Liberty Media (NASDAQ:FWONK) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
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Summary
Liberty Media Corporation reported strong performance in Q2 2026, particularly from Formula One (F1) and MotoGP, despite global uncertainty.
F1's engagement on platforms like Apple TV has increased, with a younger and more female audience in the U.S., and digital views up 13% year over year.
MotoGP signed agreements with manufacturers and teams through 2031, establishing a stable framework for investment and growth, alongside new media deals in Spain and Portugal.
Formula One experienced a 15% decline in year-to-date revenue due to a reduced race count, but underlying business aspects like sponsorships and licensing performed well.
Capital priorities focus on organic growth and maintaining a strong balance sheet, with debt at approximately $5 billion and cash reserves of $1.5 billion.
The Las Vegas Grand Prix extension through 2037 highlights F1's increasing U.S. presence, with significant ticket sales and profitability expectations.
Management expressed confidence in the long-term growth potential of both F1 and MotoGP, with strategic emphasis on digital platforms and fan engagement.
Full Transcript
OPERATOR
Welcome to Liberty Media Corporation 2026 second quarter earnings 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 questions, please press star one on your telephone. As a reminder, this conference will be recorded August 6th. I would now like to turn the call over to Hooper Stevens, Senior Vice President, Investor Relations. Please go ahead.
Hooper Stevens, SVP Investor Relations
Thank you for joining us this morning. This call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent Forms 10-K and 10-Q filed by Liberty Media with the SEC. These forward-looking statements speak only as of the date of this call, and Liberty Media expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty Media, Liberty Media's expectations with regard thereto, or any change in events, conditions, or circumstances on which any such statement is based. On today's call, we will discuss certain non-GAAP financial measures for Liberty Media, including Adjusted OIBDA, constant currency for MotoGP. The required definitions and reconciliations for Liberty Media Schedule 1 and MotoGP Schedule 2 can be found at the end of the earnings press release issued today, which is available on Liberty Media's website.
Speaking on today's call, we have Liberty's President and CEO Derek Chang, Liberty's Chief Accounting and Principal Financial Officer Brian Wendling, Formula One's President and CEO Stefano Domenicali, MotoGP CEO Carmelo Ezpeleta, and other members of management will be available for Q&A. With that, I'll turn it over to Derek.
Derek Chang, President & CEO
Great. Thank you, Hooper, and good morning, everyone. We are thrilled with the second quarter performance at both F1 and MotoGP amidst all the global uncertainty, and credit to our operating teams. In this challenging environment, our businesses are motoring along at a speedy pace. Our priorities for 2026 remain unchanged, which are to build upon Formula One's durable business model, establish the foundation for MotoGP's next phase of development, and allocate capital with discipline.
Since May, we have made tangible progress against each priority while keeping the distinct identity of each sport at the center of our approach. Formula One continues to demonstrate the breadth and durability of its platform. The new technical era is producing compelling competition on track. There is immense demand from fans, promoters, commercial partners, and media platforms. Meanwhile, our business continues to perform incredibly well, with notable momentum across Paddock Club licensing and sponsorship in the U.S. Formula One's momentum on Apple continues to build, with viewership up year over year, season to date, and total hours watched up 13%. We could not be more pleased with this result. The digital product is great, and sponsors across the F1 ecosystem are very happy with our distribution on Apple. This season F1 has attracted a much younger and more female audience in the U.S. on Apple TV. Our experience with Apple continues to reinforce the strategy of pairing premium live coverage with product innovation and broader ecosystem breadth without compromising reach.
Through Apple's ecosystem, F1 is being amplified, discovered, and embraced by a new generation of fans, and we couldn't be more excited to see what this partnership will bring to our sport in the coming years. We are also creating more direct and frequent relationships with fans. Provisional content licensing and experiential activations are extending engagement beyond race weekends. For example, Passenger Princess, which in its first season generated close to 300 million views, returned for a second season last month.
The Las Vegas Grand Prix 10-year extension through 2037 is a milestone that underscores F1's growing U.S. presence. At MotoGP, we are beginning to capitalize on the significant opportunities ahead, and we are very happy with our progress so far. The racing this season has been exceptional, with incredibly tight competition among the top five riders. More importantly for the long term, MotoGP completed agreements with all manufacturers and teams through 2031, together with new technical regulations beginning next year.
This establishes a stable framework for investment, promotion, and commercial growth. We continue strengthening the organization, including progressing on key hires and building commercial capabilities, while pursuing growth in ways that are authentic to MotoGP. There is positive momentum in the business with new media agreements signed in Spain and Portugal and new extensions of the Malaysian and Silverstone Grands Prix. Fan activations like the 20,000-person immersive watch party in London in June broaden access and visibility and underscore our priority of bringing the MotoGP experience closer to city centers.
Our capital priorities at the Liberty level remain to support attractive organic growth, maintain a prudent balance sheet, and evaluate opportunities that complement our existing assets. Brian will cover the financial results in more detail, and Stefano and Carmelo will discuss the operating businesses. Our confidence remains high in the durability of Formula One's growth and their increasingly direct and always-on fan relationships. Likewise, we continue to feel very excited by MotoGP's long-term potential as its organizational and commercial foundation takes shape.
Now I'll turn it over to Brian.
Brian Wendling, Chief Accounting and Principal Financial Officer
Thank you, Derek, and good morning, everyone. We'll start with the Formula One business. The race count this quarter is especially challenging due to not holding the Saudi and Bahrain GPs in April and other differences in the calendar, resulting in a 44% decline in the race count for the quarter and a 27% decline year to date. With that in mind, I'll focus on year-to-date comparisons, and as always, it remains best to focus on our business on a full-year basis.
Absent the calendar variability, the business is performing incredibly well. Results reported year to date reflect the 22-race calendar, the number known at June 30th. Subsequent to the end of the second quarter, we have rescheduled the Bahrain GP, which will be held in Malaysia in October, bringing our expected race count to 23 races for the year. We expect to start accruing season-based revenue, costs, and associated true-ups with respect to a 23-race calendar starting in the third quarter of this year.
Additional calendar changes may be necessary. We expect to return to a full 24-race calendar next season. The second quarter of 2026 held five races compared to nine races in the second quarter of last year. Year to date through the second quarter, F1 also had three fewer races, with eight races held in the current year-to-date period compared to 11 races held in the prior year. Year-to-date revenue declined 15% and adjusted OIBDA declined 30%, driven by the change in race count.
The decline in primary revenue was driven by the calendar variance and its effect on recognition of season-based revenue, with 8 out of 22 assumed races staged year to date with approximately 36% of season-based revenue recognized, compared to the prior-year period when 11 out of 24 races had been staged and approximately 46% of season-based revenue had been recognized during the second quarter. Media rights revenue was also impacted by the one-time revenue associated with the release of the F1 movie last year.
Offsetting the decline were underlying contractual fee increases at our three primary revenue streams and revenue generated from new and renewed sponsorship partners. Other revenue declined due to lower hospitality and freight revenue from three fewer events held year to date and lower F3 revenue due to the sale of cars at the beginning of the new F3 cycle last year. Partially offsetting was strong demand for the Paddock Club at recurring events, continued growth in our licensing business, and growth in the Grand Prix Plaza activities in Las Vegas.
Adjusted OIBDA decreased year to date because of the lower event count. The revenue decline discussed above outpaced a decline in expenses. Decreased operating expenses included lower team payments and expenses related to the delivery of hospitality offerings, travel, freight, and other costs due to the calendar variance. SG&A expenses increased, driven by higher personnel and information technology costs, partially offset by lower marketing costs as we lapped the 75th season launch event last year.
Team payments as a percent of pre-team share adjusted OIBDA were 61.7% year to date and were also accrued based on a 22-race calendar assumption for the full year. We still expect to see roughly 200 basis points improvement in leverage on this metric, in line with the average that we've seen over the past four years after 2026. For the remainder of the term of the new Concorde Agreement through 2030, we expect the payout percentage to remain relatively stable.
Team payments are best analyzed on a full-year basis due to quarterly fluctuations in team payments as a percent of adjusted OIBDA. Now turning to MotoGP, reminder that we closed the acquisition on July 3, 2025, so our financial results prior to the date of the acquisition are presented on a pro forma basis so the transaction occurred on 1-1-24. The majority of MotoGP's revenue and costs are euro denominated and, as such, are subject to translational impacts from foreign exchange fluctuations.
I will focus on constant-currency results here. Similar to F1, I'll also focus on year-to-date comparisons. Year-over-year comparisons are impacted by the mix of races, not just the number, and as a reminder, MotoGP flyaway races generally carry higher costs, including freight, travel, and fees. MotoGP race count itself was identical year over year for both the quarter and the year-to-date periods. Revenue increased at MotoGP year to date, driven by growth in race promotion from event mix and sponsorship revenue due to new sponsors and underlying contractual growth.
A reduction in contractual media rights and a decline in title sponsorship revenue related to event mix partially offset that revenue growth. Adjusted OIBDA also grew year to date, driven by both revenue growth and a decline in expenses. Cost of MotoGP motorsport revenue decreased due to the impact of lower freight expenses from the race mix, as well as lower hospitality costs related to MotoGP's new hospitality agreement with Quint, whereby MotoGP now recognizes revenue and costs related to hospitality on a net basis.
Looking briefly at corporate and other results, year to date, revenue was $12 million, which relates to the rental income generated by Grand Prix Plaza in Las Vegas. Corporate and other adjusted OIBDA was a loss of $16 million, which includes Grand Prix Plaza rental income and our corporate expenses. The quarter ends Liberty Media had cash and liquid investments of approximately $1.5 billion, which included $1 billion of cash at F1 and $142 million of cash at MotoGP.
Our debt was approximately $5 billion at quarter end, which included $3.3 billion of debt at F1 and $1 billion of debt at MotoGP, with $497 million at the corporate level. F1's $500 million revolver and MotoGP's €100 million revolver both remain undrawn. We did reprice MotoGP's debt in June, and we priced a €720 million term loan B, a $200 million term loan A, and a new €100 million multicurrency revolving credit facility at attractive terms, with future reductions in margin expected as the business delevers.
Additionally, we repaid a portion of MotoGP's debt funded with cash from MotoGP's balance sheet. Quarter-end Liberty Media's net leverage was 3.4 times. That is a slight uptick from the end of the first quarter, but it's largely driven by the F1 calendar variance. F1 and MotoGP are both in compliance with their debt covenants at quarter end, and with that I'll turn it over to Stefano to discuss Formula One.
Stefano Domenicali, President & CEO, Formula 1
Thanks, Brian. The 2026 season so far has delivered some incredible racing and amazing moments for all of our fans. There have been great battles for partners among Kimmy, George, Lewis, Lando and Charles that have fueled excitement on track. The championship battle remains highly competitive and I expect the teams to converge more and more as the season progresses. The news I knew would become reality is that attendance is up, audiences are up, digital numbers are growing and the fans are enjoying what they are seeing.
The fans are the heart of everything we do and they are loving the season. As you know, the safety and security of everyone in the sport remains our first and foremost priority. We have closely monitored developments in the Middle East region originally hoping to bring back one race to the region but unfortunately we were unable to do so as originally planned. Instead we recently announced the great news that we will recover the Bahrain Grand Prix but it would be hosted by the Malaysian, creating an exciting triple header alongside Baku and Singapore.
I want to thank His Majesty the King of Bahrain, His Royal Highness Prince Salman of Bahrain and His Majesty the King of Malaysia as well as their respected governments and of course the presence of the FIA and the promoters for all their collaboration and the flexibility making this race possible. It once again shows that we can adapt, find solutions and deliver incredible results for the sport. Looking ahead, we continue to expect that Qatar and Abu Dhabi Grand Prix are to currently proceed as scheduled for a 23 races calendar this season and expect to return to a full 24 races calendar next season.
Engagement trends continue to underscore the strength of our sport. We welcomed 3.3 million attendees to date with all 10 races selling out through Belgium. Five races set new attendance records including Silverstone welcoming 564,000 fans, making it the most attended race in the sport's history. Our Sprint format continues to drive higher Friday attendances and stronger daily attendances throughout race weekend. The success of the Sprint format continues to drive growing interest from promoters in Austria Sprint race and we expect to expand the number of sprints for next year and to provide further details soon.
Hospitality offerings continue to benefit from huge demand for premium experiences. The Paddock Club remains sold out for the rest of the season and House44, which is also sold out this season, has been a standout success. We plan to expand House44 from nine locations this year to 13 locations next year. At the Belgium Grand Prix, we launched our new premium experience, the Outlap, in partnership with LVMH. Early feedback from our partners and fans have been overwhelmingly positive and we expect to operate this experience across Europe next season.
Retail sales remain robust and highlight the underlying consumer demand on F1 brand and merchandise. At Silverstone, we introduced a new flagship retail concept that offers fans a broader and more diverse product assortment. We plan to expand this flagship format to Monza, Madrid and Austin later this year. Building on the success of the specialty F1 Disney store in Asia, we launched another Disney retail hub at the Montreal race this quarter. Additionally, we also opened two new F1 Hub locations in Montreal and London, further extending our retail footprint and following the success of the original concept in Las Vegas that returns in November, we continue working with our promoter partners to elevate our premium hospitality experience including adding new capacity increases this season at Silverstone, Monza, Monaco, Austria and Hungary and we planned expansion next year in Austria. In Monaco this season we added a third floor to the Paddock Club in addition to diversifying our premium product mix with five different experience packages. At Silverstone, we opened our Turn One Annex in our Paddock Club, taking our premium capacity to an all-time high this season.
At Austin, we are excited to open our new structure at Turn One later this year and we also have additional planned expansion also next year. We also continue to see growth in our global TV audience led by several key strategic markets including Brazil, Italy and China. In Brazil, the British Grand Prix reached a record of 18 million viewers across TV Globo and Sport TV3, generating the highest audience for the event in eight years and the largest audience for any F1 race globally since 2020.
In Italy, TV audiences are up plus 27% through Silverstone versus last year, helping drive broader growth in fan engagement across our ecosystem. In China, the momentum generated by the Chinese Grand Prix where weekend audiences more than double year to year has continued throughout the season, supported by increased coverage and growing audiences. Our social and digital platforms continue to play an important role in bringing our younger digital-first audience closer to our sport.
We grew our social media followers 19% year over year with particularly strong engagement. On TikTok, our total YouTube views surpassed 1.3 billion, up 30% year over year, while our YouTube highlights views have reached almost 200 million views with over 15 minutes hour watched. While we continue to benchmark our sport engagement using traditional measures of viewership, we also recognize that our fan base continues to evolve. So too does the way our fans engage with us across a diverse range of platform channels and experience.
For example, the Lego Driver's Parade at Silverstone generated more than 70 million video views across multiple platforms, creating another culturally relevant moment that captured the attention far beyond the live race itself. To reflect this evolution, we're continuing to enhance how we measure and value fan engagement, building a more comprehensive view of how fans connect with Formula One across the entire ecosystem. Our partnership with Apple underscores this ability to interact with fans across multiple touch points, enabling a more holistic view of engaging with our sport.
Since launching on Apple TV, F1 has attracted a younger audience while also expanding its reach among female fans. Our sport continues to build momentum on Apple TV, delivering strong viewership and engagement with fans. This season, the strength of Apple ecosystem has already helped us reach and engage with new fans across the US. F1 isn't just being watched, it is being discovered, followed and embraced by a new generation of fans across every Apple platform and device.
Our growing fan engagement continues to translate into sustained interest from our commercial partners. With respect to our media rights, we remain active in our negotiations and renewals, recently renewing with ServusTV in Austria in a multi-year agreement. Globally, our F1TV product continues to perform well with F1TV revenue, not including the US where the arrangement has changed, increasing 18% year to date. Our race promotion business has never been stronger while our calendar is fully allocated through 2028.
Interest for new destinations to host a race remain robust with many potential host cities seeking to develop long-term proposals that will drive tourism investment and broader economic activity around a potential race weekend. Our active pipeline despite our calendar being full underscores the strength of the sport commercial proposition in an era of expanding media reach, deepening partner engagement and growing consumer demand globally. We are equally thrilled with the phenomenal progress we have made this year with the Las Vegas Grand Prix.
We have added our very first F1 after-party concept featuring the iconic Backstreet Boys at the Sphere following the race on Saturday night. Our ticket sales are trending well ahead of the last year with respect to both volume and revenues. In fact we are already at month end September 25th levels as of the end of July and on a like-for-like basis excluding ticket sales for the Backstreet Boys. We have also recently announced our 10 years extension with the LVCVA keeping the LVGP on the calendar through 2037.
This extension reinforced the strategic importance of these race to our local community partners and we now have greater certainty to invest in long-term infrastructure and operational improvements reducing future build-out costs. Grand Prix Plaza in Las Vegas also continues performing well with private events, attraction and watch party performing really well with attendance on track to surpass 2025 levels. Sponsorship activity remains strong. During this quarter, we extended our agreement with Pirelli as our official tire supplier through 2028 and welcomed Flexjet as our official private aviation supplier in a multi-year partnership.
Additionally we also announced Fiverr as our new centralized signing platform for F1.com starting new season, bringing the strength of their marketing platform to our sport and ensuring we continue showing up in the most culturally locations. By partnering with Fiverr, we will deliver a smoother fan journey with more sophisticated technology to improve discoverability and ticket purchasing. Momentum around our licensee business continues to build.
We recently announced a new multi-year global publishing partnership with DK Books bringing our storytelling to a new level for fans of all ages to experience F1. We have also renewed our partnership with the Automobilist which continues to print the Swiss F1 posters and calendars for us and we also recently partnered with Hasbro to launch a special F1 themed edition of Monopoly. In addition, we have signed multi new agreement through our distance partnership including Gentle Monster and Uniqlo and have many additional product launches plans with and without Disney globally for the remainder of the year as we further the reach of our sport with iconic global brands. While we remain momentum across all parts of our business, we believe Formula One has an exciting growth journey ahead and we are excited by the opportunity. We are confident that the foundation we are building today will drive enduring value for all our partners and stakeholders. Avanti tutta. Full speed ahead and now I will turn the call to Carmelo to discuss MotoGP. Ciao.
Carlos
Good morning, and thank you, Stefano. It has been an outstanding first year growing our sport with Liberty Media, and we look forward to building on this momentum with Liberty's continued support. Our season this year has been incredible. The competition has never been tighter across the grid, with only 24 points splitting the top five riders season to date, with notable strength from Aprilia. To date, 12 riders across seven teams and three manufacturers have made the podium.
Congrats to Ai Ogura, winning his first GP at Assen, our first Japanese winner since 2004 and the first graduate of the Asia Talent Cup to win a Grand Prix. Consistent with our history, we have successfully signed the Manufacturers and Teams agreement for the next five years. This renewal provides the necessary foundation to grow our sport collectively. The most important outcome from this agreement is the strong alignment across all parties on a shared vision, which is to evolve our sport while maintaining its unique heritage.
Under the new agreement, we are collaborating on ways to optimize cost while preserving the competitive integrity of the sport, allowing teams and riders to reinvest back into their commercial efforts. As we work collectively to realize our reach, we will increase our investment into the sport with shared responsibility across manufacturers and teams to help drive the long-term commercial success of MotoGP, creating a strong plan to continue innovation and performance and reinforcing MotoGP as a premium global sport.
We continue to grow MotoGP engagement both on and off track. Across the first 11 races, attendance is up 4%, with record attendance in Thailand and Germany. We also continue to see growth in our TV audiences, with viewership up 3% through Mugello, with notable strength in our US, Spanish, and Austrian markets. We also recently hosted a watch party for the Dutch Grand Prix at the Outernet in London, drawing over 20,000 visitors, and look forward to running the same activation for Silverstone.
As we broaden our reach, we see attractive opportunities to engage fans in creative, immersive experiences in key markets around the world. We remain focused on extending MotoGP's global footprint and are encouraged by the momentum across our digital and social footprints. We ended the quarter with 63 million social media followers, a 3% increase year over year, with particularly strong performance on TikTok, where engagement increased over 80%. Our Chinese social media platforms also delivered strong growth, with followers increasing 26%.
As we continue to deepen our presence in this key growth market, video views excluding VideoPass increased over 30%. We had a productive quarter with several new and renewed partnerships across our business. In media rights, we continue to strengthen our global footprint. We have recently renewed with Sky Deutschland covering Austria, Germany, and Switzerland; with DAZN in Spain and Portugal; and with RTBF in Belgium in multi-year agreements. We also continue building momentum in race promotion, extending agreements with several promoter partners, including Malaysia to 2031 and Silverstone through 2028.
Looking ahead to next year, we are excited to race again in Argentina at Buenos Aires and for the debut of the Adelaide GP. We look forward to unveiling the first visual renderings of the new Adelaide circuit over the next few weeks. In our sponsorship business, we signed CAA as our global sponsorship agency, further strengthening our commercial platform and capitalizing on our brand refresh and growth in hospitality. We are encouraged by the early momentum with our expanded partnership with Quint, where we are working together to enhance the premium hospitality experience at our events.
We are excited by the path ahead and remain encouraged by our early momentum. We look forward to continuing to update the investor community on our progress. Now I will turn the call back over to Derek.
Derek Chang, President & CEO
Great. Thank you, everyone. We appreciate your continued interest in Liberty Media. That will open the call up for Q&A.
OPERATOR
Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit to one question and one follow-up question. Our first question is from Kutgun Maral with Evercore ISI.
Please proceed. Great.
Kutgun Maral, Analyst at Evercore ISI
Thanks for taking the questions. Two, if I could. First, I wanted to dig into the underlying trends across media rights. I think the Apple deal in the US continues to get a lot of attention, but you've inked a number of other broadcast agreements since then, and we don't get as much visibility into the economics of those. I know every deal is different and the linear and digital media landscapes keep shifting, but could you give us a sense of how those conversations are generally evolving?
And in broad strokes, is there a helpful way to think about the trajectory of media rights revenue as these deals get renewed or extended? And then, second of all, I wanted to ask about the Las Vegas Grand Prix. It's very encouraging to hear ticket sales are trending well. I know you don't break out the financials separately and discreetly for the race, but can you share any color on how profitability is trending year over year? Because if current ticket sales and revenue trends hold and you continue to evolve the vendor contracts, it seems like profitability should be positioned to improve as well.
But I'd appreciate your thoughts on how we should be thinking about the financial impacts of the 10-year extension going forward as well. Thank you.
Derek Chang, President & CEO
Sure. This is Derek, and I'll just start, I think, on the media rights. As you know, media rights across the globe sort of ebb and flow depending on who the players are, what rights are coming up, and other factors as it relates to dynamics of the different subscription businesses or broadcast businesses in those markets. And so we are constantly in discussion with folks, not only while we're in negotiation, but frankly outside of that, because they are partners and we're always trying to build and generate as good a product as we can with them.
Through those discussions, you're constantly hearing about what's going on in these markets, whether or not digital players are coming in globally in other markets, what their expansion aspirations are. I think more broadly I would just say that we feel good that we have great products. We have content that people want. We obviously, to some degree, are subject to some of those things that are outside of our control. The things that we can control are continuing to make the sports that we own as compelling as possible and as interesting for our partners as possible, and that's what we do to put ourselves in the best position as we go to market every time. Now, we are, as I mentioned earlier, constantly having discussions with these guys, and so what you've seen from time to time is us also taking advantage of opportunities where we've renewed deals early because it makes sense. We will continue to look for ways to do that because what we are interested in is the long-term stability of our product and making sure we're with the right partners. And just like with the race promoters, if we can find the right partners who will invest for the long term, we think that builds our brand; that builds value in our sports. As we come back to the specifics of the question, I think that we are very encouraged by where the Apple deal has gone. I think we're encouraged, certainly with F1, with the recent renewals with Sky, and then on the MotoGP side, also very encouraged by what we've just done recently, particularly with DAZN, which—Spain and Portugal are important markets for us. Stefano and Carlos, I don't know if you guys want to add anything to that.
Stefano Domenicali, President & CEO, Formula 1
Yeah, I mean, thanks, Derek. I think that a couple of points on top of what Derek just said. First of all, the beauty of what we are doing is that we control the content and we produce it, and this is an incredible asset and opportunity to redefine what is now, in the media world, the redefinition of the reach. We don't have to forget that the reach is taken not only with the evolution of what we have had in terms of great deals with the great media partners, but we have other ways to produce content through different ways to connect people.
We don't have to forget that now there are so many platforms to reach people that are creating value for the media broadcasters to connect with us—either through, let's say, traditional product or other products that could be digital or other platforms. That's why the beauty of what we are having today in the global world is that the partners that are working together with us want to renew earlier than what is the expiration date, because they see the value of what they're doing.
On our side, making sure we take the right evaluation market by market, we're going to see if new trends coming in can be monetized or help us to get into a different dimension of reach; otherwise it will be different. So I think we are at a great spot today. We are an incredible sport that, because of what we are producing, gets the leverage to make sure that, looking ahead, we are very positive that we can be a sport that can be produced on all the different platforms all around the world, making sure that we can monetize as much as we can every single contract, what we are doing in every single market.
That's the point on media, in my opinion, to add on what already Derek said absolutely very, very clearly. And Derek, of course, if we can answer the second question, I will follow you; otherwise I could go ahead with that point, as you prefer. But I think that what we don't have to forget—I'll start once again with one factor—Vegas is becoming one of the most important events that has already shown, since the beginning, the potential of it. I don't want to forget that, if we compare the economic impact that F1 did versus Super Bowl, with respect, we were bigger.
That means the potential to keep growing, controlling even more the costs, having now the opportunity of having agreed the 10-year extension with LVCVA, means that we can really build even stronger the possibility for this Grand Prix to be even more profitable. That is already the case, because this is something that we knew—it was a product that could have been fantastic. And this trend of growth in terms of profitability, and also not only ticketing-wise but in terms of positioning as an F1 product that can have a great push to other promoters, is becoming a relevant thing that is indicating to the world of the sport business the way to produce events around the world. And this is very, very good. We are very happy. Emily Fraser, the CEO of the Vegas Grand Prix, did a tremendous job with the team there, focusing and making sure that, all together as one, we can produce an even stronger product for the future. This year's event will be phenomenal. I don't want to anticipate; there will be some new content that we're going to do on the racing, because we don't forget that at the center of our product—Vegas, Miami, Madrid, or wherever we are in the world—is what we're doing at the track, and then being able to extend the experience.
That is the key factor of being so successful so far all around the world.
Kutgun Maral, Analyst at Evercore ISI
Great, thanks, Stefano.
Derek Chang, President & CEO
Operator, next question.
OPERATOR
Our next question is from Steven Lecheck with Goldman Sachs. Please proceed.
Steven Lecheck, Analyst at Goldman Sachs
Great, thanks for taking the questions. Brian, you called out that absent of the calendar variability at F1 this year the business is performing exceedingly well. I was just curious if you could maybe speak a little bit more to the underlying performance you've seen year to date and if there's any particular parts in the business that are performing better than expectations heading into the year.
Brian Wendling, Chief Accounting and Principal Financial Officer
Yeah, thank you for the question and I can certainly start and I'll let Stefano add on, but obviously the calendar variability makes it very challenging because you have lower proportionate revenue recognition. But if you kind of look through that, we're seeing really good growth on sponsorship similar, you know, as we did last year. We're seeing really strong performances in licensing, the paddock. The demand for the Paddock Club is very strong.
Obviously you have fewer races. You don't necessarily see that come through the numbers. But those are three areas that I would very, very specifically call out. Stefano, anything you want to add to the underlying performance?
Stefano Domenicali, President & CEO, Formula 1
I think Brian, you reached the most important point for sure. Licensing is starting to be on the trajectory that, you know, we've heard since a couple of years. There is a tremendous effort to characterize this revenue stream even stronger in the future. I want to say stay tuned because something will happen because it's important that we keep growing that revenue stream, as we always said. And then I go back to the point that Brian was saying before related to Paddock Club.
Paddock Club is related to experience, and this is something that will create even more the possibility of growing our revenues in the future. Because experiential opportunity is where we are focusing our future. You know, we did an experiment, for example in Spa, offering a very exclusive customer a possibility to have one of the best chefs in the world at tour, having a unique way of having a food experience at the end of Saturday night. This is another way to create things that money cannot buy.
That's our approach to create even stronger that kind of possibility that will have an impact on our revenues. That's definitely very, very important. If I may, I don't want to give for granted the fact that we were able to react in a very difficult situation because of course our way to embrace our way to work is to always try to find solutions, even if there are problems. You know, the fact that with the Bahrain Grand Prix we wanted to bring home a race there and find that place to be in Malaysia, not in Bahrain, shows our vitality.
You know, we are racers inside. We want to make sure that our fans and our partners will rely on us to find solutions. That's what will happen in future with regard to revenue streams that I see a great potential even in the next five years ahead of us.
Steven Lecheck, Analyst at Goldman Sachs
Great, thanks for that. And then maybe just on the expense side for Stefano and Brian, SG&A at F1 looks like it continues to pace up a good bit year over year. Just would be curious if you could talk more about the investments you're making in the business and then how we should be thinking about the pacing of SG&A as we look into the back half of the year and then maybe even into 2027. Thank you.
Brian Wendling, Chief Accounting and Principal Financial Officer
The biggest two factors are you have a marketing benefit because we had the 75th anniversary last year. We also have an FX impact where FX has negatively impacted SG&A for the first half of this year. Normally we don't see something that large, but as our cost base in the UK changes, if you have changes in the British pound, obviously that could be an impact. Outside of those two items, you know, there's investment in personnel, so personnel costs are higher than they were in the prior year.
SG&A slightly higher at LVGP. The bulk of that is due to the fact that, as you recall, we took over the sales function from Quint last year, but that wasn't fully baked at the beginning of 2025. So it was being built up through 2025 and you have a full year of it now. So that shouldn't be an impact going forward. And then we do have higher IT costs as we invest in the business. Those are the primary items.
OPERATOR
Great, thank you very much. Next question. Our next question is from Matt Condon with Citizens Bank. Please proceed.
Matt Condon, Analyst at Citizens Bank
Thank you so much for taking the questions. Stefano, you know you mentioned the commercial opportunity and I know you've talked about in the past as being a big future opportunity. Can you just talk about the key levers to make this a bigger part of the business over time?
Stefano Domenicali, President & CEO, Formula 1
Sorry, Matt, can you repeat? Because the line was a little bit disturbed on my side. Sorry,
Matt Condon, Analyst at Citizens Bank
No, I was just asking about the commercial licensing opportunity and you talked about this being a big future opportunity. Just wanted to know the key levers to getting this to be a bigger part of the business over time.
Stefano Domenicali, President & CEO, Formula 1
Okay, sorry. Now I understand. No, I think that the beauty of what we are doing is that every time we meet, you know, there is always what's next. What's next is finding opportunities that our market presenting to ourselves. We have for sure done already an incredible step with regards to what in all the categories we can offer to our customer. The investment on digitalization that Brian was mentioning before will allow us to grow this opportunity even further.
Different market, different visibility, different opportunity. And therefore this will allow us to maximize that. Every connected to that in terms of other commercial opportunity, I think definitely one thing that we are very focused in working very hard to renew: the actual big partners to be extended now without waiting the expiration. And one area that we want to protect because it's an area where everyone wants to be totally involved is the area of AI.
We will never give to anyone a single part of that area because it's too big. Therefore, our ability to divide that area of business is creating us a lot of other opportunities. And the other thing is related to the key licensee partners that is growing year by year. We see that through different proposition that we are doing. We are creating capsule. We are creating content that enable us to have a bigger issue with our fans. Now we are really, I would say, in a good position to monetize as much as we can the possibility of moving our customers through our partners too.
Also, but that will give us a great visibility of a great trajectory of future revenue that will continue in the next future, of course.
Matt Condon, Analyst at Citizens Bank
Great, that's very helpful. And then I just wanted to ask about the new agreement with the manufacturers and teams from MotoGP. Can you maybe just give us an overview and what are the key points that we should really know as you think about this going forward? Thank you so much.
Derek Chang, President & CEO
This is Derek. I think that the key points are that, you know, we've got another five-year deal with the teams and the manufacturers and I think we've got everyone sort of moving in the right direction in terms of outlining what the technical aspects of the sport will be. I think the other key components are we're—some of this is in the deal, some of it not—but just sort of how we're going to build this sport together. This process has been, you know, it's a bit long and as you might imagine in any sort of discussion like this, I think there's some gives and takes, but I think that we're coming out of it in a way where everyone on both sides, in terms of the teams and us, are trying to figure out and work together to build the sport both as a product, but also from a commercial standpoint that will benefit all of us. Carlos, I don't know if you want to go into that a little bit more.
Carlos
Thank you, Derek, and thank you for the question. I think it's a very positive outcome for us. And evidently after the deal with Liberty Media closed and acquisition closed, that was really the time that we could, you know, really start the conversation with the manufacturers and teams as there has been a real alignment in terms of how we want to build this together, as Derek was saying. And really, you know, what is the vision and the strategy behind building MotoGP and how the manufacturers and the teams have to be a part of that.
I think that, you know, high tides raise all boats and, you know, putting together the investment that is going in towards the teams for them to also be able to invest into their own resources to grow their brands. The sport is an amazing place from the racing point of view and 2027 and the new regulations will only improve that. So this is really—it's been a great conversation with the teams and the manufacturers to really get everybody aligned on the commercial side and the strategy behind building the sport.
Thank you.
Hooper Stevens, SVP Investor Relations
Thanks very much, Matt. Operator, next question, please.
OPERATOR
Our next question is from David Joyce with Seaport Research Partners. Please proceed. Thank you.
David Joyce, Analyst at Seaport Research Partners
More on MotoGP, please. Can you help us understand how much of the cost base in the quarter was allocated to incremental growth initiatives as that sport aims to apply the Formula One playbook? And separately, on the sponsorship side there for MotoGP, how much of that is expiring in the next year that could result in either upgrading the sponsors or expanding relationships or just getting step-ups based on the continued fan engagement growth there.
Hooper Stevens, SVP Investor Relations
Thank you. Why don't we start with Brian on the cost side?
Brian Wendling, Chief Accounting and Principal Financial Officer
Yeah, David, I would say the investment phase is not that pronounced in the quarter specifically. I'll look at the year-to-date results, but year to date, you know, we've got higher marketing expenses as we try to grow the brand. There are some incremental investments in personnel, but those are really not that material. I mean, you can see in our reported results that SG&A is relatively flat for the quarter. And then on cost of revenue, there certainly are investments there, but those are offset by, you know, changes in the schedule where you have higher payments to the teams due to the change in the schedule and increased flyaways.
Actually, I'm sorry, a lower flyaway, lower freight cost because of the change in Qatar. So, so far you're not seeing material increases in the cost base through the investment, other than some personnel and marketing costs.
Derek Chang, President & CEO
And on the sponsorship question, I think the way to think about it is less about sort of what's expiring. As you might imagine, we have a regular flow of deals that sort of come up and they're probably three to five years in nature. And so periodically you have these coming up, but I think it's actually more about what sponsorships are going to be available with a focus on the business and bringing this to a much wider audience. And I think something that we've been pinning on from day one—and we've historically had a fairly endemic sponsorship base—and I think as we look much further afield, this starts to open up much bigger opportunities for us, well beyond sort of what a normal renewal rate paradigm will give us. So I think that's how I frame it, how I think about it.
David Joyce, Analyst at Seaport Research Partners
Great, thank you very much.
OPERATOR
Our next question is from Brent Navon with Bank of America. Please proceed.
Brent Navon, Analyst at Bank of America
Thank you. We've seen Formula One, I guess, increasingly add Sprint races to the calendar. I mean, how many more can realistically be added here? And I guess, can you explain how this filters through the business? Is this just extra race promotion revenues? I mean, is there media rights or sponsorship opportunities that come with it as well, or even hospitality. Thank you.
Hooper Stevens, SVP Investor Relations
Sure. Stefano, why don't you just go ahead and take that one?
Stefano Domenicali, President & CEO, Formula 1
Yeah, sure. I mean, sprint races are an opportunity that, first of all, started because we wanted to produce something that could create action at the track, creating leverage for the promoter and ourselves to create action on the tracks. Starting for the weekend, we're going to have more races, more sprint races. Sprint, sorry, next year. Yes. We'll inform, when we will announce the calendar, how many. The principle is very simple. This is also an opportunity to increment the revenue stream for sure.
This is an opportunity for us to have new deals, as we have already seen. And moving in this direction will be our future. We want to do it in the right way because, of course, this will allow us also to make sure that scarcity is a value. So, if commercially we would go everywhere, of course that's not any more a value that we can really, from the commercial point of view, sustain. But definitely we're going to move further up in some of the—what would the number be in the future?
That's 1000%. What will happen already next year.
UNKNOWN Analyst
Great, that's helpful. And maybe just a follow-up to some media rights discussion earlier. You know, a few months ago when you announced the Sky extension, Germany was noticeably absent from that agreement. And, you know, there's been a few recent press reports suggesting you may look to be adding a race back to the calendar in Germany. And so I guess, should we interpret that as potentially, you know, Germany — you guys viewing that as an untapped growth market — and, you know, maybe help kind of help us think through how bringing a race back potentially could help with the media rights discussions there.
Doug
Thank you so much. I'll start on this one. Okay. Yeah, look, I think I'll let Stefano talk about a race in Germany, but I think that, broadly speaking, this is sort of what I was alluding to earlier: Germany is a market in flux, you know, with the RTL Sky merger. I think also you've got some of the digital players, the streaming platforms, that are coming into Germany. So it's a market that, you know, probably a few years ago was, you know, not as robust, and it's looking now more robust.
And those are just market-driven phenomenons. And then you layer onto that what we continue to do from a product standpoint, which I'll let Stefano talk about more, and any sort of sense of races in Germany and such. But that's solely dependent on having races, having the content. It is, you know, part of it is what the macro dynamics are happening in that particular marketplace.
Stefano Domenicali, President & CEO, Formula 1
Well, if I may add—yeah, if I may add on what Doug said—definitely RTL was an important step in our need to have more reach in that market. I'm pretty sure that in the future, when will be the right negotiation, the market of Germany will be different, for example, from what we have now in Italy or in the UK. There will be digital platforms or other streamers that will apply for the tender, because that's a market that possibly will have that opportunity to put us in a situation that we need to make the right decision for the future.
But with regard to the potential, I would say that we don't have to forget that we have Audi that's stepping into the business, we have Mercedes, we have big partners that have their home base in Germany. And I think now Germany wants us to think in the medium term if they can come back into the calendar or, even more important, being as it was 20 years ago, one of the most important markets for Formula 1. I think those are the bases for this discussion.
I think that we know very well the dynamics in Germany are not really the fastest ones, but definitely the new situation in Germany starts to move in the direction that I see Germany potentially in the future being a very interesting market that will have a positive effect both on the media side, but also maybe on the promoter side. It will not, in that case, be a short-term call, but definitely will happen. And this is very, very important to remember.
Thank you so much.
OPERATOR
Our next question is from Ian Moore with Bernstein Research. Please proceed.
Ian Moore, Analyst at Bernstein Research
Hi guys. Thanks for taking the question. Everything you shared on, like, premium hospitality, Paddock Club, really encouraging today. What are you learning, I guess, about supply versus demand dynamics there? You've added a lot of capacity there over the past couple seasons. What are the signals that are giving you confidence that demand for these experiences continues to outpace supply?
Derek Chang, President & CEO
Steph, you can take this.
Stefano Domenicali, President & CEO, Formula 1
Yeah, thanks. Thanks, Derek. I mean, today I can tell you that today we are talking about the fact that, already next year, 2028, we have already allocated for the teams all the Paddock Club hospitality that we have. So it's a sign that today we need to see how we can extend not only in terms of quality, but in terms of pricing. The other offers that the promoters are doing as a joint activity. So the signals are all positive, all great. We see our market in a full-strength mode, also because we don't have to forget that now also the teams have solid partners, very important brands that want to invest in Formula 1 to what we are offering on the commercial side. So today are all good. We have new products that are very, very innovative. The good thing is that I think, personally—not personally as Stefano but as a team and F1—is a good thing because everyone is watching us on what we are preparing for the future of sports entertainment, and our team is focused on creating more initiatives to try to be always at the top edge because today is not only pricing, it's really how we can involve our team and our people—sorry—to leverage what we are today.
So the signals are super positive and we will not give up in making sure that this positivity will be extended for a longer period as much as we can.
Ian Moore, Analyst at Bernstein Research
Appreciate that.
Stefano Domenicali, President & CEO, Formula 1
Thank you.
Hooper Stevens, SVP Investor Relations
Thank you, Stefano. Thank you, Ian, and everybody else for participating today. We look forward to speaking to you more offline and seeing you in the coming weeks. Take care.
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