Despite Continuing Losses, Formula E CEO Says Racing Series Is On Track Financially
Formula E is approaching end of its third season, but is the project financially viable? According to its CEO Alejandro Agag the future is bright.
Formula E noted losses in the first two seasons, but that doesn’t surprise anyone, as that is a common affliction of any new business.
And the results seem to be headed in the right direction.
“Accounts filed at Companies House showed Formula E Operations Ltd reduced its operating loss to 33.7 million euros ($38.32 million) at end-July 2016, a period covering its second season, from a previous 62.7 million.
Net liabilities rose to 107.2 million euros from 72.1 million, while total revenues reached 56.6 million from a previous 19.7 million.”
The question is how far Formula E is from break even? Agag encourages it could be achieved at any time, but instead the company is opting to accelerate expansion, and make deeper investments at this stage.
“Everything is going according to plan,”
“Actually we are doing incredibly well financially according to our plan.”
“We could have broken even this year but we decided to invest more in marketing and promotion. We decided to add races like the one in New York, which is in year one a race which is costing, we have significant capital expenditure.”
“It’s really up to us when we want to go to break even or not. We could be in break-even now, we could be in break-even next season but we may decide to invest more in marketing and promotion.”
Formula E is the only global electric racing series, so the ongoing electrification movement certainly works in favor of Formula E. As a result, more and more manufacturers are interested in joining the series, especially as the expense to do that at this point is relatively small ($10-15 million, compared to $300 million in the example of Toyota team participating in the World Endurance Championship).
Recently, Audi dropped the World Endurance Championship, and instead focused on the Formula E, and saved some €100 million in the process according to Reuters.
Check out Audi’s nifty “change over” promotional spot: