of connectivity. So, a platform of connectivity means that all the elements that are able to attract interest has to be discussed and operated in the way that hopefully we have shown to be very serious
Thanks for that. And just one more quick one. Brian mentioned that team payments came down as a percentage of free team share adjusted EBITDA or COVID in 2023. We know those are variable. I was wondering if you'd be willing to speak to at what point we started to see some of that operating leverage come through in 2022 and maybe what investors could expect to see on this front in 2023.
Yeah, so as you rightly point out team payments were a source of margin expansion in 2022. That was offset by the freight compression that we've talked about, higher hospitality cost, although we still have very attractive margins in the paddock club. But as we've talked about before with the 2021 Concord Agreement,
As our profitability grows, we have increased leverage on those team payment counts.
And as we pointed out before, there's some one-time items in SGNA, so we would expect some number.
Great. Thank you. Our next question is from Peter Sapino with Wolfe Research. Please proceed with your question.
Hi, good morning, pleasure to be on a Liberty call.
Question on F1 operating expenses in particular, I wondered if you would discuss puts and takes for OpEx as we move beyond 2023, given that 2023 OpEx includes some one-time costs for the O&O event in Vegas. And then the second question is on...
your global popularity. It's obviously on the rise and we all agree that the US is going to see a wonderful benefit from Vegas and as that happens I wonder if as you look at other professional sports leagues in the way they leverage their brands what what best practices Outside of the core events are you looking at that you think you might go to replicate it F1. Thanks The op x1 first but
As we pointed out, freight margins have been one of the biggest pressures on our other cost of revenue. And we've basically absorbed that in 2022, so you wouldn't expect to see that continue in as we go forward. Hopefully you'd see some leverage there. Hospitality costs, as we just said, there's good margins. So Vegas.
We'll play in. We haven't given the opX number. We've just given the revenue number and overall profitability, but you'll see opX increase associated with Vegas as you would expect. But yeah, we would expect leverage as we move forward.
We haven't given the OPEX number, we've just given the revenue number and overall profitability, but you'll see OPEX increase associated with Vegas, as you would expect. But yeah, we would expect leverage as we move forward. Stephanie, I'll let you handle the second.
Yeah, can you hear me Peter? Yeah, thanks, Stefano. Hello. Okay, sorry. I was losing the line. Now I think that the global popularity, as you said, is growing and this is a fact. And I would say what we are bringing home is the fact that all the other support league business.
are really interested in understanding how our world was so fast and dramatic. But of course, we are quite humble in that of course, because we want to learn from everyone around the world what we can capture in order to increase our way of growing.
I think that is one key that is very important is the way that we engage with our drivers with the fans. They are the voice, the authentic voice of the visa we are in. We feel that the sharing with them the responsibility of that fund engagement is giving us an incredible attraction because then...
that attractive approach will turn into business if you think about gaming, if you think about the fact that the drive then the fans wants to attend to the race, if you see that the fans wants to follow the counter-novo social media. So I think this is the really one of the key elements that is quite unique.
And I think on that we will work even harder to make sure that this voice is even stronger.
Thanks so much. Next question. Our last question is from Jason Bezzanette with City. Please proceed with your question.
You just had a quick question on Formula One. Can you just, if big is as successful as you expect it will be, can you just talk about dating factors or constraints?
that are ahead of you in terms of expanding that into other cities. Thanks.
I'll take a cut now. Let's definitely.
The biggest is unique for many reasons. One, the economic opportunity is large.
We're not operating in a country which liberty is reasonably familiar. It's pretty close to us. The ability to go negotiate and make something happen on a street circuit rather than an own circuit made it easier in many ways. There wasn't a promoter, natural promoter. It was a role that was good for us to fill in.
And it was good for us to test some of the theories we had about promotion. So it was a unique opportunity and great, it's a great test lab. Could there be other cities? I think there are many countries where it's obvious we would be less effective as a promoter than the US. There may be somewhere we could operate reasonably effectively or maybe have some form of a co-promotion.
And that could be interesting. But I do not, I think Vegas is relatively unique in terms of being the kind of place where we would go all out and do what we have done and what we are doing here in 2023. Definitely what might you add? Yeah, I couldn't agree more. I think that is absolutely totally right. And we don't have to forget that in such a short time, we moved in a new dimension with is Bennett. You heard what you're feeling?
by doing that will be an incredible push for everyone to push for a better quality result for everyone. We have a huge demand around the world to host the Grand Prix, not to the U.S., but to the Paris. So this could be an experience that can be used to better organize the rumpers in the future. But so far, let's make sure that we are totally focused on making Vegas. Welcome to Elizabeth invading.
Super special event. Thank you very much. Operator, I think we are done. So to our listening audience, thank you for your interest in.
and false support for Liberty Media. We hope to speak to you next quarter if not sooner, and I think Operator, we can end the line there.
Thank you. This concludes today's conference. We thank you for your time. You may now disconnect your lines.