Q4 2022 Liberty Media Corp Earnings Call
Speaker 1: I F.
Speaker 1: I R.
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.
Speaker 2: keep at. As a reminder, this conference will be recorded today, March 1. I would now like to turn the call over to the Shane Kleinstein, Vice President and Investor Relations. Please go ahead. Thank you. Good morning. Before we begin, we'd like to remind everyone that this call includes straightforward looking statements within the meaning of the private security litigation reform act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the reading media of the Sweden-410K and a filed with the FEC. These four looking statements speak only as a bidate of this call, and Liberty Media expressly explains that any obligation or undertaking to disseminate any updates or revisions to any four looking statements contained herein to reflect any change in Liberty Media's expectations with regard there to or any change in events conditions.
Speaker 3: we will also have Formula One's president, CEO , Stephano Domenicale, and Liberty's Chief Accounting and Principal Financial Officer, Brian Wendling. First, let me start with an update on the split off of the braves and the creation of Liberty Live Tracker. We filed the amended F's for, and we still expect completion in the second quarter.
Speaker 3: Let me try the Liberty Series XM. We expect we will have a simplified structure following the recapitalization of LSXM and the creation of the Liberty Light Tracker. And we are focused on rationalizing this structure in the near term. Looking at its series 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 multiple headwinds we are experiencing here in the early part of 2023. 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 13.5 million last year. The ad market remains soft, especially in the first half of 2023. And we are seeing moderating marketing spend ahead of the fourth quarter app revamp. Plus we've had some cash impacts. We expect peak satellite cat-backs in 2023 and we are now a tax payer, something which previously we had not seen. We do expect these incremental satellite cat-backs will moderate 2024 with nearly no incremental satellite cat-backs by 2027. By the end of the year.
Speaker 3: We're also stepping up some tech investments for long-term success. 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 3: We do expect these negative trends in the ad market. And so our will turn and 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. Continue to see incredible demand. 2022 attendance was up 24% over 2019. We are at all time high for concert attendance.
Speaker 3: We do expect these negative trends in the ad market. And so our will turn, and 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. Continue to see incredible demand. 2022 attendance was up 24% over 2019. We are at all time high for concert attendance. Despite many markets, they'll be in close.
Speaker 3: during part of the year. We've seen especially strong international markets, but 70% of net new tickets sold in 2022 were to international clients. And we expect another record year of demand in 2023. Ticket sales in 2023 are up 20% versus the same time last year. And last year it also benefited from 20 million of tickets that were rescheduled from prior period due to COVID. Forming the one group, right at the end of the 2022 year attendance records were set. We wrote 36% over 2019. Our fan base has increased in diverse with new fans being younger and the share of females within the fan base 40% larger than the share in the established fan base. That's been the new fan base. The US is especially strong. One in three fans globally started following F1 in the last four years and the US is even higher at one in two. This is a result of many efforts and most of them related to our efforts to drive.
Speaker 3: The access to our drivers across poll channels not only drive to survive, but the driver presents on social pages, coverage in large-use publications, late-night comedy appearances on people like Jimmy Kimmel. And it's interesting to note, for example, look at our Instagram followers. In comparing votes, Lewis Hamilton had 31.5 million versus Tom Brady at 13.6 million. F1 is clearly getting into the mentality of America. And looking at the younger talent, LeClaire has almost 10 million, and Lucodon Chick is at 8 million. Again, we're doing pretty well. We will have three US races in 2023, the second year of Miami, capitalizing on the first year's success with several improvements around hospitality and security. We expect the sporting world to be super excited as we are for the inaugural Las Vegas GP. F1 Las Vegas Social Media garnered over 170 million impressions and over 5 million engagements since September of 2022. And we launched LVGP TikTok last weekend. The first post had over 535,000 views in the first 24 hours. Let me turn to the braves. We reiterate that we believe the split-off will better highlight the value of the braves. We grew baseball revenue in 2022, even though we had experienced less postseason gains.
Liberty Siriusxm group attributed principal amount of debt is $13 1 billion, which includes $9 5 billion of debt Thats down at the Sirius XM level.
Formula One group had attributed cash liquid investments and monetize will public holdings of $1 8 billion at quarter end.
Which includes $752 million of cash at Formula one.
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.
During the quarter <unk> refinanced its term loan and revolver at attractive rates and an extended maturity F. One repaid $477 million of its term loan b in connection with this refinancing using cash on hand.
At year end Formula one $500 million revolver is undrawn.
<unk> leverage at the end of the year was two seven times.
On the ethylene operating business given quarterly variability in the year over year. If 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. Other epsilon revenue grew 63% or $180 million with approximately $110 million of the <unk>.
<unk> growth coming from hospitality and experiences and approximately $55 million coming from increased rate.
Team payments as a percent of the pre team OIBDA as reported was 66% in 2022 down from 68% in the prior year benefiting from the team the terms of the 2021 Concorde agreement.
As a reminder, other cost of Formula one revenue are largely variable in nature and related to both primary and other F. One revenue opportunities other cost increase from 20% of total revenue in 2021% to 23% of total revenue in 2022.
Primarily driven by compression in freight margins with significant air charter cost inflation inflation during the year as well as increased cost of servicing our additional hospitality offerings.
SG&A 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 cost due to the change in the company's L tip from a stock to a cash based long term bonus program and increased head count to support growth.
Also included in SG&A in 2022 was $19 million of costs from the Las Vegas Grand Prix, mostly related to personnel and marketing initiatives.
Looking at 2023, and we look forward to a record 23 race calendar. The calendar will consist of 14 flour flyway races, compared to 12 flyway races in 2022.
As we've discussed before flyway races, typically pay higher fees than the European races.
And on Las Vegas, as previously communicated we expect total revenue approaching $500 million looking at total raised 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 panic 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 one corporate level and track related Capex is expected to be incurred at the F. One opco level.
The majority of our Capex spend will be incurred at the corporate level, primarily because year round activations static building will be separate from formula.
We will not be providing a forward looking allocation between F. One opco in formula one corporate capex.
But you'll be able to see it in our historical numbers as they get reported.
<unk> will pay rent and other fees out of Formula one opco 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 in consolidation.
We also expect the receipt of advanced payments, primarily related to ticket sales to impact year over year comparability in working capital flows in.
In the first year of the Vegas race.
Nearly all <unk> revenue will be recognized in the fourth quarter. When the rates takes place, we would expect grandstand and Gi tickets as well as sponsorship revenue to be recognized in primary F. One revenue as rates promotion in sponsorship revenue respectively.
We expect hospitality tickets will be recognized within other formula one revenue.
On cost recognition, we expect the vast majority of the race related cost to also be recognized when the race takes place as cost of F. One revenue.
There will be some SG&A incurred throughout the first few quarters of 2023.
Finally at the branch group at quarter end, they had attributed cash and liquid investments of $151 million, which excludes $22 million of restricted cash raise group had attributed principal amount of debt of $546 million at the end of the year.
Liberty and our consolidated subsidiaries are in compliance with our debt covenants at quarter end and with that I'll turn it over to Stefano to discuss formula one.
Thanks, Brian 2022 was a fantastic season on track <unk>.
Commercially with our partners and financially in our results.
<unk> 16 wins broke records with the most wins in a single season.
The rebel team won the first construct a championship that since 2013.
And then APAC competition battles down to the last race without being in the cloud and both tightened full force place. The feedbacks from the drive has made it clear the new regulation meant that cost could raise more closely and we saw some great results on the truck.
This action during the season fueled our growing fan engagements. So it doesn't fit into so requisite tenders of Grand Prix beds, we welcome more than $5 7 million fast race weekend.
36% compared 2019 demand is continuing in 2023 with sell out crowds expected the number of races. This season.
<unk> was once again the fastest growing major sports league on the planet in 2022 in terms of social media followers, we had $60 6 million total followers.
83% from 2021 and saw significant growth in markets like the U S, where social followers went up 42% versus 2021 to $4 5 million.
Additionally, could also have fund dot com and the effluent app unique users with up 11% that doesn't 'twenty one $225 million.
On viewership cumulative TV audience is for the 2032 season was 1.54 billion and average viewership of race was $70 million.
U S viewership was up 36% compared to 2021 with an average of $1 2 million viewers tuning in all rate base.
Looking at some other markets each of the viewership grew in 2022%, Australia was up to 20% and Germany viewership grew 9%.
With our newer younger demographic the digital share of Epsilon video minutes consumed grew from 16% in 2021% to 24% in 2022.
As an endorsement of F. One growing global popularity technological relevant assesses the nobility of Ford's Ford announced their return to F. One from 2026, and a new partnership with Red Bull.
Ford is a celebrated name in motor sport with a story of the F. One history dating back into the <unk> and they are the third most successful and human factor in Epsilon history.
We expect pours involvement as a technical engine provider will bring value not only to us but to the sport.
Growing engagement has benefited both new and renewed commercial agreements <unk> grew revenue across all primary sources promotion media rights and advertising and sponsorship. In addition, our <unk> fatality performed especially well in 2022.
His first full season of operations since the onset of the pandemic.
We welcome 50000 guests over the season with sell out at 12 out of 19 events.
In 2023, we are focused on optimizing the value of our patent cliff by expanded the premium services. We offer are continuing to enhance the guest experience and adjusting pricing.
Turning to recent updates.
Our commercial agreements Ah race promotion, we extended our recent Zhambu doesn't 20, Florida in 2025, and the 23 <unk>.
Grand Prix is already sold out the promoter has focus on sustainability is uncertain with 99% of general admission ticket holders in 2022, arriving by public transportation.
<unk>.
We signed a number of large brokers the agreement throughout 2022, including renewing our partnership with Sky in major European markets and with the ESPN in the U S. Maurice's.
More recently, we entered into a multiyear media rights agreement, we'd be in sport to exclusively broadcast F. One in 10 territories across Asia.
Our folks support agreement in Mexico was extended through 2025, we also renewed our partnership with <unk> in Belgium.
23 of 2024, and our agreements with does owning Japan through 2025.
<unk> continues to grow in popularity among new and edited just fence. The product is now available in 120 countries.
Sponsorship just last week, we announced the addition of Qatada ways as a global airline partner on the multi year agreement.
We will also be the title sponsors three races.
Looking forward there are number of areas, we continue to explore for additional sponsorship opportunity, including travel financial services food and beverage telecommunications and more.
Our team has continued to build the implant engagement opportunities to capitalize on our momentum.
Fifth season of drive to survive.
February 24th.
The 2023 F. One the esport qualify round is being held through may 25th and we hope to build on this strong engagement from last year, when 1.3 medium players up tempted to qualify.
The new license program F 100, <unk> launched its first location in London in December hosting over 600 Epsilon guests and celebrities as the official launch party. We've seen is the excitement on FY <unk> 60 full motion racing simulator.
The second venue will open in Birmingham in the UK in the fourth quarter 2023 with additional locations planned to follow a new F. One of the exhibition with also launch in Madrid. Later this month and remained there before moving to be landing time for detailing grumpy.
This is a 90 minutes immersive experience guiding visitors through the past present and the future of the sport and its plan to visit 25 cities around the world over the next decade we.
We are counting down to the start of 2023 seasons.
Testing finished last week and with another year of improvements of the track we are expecting even pieces competition on the track.
<unk> say this though simply eager for that comeback there will be new phases of the great with Nick the Breeze, Oscar yesterday, and a promising young American driver Logan's surgeon as well as the return of the <unk>.
The 23 rates commensurate you said they can fulfill more one.
We made the decision not to replace China and on the calendar and the most of the economic benefits of our replaces race was the worst the logistical and sustainability considerations for the F. One and other things.
There will be six <unk> housing led by John Austria spot, Qatar hosting 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 race in the U S, including taking to the streets of Las Vegas for a night race in November we announced highly consumer as the title sponsor and T mobile.
Exclusive wireless provider.
The plan to deploy and the bus <unk> public network race weekend that will power our customized App and then have those efficiency of the fan experience.
Our second wave of public ticket sales, we launched soup and in spring the love the Gainesville Bristow facing the track roads with digital plans in place to minimize disruption to the Las Vegas flow of traffic in the process.
We have made a long term investment in Las Vegas, which we expect to set us up to the race will Degas hookup and finally, we made several announcements closing our opposing sustainability diversity and inclusion and <unk> recently announced a global charity partnership with UNICEF to help bring quality education to the world's most <unk>.
<unk> children building on Epsilon long history of promoting stem education worldwide.
We also look forward to the brutal <unk> Academy in 2023, the <unk> intend to maximize the potential of young female drivers to reach the highest level. The motorsport provided those currently go Karting Arthur <unk> with access to the fundamental discipline is needed before ration at three and working up to phone.
Well the <unk> Lucas is of five teams run by current at 203 themes each entity free cash to make up a 15 cost grades.
The first season will comprise 21 total races ended as a support event at the Austin Grumpy in October I'm delighted that today, we have announced Susan worldwide as the managing director of the <unk> Academy. She has a wealth of experience as a driver and team principal and will provide huge value to the project.
Rapid 2022 and look in 2023.
<unk> is the strongest position it has ever been this year, we launched a new brand campaign demonstrating F. One place into supporting the entertainment World.
Given new fancy reason to actively engage with 23 season and keep coming back for more <unk>.
One is in a miscible and extraordinary perspective, and a three legged stool and intoxicating world affection innovation and entertainment, both on and off the track where.
The extraordinary potential of technology into work comes together to make the difference between winning and being for Gov.
This is not only support this is permanent one advantage so.
So full speed ahead, and now I will turn the call back over to Greg. Thank you Joe.
Thank you Stefano and thank you Brian .
To our listening audience. We appreciate your continued support of and interest in 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 one on your telephone keypad.
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Our first question comes from David <unk> with Evercore. Please proceed with your question.
Hi, good morning.
Greg.
The Braves hot spin about to get done and the recapitalization of the Reattribution Liberty live and you sort of talked about rationalizing the structure of Liberty Sirius I think can you sort of.
Talk about the prospect of doing the hard 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.
Uh huh.
I think 10 global sponsors is that you talked about a lot more opportunities in different verticals is there more opportunity to have more global sponsors or are we sort of topped out at that.
And if I could one final it looks like the logistic costs.
That is sort of paid by the teams, but it seems sort of elevated and I'm trying to understand is some of the inflation impact of that being passed on to the teams is that something.
We should expect to continue or was that sort of a one off factor. Thank you.
Okay I'll start Vijay that was so long ago that was one of those.
And as I've almost got lost.
Thank you.
So look we have lots of things, we could do including a spin of theory, but I think there are probably.
Discussion 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 look we're looking at those with renewed vigor and we believe we're much better execute on any of those post the Liberty live <unk>.
<unk> on the <unk> spend.
Stepping up.
Oh, yeah yeah.
Thanks, Vijay for the question I start with the second with these logistic costs.
So last year was a combined factor of that.
We had to pay for that.
And included the team, but I would say the first signal that we see already the she is going into the right direction of.
These logistics supposed to be reduced and in that respect that he is also the other element that we're trying to be even more efficient in order to make sure that the things I've done in the proper way and this is very very very important to ship out and and on the other side with regard to the partners of course, we want.
To keep the exclusivity.
<unk> value and we don't want to put on the other side. The final number of that is in portable it's important that we keep the right value to the global Plaza, but also to the other verticals that have come into the equation. Because you know we never had such a strong pipeline. So it's up to us really to make sure that everyone has the right visibility in <unk>.
For what is basically related with us.
Yeah.
Alright, thanks, guys.
Our next question is from Ben Swinburne with Morgan Stanley . Please proceed with your question.
Thanks, Good morning.
Two.
For me one question. So I guess first for Greg or Stefano everyone's had taken a report but certainly both.
It's pretty clear I think it's definitely at this point last year that the value of the teams has significantly increased especially from where you bought the business years ago, but I don't know if I have a clear idea of sort of how that benefits <unk>.
On the company and ultimately shareholders I think it does but.
I'd love to get your perspective and in particular.
The award is asking the first Concord agreement question for 2026, but does this allow or enable our support your ability to sort of continue on this path of operating leverage into the new agreement.
Because of the amount of value creation at the team level. So that's I guess any more interesting question and then I'm going to try and O'brien you guys 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 'twenty three and then you mentioned marketing.
And I guess when you guys talk about the top five economic race for Vegas are you, including these incremental G&A costs that are happening outside of the quarter.
Thank you.
So Stefano I'm happy to take a cut and then or let you lead other way.
<unk>.
One of the things we are.
Credit Chase and credit Stefano So it's easier for me to go first and give them the credit one of the things that we at Formula One with Liberty's help have been trying to do is build a mentality.
That all credit the NFL for which is one league that we benefit when everybody benefits and yet the teams compete very hard on Sunday and Monday, we need to think about growing the entire ecosystem.
And it was critical.
We have healthy teams so that we could have a healthy leak.
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.
It doesn't mean, we won't have disagreements with the teams about how much of the pie as ours and how much of the pie as theirs, but trying to build the mentality that as you gain we gain and vice versa and that that we're playing the long game here is really part of our goal.
And so I think we will have.
Our strength in hand.
Next cognate agreement not.
A whip hand, but a hand, saying hey look we're here to grow the value and youre going to be benefit from it and we want to see your team valued grow dramatically.
Stefano Please correct me.
No I totally agree Greg if I may add just two considerations.
King.
Financially.
It means also the strength of the entire system to invest with the also the strategy to gauge more with fans and partners that will have a direct effect to the growth and the strength of the business itself and we don't have to forget that there's not too many years ago.
These were suffering and that's one we're there to support them financially.
And this is something that we don't forget that's why we really believe that the more value we get to the teams that move I think we'll go back to the system.
And to the entire business.
Yes, Ben on the on the SG&A piece I'll talk about it from the full year basis first but.
<unk> 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 <unk> moving from stock compensation expense to a more like a personnel 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 of different matters.
ERP implementation and a few other onetime items that are affecting SG&A.
So on your question about whether SG&A is included in our statement on top five race at most definitely is.
Great. Thanks, everybody.
Thank you.
Our next question is from Barton Crockett with Rosenblatt Securities. Please proceed with your question.
To switch gears to.
Sports teams and just wanted your kind of views Greg on.
What's behind the.
<unk> kind of vibrant activity, we're seeing right now in acquisitions of sports teams in many sports at premium prices.
I'm thinking of the talk around Manchester, United Milwaukee Bucks in axons.
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 added things like Forbes or sport at co and I'm. Just wondering if you have any thoughts about why.
And if this could be applicable that baseball in your view and.
And is there any potential for this to be disrupted by all of the noise around local TV rights and the risk that curious to an important revenue stream.
Yes.
A couple of thoughts I mean, I don't have any.
I believe unique thoughts on the value of sports teams you've seen.
A lot of commentary about these are trophy assets there is a limited number.
They've been good stores of value that increasing global popularity only means that they have more interest globally and more and more potential investor interest globally. I think those are all true.
Isolating which of those factors hard to for me to say.
I think thats, certainly going to be true of the Atlanta Braves.
Is true with them as they are.
On the trading value the longest contingency operating franchise in the United States.
Storied history of winning.
Storied history of economic success.
Hard to think of a.
More perfect franchise in many ways.
Okay.
Obviously, there are changes coming in the ecosystem.
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 RSM.
I think that's in the short term at least that's almost inevitable with some of these contracts are done and 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 <unk>.
Cable household or a broadband household territory, having a very large dedicated fan base, having a relatively modest.
<unk> given the scale of those that territory.
All anecdotal evidence we know suggests that we have the most profitable RSM for the RSM owner and distributor 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 that I started with so.
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.
Our next question comes from Steven elastic with Goldman Sachs. Please proceed with your question.
Great. Good morning, maybe for Greg on F. One I think you said that.
A third of the fan started following us over the last few years I mean that certainly makes sense with looking at the attendance.
Pieces, but maybe looking ahead could you talk a little bit more about your confidence in converting the hands that have come into the sport, maybe because of driving survive or social media over the last few years in terms of lifelong fans smart and maybe more broadly what do you see the next most important levers to drive growth from here.
Well I'll comment, but I also want to Stefano to add.
Look we are <unk>.
Very focused on sustaining the growth and interest in F. One in many many ways that's with new innovations on the track insuring.
More competitive racing with new innovations on.
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 is exposing the drivers drive to survive was obviously, a key part but not the only one I think.
We're helping and the teams are helping create what will be a very exciting moving next year with Brad Pitt.
And.
The directors of top gun Maverick and produces a top gun Maverick all of which we think will be another.
Sustained growth the Las Vegas race is going to be a massive noise.
Noisemaker for our sport and annoyed and will open up our support to many people who previously were not aware.
While there are 16 to 17 year olds, who are crazed and get up every Sunday morning to watch there are many people who really do not follow a formula one it will be hard to Miss Formula One after Las Vegas, it will be less 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 it's definitely what would you add please.
Yes.
Would say that the drag.
Greg.
The main sport can pillar for short covered we took about raising 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 find the idea is to improve the spectacle of the racing itself, but.
Yet.
Another dimension is related to the fact that we have an entertainment platform that is growing we are working on new form of a final engagements with the different social content with new way of connecting with media, but also we do not forget one piece that I would say is getting more and more relevant the way that we.
They are doing now with support in a context, where we are talking about a very important values. When we're talking about the diversity and our approach is what we talked about our social responsibility. When we're talking about our idea is to develop the system.
Besides of it I think that all of 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 total voice of course is different depending on who we want to engage with but we had a plateau not connectivity so connectivity needs that the all the elements that are able to attract interest has to be.
Scott and operate in the way that hopefully we have shown to be very see this up.
Great. Thanks for that and then just one more quick one Brian mentioned of team payments came down as a percentage of <unk> adjusted EBITDA or EBITDA. In 2023, we know those are variable I was wondering if you'd be willing to speak to at what point are you starting to see some of that operating leverage come through in 2022 and maybe why.
Investors can expect to see on this front in 2013.
Yes, so as you rightly point out team payments, where it were a source.
Margin expansion in 2022.
That was offset by the freight compression that we've talked about higher hospitality.
<unk>, although we still have very attractive margins in the paddock club.
But as we've talked about before with the 'twenty one Concorde agreement as our profitability grows we have increased leverage on those T payment calix.
And as we pointed out before there's some onetime items in SG&A. So we would expect some numbers.
Great. Thank you.
Our next question is from Peter <unk> with Wolfe Research. Please proceed with your question.
Hi, good morning pleasure to be on our Liberty call.
Question on F. One 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 onetime costs for the <unk> 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 U S is going to see a wonderful benefit from Vegas.
It happens I wonder as you look at other professional sports leagues in the ways they leverage their brands, what what best practices outside of the core events are you looking at that you think you might be able to replicate enough one thanks.
So I'll take the Opex, one first but.
As we pointed out freight margins had been one of the biggest pressures on our other cost of.
<unk>.
And we basically absorb that in 2022, so you wouldn't expect to see that continue.
And as we go forward.
Hopefully you can see some leverage their hospitality costs.
As we just said there's good margin so.
Vegas will plan, we havent given the Opex number we've just given the revenue number and overall profitability, but youll see opex increase associated with Vegas as you would expect.
But yes, we would expect leverage as we move forward.
Okay.
Okay.
Ethanol I can handle the second.
Yes.
Can you hear me Peter.
Yes, Thanks Stefano Hello.
Okay got it.
No I think that's a global popularity as you said these growing and and and and this is a fact and I would say what we are bringing AUM is the fact that the all the other sports League business are really interested in understanding how our group was so fast and dramatic and but of course, we are quite humbled and that approach because it.
Want to learn from everyone around the world, what we can capture in order to increase it.
Let's see.
Our our way of growing I think that is one key that is very important is the way that we engage with our drivers.
With defense and they are really the voice the authentic voice of the visa we have it we feel that the sharing with them. The responsibility of that upon engagement is giving us an incredible collection because then that's attractive.
Approach will turn into business you should think about gaming you should think about the fact that the drive that defense wants to attend.
Race, if you will if you see that the first was to follow the council and other 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 these this voice is even stronger.
Thanks, so much.
Next question.
Our last question is from Jason Bazinet with Citi. Please proceed with your question.
Just had a quick question on Formula one.
Can you just if vegas is as successful as you expect it will be can you just talk about gating factors of constraints.
That are ahead of you in terms of expanding that into other cities.
I'll take a cut and I'll, let Stefano.
Hum.
Vegas is unique for many reasons.
One the economic opportunity is large.
We're not.
We're 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 in one circuit made it easier in many ways there wasn't a promoter natural promoter.
There 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 U S. There may be some where we can operate reasonably effectively or maybe have some form of co promotion and that could be interesting, but I do not I think vegas is relatively unique in terms of being a kind of a place where we would go all out and do what we have done it.
And what we are doing here in 2023 in Vegas.
Definitely what might you add.
Yeah, I Couldnt agree more I think that that is it absolutely totally right. Then we don't have to forget that.
In such a short time.
We moved our new as I mentioned, but he has been at the promoter.
You know.
No one was thinking before possible. So first step for us is to make sure that we need to.
Make sure that they get these rights first the first attempt. So total focus on that and then of course I'm sure that these will an incredible push crude oil to promote to see what is really what can be done better. So I think that already but that will be an incredible push whatever you want to to push for better quality goods.
Helpful for everyone. We have a huge demand around the world to host the Grand Prix and upcoming U S. But those antibody. So this could be experienced that can be used to better organize rumbling in the future, but so far let's make sure that we are totally focused on making Vegas.
Super special with that.
Got it thank you very much.
So operator, I think we are done so to our listening audience.
Thank you for your interest in and support for Liberty Media.
We hope to speak with 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.