Earnings Call Transcript - BATRA Q4 2020

Operator, Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Liberty Media Corporation 2020 Year-End Earnings Call. As a reminder, this conference is being recorded today, February 26. I would now like to turn the conference over to Courtnee Chun, Chief Portfolio Officer. Please go ahead.

Courtnee Chun, Chief Portfolio Officer

Thank you. Good morning. Before we begin, we'd like to remind everyone that 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 Liberty Media's most recent Form 10-K or Liberty Media Acquisition's Form S-1 registration statement filed with the SEC. These forward-looking statements speak only of the date of this call and Liberty Media and Liberty Media Acquisition expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Liberty Media or Liberty Media Acquisition Corporation's expectations with regard to their due 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 and SiriusXM, including adjusted OIBDA and adjusted EBITDA. The required definitions and reconciliations for Liberty Media and SiriusXM Schedules 1 and 2 can be found at the end of the earnings press release issued today, which is available on Liberty Media's website. Now I'd like to turn the call over to Greg Maffei, Liberty's President and CEO.

Gregory Maffei, President and CEO

Thank you, Courtnee, and good morning to all of you. Today speaking on the call, we will also have Formula One's new President and CEO, Stefano Domenicali; and Liberty's Chief Accounting Officer and Principal Financial Officer, Brian Wendling. I'd once again like to recognize and thank our management teams and employees for the tremendous job they have done navigating through COVID in difficult circumstances. Beginning with Liberty SiriusXM, I'd note we continued our share repurchases, repurchasing $99 million across both LFX and AMK shares in the November to January time frame. As you know, the discount persists, and we repurchased at a look-through price on SIRI of about $3.70 per share. We do expect to take advantage of discount opportunity, in part driven by some recent balance sheet improvements we have at LSXM. In November, we raised $920 million of a live exchangeable bond at 50 bps to repay our live exchangeable maturing later this year and from the call spread between LSXM and 1 that originated when we did the reattribution. In tandem, we amended the live margin loan and unencumbered a substantial portion of our live equity. Also, after quarter end, we amended our SIRI margin loan, increasing our borrowing capacity from $1.35 billion to $1.75 billion. Accordingly, we have generated substantial incremental borrowing capacity to pursue that discount and continue to take advantage of it. Our ownership of SiriusXM as of January 29 stood at 76.4%. We do expect to get to 80% ownership this year, and we recently announced a tax sharing grid between SiriusXM and Liberty SiriusXM. The SIRI Board of Directors evaluates capital return strategy every quarter and we'll continue to do so if Liberty gets to the 80% ownership level as we expect later this year. Looking at Sirius itself, we welcome Jennifer Witz, who assumed her new CEO role in January. The new car penetration at SIRI reached 80% in the fourth quarter, and we have line of sight to reach 82% in 2021. SiriusXM hardware is now in one out of every two cars on the road, and that number continues to climb. SXM self-pay households listening in the digital environment, i.e., out of the car, grew 40% in 2020, and Stitcher holds the largest share of the U.S. podcast listening audience available to advertisers. Please do make sure you listen to the podcast of the year, Office Ladies. For those of you who have attended our investor days, you know how much we appreciate The Office. Turning to Live Nation, we continue to have great demand for concerts; perhaps notably, The Weeknd sold over 1 million tickets worldwide for his 2022 tour just one week after announcing the tour. Clearly, there is robust demand for live music. Live also acquired a majority stake in Veeps, a ticketed live stream platform; I encourage you to check out the series they have on Rufus Wainwright. Looking at the Formula One Group, as I mentioned, we have a new CEO there, Stefano Domenicali, from whom you'll hear in a minute. We are planning for a record 23 races this year. Notably, the Orange Army is ready to welcome the Dutch GP and local hero Max Verstappen in September at Zandvoort. 2020 showed we have ample demand for hosting races, even on short notice from both new and historic tracks. And now for many of you who have seen everything you want to see streamed online this year, get ready to tune in for Season 3 of Drive to Survive, which drops on Netflix on March 19. In January, we introduced LMAC with SPAC. We raised $575 million; that's the largest corporate SPAC to date, according to banks involved, and we may be correct; it was the most oversubscribed SPAC of all time, and the first trade at $13.20 was the highest initial trade for any SPAC to date. The stock has continued to trade well, but admittedly on thin volume. We are actively in discussions with a number of targets in the TMT space. The 20% interest in LMAC is attributed to the Formula One Group. I would remind you that the Formula One Group has committed to board purchase $250 million, a $10 increase per unit in connection with the initial business combination when that occurs. Turning to the Braves, we sadly lost some icons from the Braves this off-season, and we'd like to start by paying tribute to them, notably, Phil Niekro and, of course, Hank Aaron. We started a fund named after Hank Aaron, seeded with $1 million from the Braves plus $1 million from Major League Baseball and the Major League Baseball Players Association to help promote diversity in baseball. We are excited about our enhanced 2021 roster coming off of winning the NL East for our third straight season. We did re-sign Marcell Ozuna to a four-year deal. As you may recall, we came within one win of reaching last year's World Series. So our players are ready to go. Spring training started recently on Tuesday, and our first spring training game is this Sunday. We expect fans to be in attendance at 25% capacity. Returning to home at The Battery, we are near completion and 70% leased. Both Kristin Kreuk and Papa John's will fully occupy their space by the summer of 2021. Ninety-seven percent of the Battery tenants are operational, which speaks to the relative openness of Georgia, and we believe that bodes well for fans at Truist this year. We do expect to have fans in the stands, but are not yet sure of the seating capacity restrictions. We have significant demand for both tickets at Truist and Spring training; as I noted, we look forward to a great 2021 season, including hosting the MLB All-Star Game on July 13. So with that, let me turn it over to Brian for some more financial results.

Brian Wendling, Chief Accounting Officer and Principal Financial Officer

Thanks, Greg, and good morning, everyone. At Liberty SiriusXM Group, we've taken a number of steps to boost liquidity and strengthen the balance sheet. In the fourth quarter, we issued $920 million of Live Nation exchangeable bonds and amended our Live Nation margin loan, unencumbering substantial Live Nation equity value as part of the amendment, decreasing the shares underlying the loans from $53.7 million to $9 million. Subsequent to the quarter end, we amended our SIRI margin loan, increasing borrowing capacity to $1.75 billion, up from $1.35 billion at year-end and borrowing an additional $125 million. Inclusive of this additional margin loan drawn, Liberty SiriusXM Group had attributed cash, restricted cash, and liquid investments of $1.1 billion, excluding $83 million of cash and restricted cash held directly at SiriusXM. We also have $1.1 billion of undrawn margin loan capacity at the parent level. Note that approximately $850 million of our cash will be used in 2021 to settle the call spread between the Formula One Group and the Liberty SiriusXM Group and to repay our 2.25% Live Nation exchangeable bonds. This value is based on estimates of the fair value of both liabilities at year-end. As of February 25, the value of the SiriusXM stock held at Liberty SiriusXM Group was $19 billion, and the value of our Live Nation stock was $6 billion, excluding the value of the Live Nation call spread held at Formula One, valued at $371 million at year-end. We have a $3.2 billion principal amount of debt against these holdings. Total Liberty SiriusXM Group attributed principal amount of debt is $12.8 billion, which includes $8.6 billion of debt at SiriusXM directly. Formula One Group had attributed cash and liquid investments of $1.4 billion, which excludes $265 million of cash held at Formula One. The total Formula One group attributed principal amount of debt was $3.6 billion, which includes $2.9 billion of debt at F1, leaving $727 million at the corporate level. At year-end, Formula One's $500 million revolver remains undrawn. At quarter end, the Braves Group had attributed cash and liquid investments along with restricted cash of $185 million and attributed principal amount of debt of $674 million. We are currently in compliance on all debt covenants across the portfolio. With that, I'll turn it over to Stefano to discuss Formula One.

Stefano Domenicali, President and CEO of Formula One

Thank you, Brian. I'm thrilled, first of all, and honored to lead Formula One. Thank you to Liberty, the FIA, the teams, and all of our partners for the warm welcome. Before I start, I want to thank Chase for his tireless work over the past four years and for building an organization that gives us a very strong foundation for growth in the decades ahead. Last year was a challenge for everyone around the globe, and every business of the sport felt the impact of the pandemic. Formula One delivered what many thought was impossible. A 70-race calendar was delivered safely and with huge enthusiasm from our fans. Seventy-two percent think F1 has improved over the past two years. Sixty-eight percent believe F1 is in good hands under Liberty Media. Seventy-one percent rate their satisfaction with being an F1 fan as eight or higher. Furthermore, fans believe Formula One handled the pandemic safely, very well. Ninety percent believe the safety measures put in place to allow races to go ahead have been handled well. Eighty-one percent believe F1 has communicated well with fans during the shutdown, and seventy-three percent believe F1 has handled the absence of fans at the races well. Eighty-eight percent feel positively about the calendar in 2020. We continue to navigate the challenges of COVID-19 this year. However, that will not preclude us from pursuing our priorities and opportunities we see in front of us, which are: number one, putting the drivers at the center of F1, as they represent the soul and are the ambassadors of the sport. The level of talent we have today on the grid is among the highest in F1 history, and we should celebrate that. Number two, delivering an incredible product that strengthens competition and action on the track, which includes 23 races this year. Number three, enhancing the long-term perspective of the sport and ensuring an attractive business model for all participants. Number four, remaining committed through our actions to our We Race As One platform, focusing on sustainability, diversity, inclusion, and community. Reflecting on 2020, we were extremely proud to complete a successful 17-race season. The last few races brought some new faces to the podium, including the Sakhir GP, which saw Sergio Pérez claiming his first win, alongside Esteban Ocon and Lance Stroll. In the same race, we were relieved to see Romain Grosjean walk away from a fiery crash; a testament to the support teams on the track and the improved safety measures in the sport. Max Verstappen secured the win at our last Grand Prix in Abu Dhabi, which capped a very successful season for Red Bull, who placed second in the constructors' standings. On the financial plans, clearly, we were impacted by COVID-19, which we managed in collaboration with our partners to mitigate the impacts. Due to the reduced number of races, the duration of the season, and almost no fan attendance, primary revenue declined in all categories. However, we worked with our promoters to extend contracts where mutually agreed and collaborated with certain sponsors for the right fit for future years. We approached this agreement with a spirit of partnership and largely insulated all contract impacts for 2020. This spirit of collaboration, together with the ongoing terms of our contracts, leaves us well positioned with all our material commercial partners as we enter 2021. For the full season, we are pleased with the reaction from our fans across multiple platforms. We made significant gains across social platforms, making us the second fastest-growing major sports league in several follower counts across the four major social platforms ahead of major sports like the NFL, NBA, PGA Tour, and WWE. We have seen the fastest growth in digital engagement compared to all our major sports, with a 99% increase in 2020. On TV, our average audience per Grand Prix was 87.4 million, very marginally down from 2019, but still higher than the average audience in 2018. Compared to other major sports with international footprints that experienced a decline in 2020 due to the pandemic, we plan to engage more fans in 2021, and we have set forth an exciting 23-race calendar. This includes the addition of Saudi Arabia and a much-anticipated race in the Netherlands. We will mitigate the challenges of the pandemic, but we are pleased with how we have already worked with our partners. We were able to re-establish Australia later in the year and announced the return of Imola and Portimão to the schedule. All conversations with promoters have been positive since the start of the year, and every one of them has made it clear that the events should be going ahead on schedule. We would love to welcome fans back on the track, and we will be working with the local organizers and governments on that approach. We are also grateful for the efforts made by the government to allow Formula One to continue to travel to our events during the time of global quarantine. Our highly robust safety procedures have proven that we can travel and race safely. Furthermore, we are evaluating the possibility of racing with a proposal to try a new Saturday sprint race format for some races in 2021, the result of which would determine the grid for the main event on Sunday. This was supported by the teams in principle at the meeting a few weeks ago, and we will work with them and the FIA to finalize the details before the start of the season. On the sporting side, we are expecting an exciting season with Lewis Hamilton and Mercedes fighting for a unique and historic 8th World Championship. We hope to see Ferrari return to its historical success and are excited for all the new faces and lineups on the grid. For most of the season, we were curious where Sergio Pérez would find a driver seat, and we can't wait to see him pair up with Max Verstappen. McLaren, who had a spectacular 2020 season, finished third in the constructors' standings. We will see Daniel Ricciardo and Lando Norris line up together. We welcome back Aston Martin, an iconic brand with a season champion, Sebastian Vettel, behind the wheel. We also welcomed the return of Fernando Alonso to the newly branded Alpine team. He is doing well, by the way, following his recent accident, and we look forward to seeing him at the start of the season in Bahrain. And of course, the world will be watching the rookie season of Mick Schumacher. Last year was momentous for Formula One: signing a new Concorde Agreement and reaching agreement on the introduction of a cost cap, taking effect this year in 2021. The next major rider to cover relates to the power unit or engine. In a demonstration of collaboration, the FIA, Formula One, and the teams voted to freeze power unit development from the start of 2022. A high-level working group has been established, which includes power unit manufacturers and suppliers. As we look to the next generation of the power unit for 2025, the key objectives are carbon neutrality, truly sustainable fuels, hybrid power units, significant cost reduction, and, of course, attractiveness to new power unit manufacturers. We believe that sustainable fuels combined with hybrid engines will present an appealing opportunity for the OEMs in their portfolios, providing a powerful solution to support the automotive industry's decarbonization initiatives worldwide. I feel very positive about this product in this area and have already had productive conversations with existing and potential OEMs regarding the direction Formula One is moving in. Continuing on this topic, we confirm that the We Race As One platform will become our official ESG platform with the three core pillars of sustainability, diversity and inclusion, and community. We are proud of the impact this platform has had over the past year and will continue our efforts to advance it as a sport. In the coming weeks, I will meet with all the drivers to discuss our new races and plans for this year and beyond, including the rollout of our apprenticeship, internship, and scholarship programs for underrepresented groups. It is crucial that we highlight our heroes, role models, and champions of progress in our sport, who inspire fans around the world. We are looking forward to Season 3 of Drive to Survive, hitting Netflix on March 19. This season once again captures all the drama and storylines from 2020, and there's no doubt that this series continues to attract new fans to our sport. I can't express enough my excitement for all the opportunities Formula One has in front of us, and I look forward to updating you on our progress. But please be sure to watch the season-opening Grand Prix in Bahrain on March 28. With that, once again, thank you so much, and I will turn it over to you, Greg.

Gregory Maffei, President and CEO

Thanks, Brian. Thanks, Stefano, and to our listening audience. We appreciate your continued interest in Liberty Media and hope you're all staying safe and healthy. Operator, with that, I'd like to open the floor to questions.

Operator, Operator

Our first question today comes from Vijay Jayant of Evercore.

Vijay Jayant, Analyst

I have two. First, Greg, obviously, with the tax sharing agreement with Sirius, that sort of kicks in at 80%. Obviously, you mentioned that the Board will decide how capital allocation works post that in a moment. But given the flow will be pretty small and I think your dividends will be tax rate both that. Is there an expectation that we should assume that will shift more towards dividends or buybacks? Or are we perfectly on a path to sort of taking the company private? And are there any obstacles sort of on that path? Is there like a squeeze-out requirement at 90%? Anything you can share on sort of what happens to the capital — equity capital structure sort of post the 80% level? And second, for Stefano. I just wanted to sort of get your perspective, you've been mentioned in the press suggesting that you're looking for more quality over quantity in terms of races, and obviously, you're talking about a sprint race, but do you really think you need to change the format of the race where you can — where you need free practices and making it the biggest practical. Can you just talk about what you really think is the opportunity to make the weekend bigger event broadly?

Brian Wendling, Chief Accounting Officer and Principal Financial Officer

So I'll go first and chat a little bit about dividends, capital allocation and the like. First of all, it really is a decision of the full board. You would note correctly that on the margin, we would probably have a slight tilt towards dividends, we at Liberty Media, Liberty Sirius compared to where we once were. But it's really not that bigger tilt. While we're looking at the discount to NAV running about just under 28%, substantially tightened from the 45% when the GME world blew up, and we were running more like in the mid- to low 30s. So we have tightened it. But that's still quite large compared to even the 7% rate we would normally pay with the DRD exclusion. So I don't think there's a huge thumb on the scale for Liberty; we are marginally more oriented towards dividends, but not massively, but that decision really will be driven by management and the Board. As far as triggers that might involve, I would say the independent board will have to make their own decisions. But one thing that I think would likely be in the back of their minds is if we get to 90%, we could do a short-form squeeze-out merger of the remaining 10%. So some directors might think about the pace at which we would get to that kind of number. But again, those decisions really will be made by the full Board. At some point, the independent directors will have a voice about ensuring that the minority is appropriately protected.

Gregory Maffei, President and CEO

Okay. That's my answer regarding the format and what we are thinking to improve in terms of show. First of all, let me say that our objective is to try to offer to the people attending the event, to the people watching television, to the people who are fans of Formula One, something that is exciting. So the idea that we have shared, and I think that we have received great feedback from everyone in the sport, is that we will try to figure out something that gives qualifying on Friday, a Saturday sprint race that will determine the grid order for the Sunday race. So that will provide the thrill of a great weekend that will be beneficial to all the parties involved. This is something that we are detailing with the teams and the FIA in the next weeks to present the final format before the start of the season.

Operator, Operator

Our next question comes from David Karnovsky of JPMorgan.

David Karnovsky, Analyst

Can you discuss the freeze on engine development and how you think this might impact on-track competition? And then just maybe expand a bit on your view of F1's long-term engine goals in light of some of the OEMs like GM and Jaguar moving toward all-electric vehicles?

Gregory Maffei, President and CEO

Well, thank you, David, for the question. I think that what is important to state is that this idea of freezing development one year in advance is connected to the new sustainable business approach that Formula One has taken. We have adopted this year with the cost cap that is related to a significant part of the cost of managing the team. Another important point was how we can capture control of investment costs as in a standard business and the power unit. Therefore, by anticipating the end of spending new money for a new engine, we are trying to capture the attention of potential manufacturers while ensuring that the current participants are interested in the future. We believe that being hybrids in the future is the best way to provide all manufacturers access to a diverse portfolio beyond just electrification. Hence, what we are implementing — focusing on carbon neutrality, fully sustainable fuels, and hybrid power units ensures we remain at the forefront of advanced technology and research in Formula One while allowing all automotive brands to benefit from these efforts. This should foster a win-win situation.

David Karnovsky, Analyst

Okay. And then I believe there are a number of race promotion contracts expiring at the end of this year. I think Singapore and the U.S. Just wondering how you are thinking about F1 in these regions versus adding new races and other flyaway markets. I think you mentioned South Africa recently. With regards to the non-duty, is there any update you can provide on whether we might see that race at some point in the future?

Stefano Domenicali, President and CEO of Formula One

Well, yes, I mean for sure we're in a great moment because despite the pandemic, we are receiving an incredible number of requests from organizers, which demonstrates that, yes, the center of interest not only from the organizers worldwide but also from the Motorsport community, is there. Therefore, our strategic plan is to determine first what is the right dimension concerning races in a year. We have contracts expiring that you mentioned, but discussions are ongoing because the ones you are considering are essential, and there is a lot of interest in progressing and maintaining them in the future. We confirm, as you know, that the U.S. is a very important and strategic market for us. We aim to add another race in the U.S. We have a great partner in Austin, but we are looking for other solutions that would be crucial for us. What I can say is that regarding Vietnam, for whatever reason occurred, we didn't have the race, but that is still an important area for the strategic growth of our business in the future.

Gregory Maffei, President and CEO

And if I could just add to Stefano's comments, which I agree with, we do not have an unusual number of promoter contracts expiring this year or pretty much in any year. We have a portfolio where a certain number are renewed every year, just as we have a certain number of broadcast contracts renewed annually, and generally because we think demand will rise for our sport, we all feel that we appreciate this. We think there are more opportunities ahead than behind.

Operator, Operator

Our next question comes from Ben Swinburne of Morgan Stanley.

Benjamin Swinburne, Analyst

I want to ask both Stefano and Greg, just a question around sports rights and the state of the market right now. Maybe Europe and U.S. You guys had a very successful lease space on the press reports renewal in Germany with Sky last year. But we've seen some of the other deals that have happened or are happening have gone backwards, EPL, Bundesliga, and at least the press suggests Serie A may roll back. And even in the U.S., there has been more tension than usual, and Greg, obviously, with Sinclair what's going on there in FOX Sports is clearly tricky with 30:32 cutbacks. So can you guys just give us a sense as you move through '21 and '22, how you're feeling about your position both with F1 and the Braves? And if you think the market's gotten even more complicated and more challenging than it was a couple of years ago?

Gregory Maffei, President and CEO

Stefano, do you want to take it, or I'm happy to?

Stefano Domenicali, President and CEO of Formula One

Okay. In my opinion, the situation we're living today is, for sure, interesting from one side, but very good on the other. I mean, as you know, our broadcasting partners are hugely important for us. But we can see a very good opportunity to extend and explore different models to, as I said, be complementary and provide direct connection to the fans, by engaging in the OTT world, which is still an area that we will, for sure, pay attention to for the future. But to be honest, I do believe that if you are able to attract — as we are successfully doing — the sports, the commercial account, because the interest is there, and we need to ensure that the sport we are shaping up for the future provides the context to be deliverable to the fans. And that's why we have numerous activities connected to ensure that we not only don't lose our traditional and loyal fans, but we also appealing to the new supporters, the younger generation. Therefore, we have many programs to ensure this happens already this year. So I'm positive about that.

Gregory Maffei, President and CEO

I agree with Stefano's comments, but I had a couple more points, if I could, Ben. First, we've done a lot over the last few years. Thank you, Chase. And now thank you, Stefano, to generate fan interest and excitement, that is on-track competition. That's more competitive field as we go into '22. There are many ancillary factors such as fan festivals, programming, Drive to Survive, and all of these build fan interest. Obviously, the Esports component as well is crucial when going for renewal. The key elements are fan interest and excitement. Probably the most important is how competitive the bidding is from multiple distributors of your product. Candidly, the best deal we have is probably our U.K. deal, mainly because several bidders had significant interest in acquiring our product. I believe, as Stefano noted, we have a relative value. We've observed declines in other high-cost European alternatives. However, on a cost basis per viewer, cost per hour, etc., F1 represents a relative value. A side note to consider: with rising costs for scripted content, if these escalate further, it creates a floor for the value of live sports. Typically, live sports are seen as incredibly expensive, but this might lessen with the escalation of scripted content.

David Karnovsky, Analyst

Can you discuss the broadcast side of the Formula One business for this year? Would there be any lingering COVID-related impacts? Or should we think about it as being sort of comparable to 2019 and grossing up for step-ups, escalators, and the number of events?

Gregory Maffei, President and CEO

We expect a fairly normal broadcast revenue stream considering our 23 races now. Again, my crystal ball concerning how COVID plays out is uncertain. But our goal was to mitigate the pain of 2020; to the degree that we had to make concessions to or with broadcasters, our ambition was to make that a one-year issue and revert to normal in 2021. So that's our hope and expectation, but the COVID situation remains unpredictable.

Operator, Operator

Our next question comes from Bryan Kraft of Deutsche Bank.

Bryan Kraft, Analyst

A couple of questions. First, can you — Greg, can you talk about your current expectations for what I'll call the path to normalcy for your live event businesses looking out over '21 and '22? There's obviously a lot of focus in the market by investors on how quickly businesses like these are going to be able to bounce back and whether the back half of '21 looks normal or '22 looks normal. So I'd love to get your thoughts on what Formula One, Live Nation, and the Braves, what that path looks like for them? And then just quickly on the leverage target for Formula One. Can you remind us what your target leverage ratio is? And is there any thought to running that balance sheet more conservatively in the future, just given the experience with the pandemic? Or are you still comfortable with that?

Gregory Maffei, President and CEO

So I'll start with the opening statement. It's certainly not binary, and it's not black and white in a lot of ways because, between F1 and the Braves, we have multiple sources of revenue. F1 comprises three big pillars: broadcast, which faced challenges in 2020, but likely will face fewer difficulties in 2021 regardless of COVID; sponsorship and advertising, which were less impeded in 2020 than the fan component, but again, likely less in 2021; and then fans, and we'll have different alternatives where fans will be present to varying degrees. I don't see it being a complete flip from 0 to 100; it will be somewhere potentially in between. I'm optimistic we'll see 100% capacity by the end of the year. The same applies to the Braves: multiple revenue streams such as television and onsite revenue exist, but sponsorship is not a large factor compared to F1. I believe, again, it will not be binary — we will likely start at 25%. Georgia is considerably open. We will be better positioned for fan attendance compared to locations like New York or California, and decisions will be dictated by local authorities. We expect increasing attendance, but again, it won't be instantaneous. As for Live Nation, they are particularly vulnerable to shutdowns as they don't have the broadcast element. Conversely, they operate globally, which means various responses, depending on where you are. I think Formula One is preparing for a balance sheet that can withstand any situation, and we're fully supportive of that.

Brian Wendling, Chief Accounting Officer and Principal Financial Officer

To answer your question quickly: the leverage target for Formula One is set between 5x to 5.5x. As you will recall, we have a maximum leverage of 8.25x, which has been waived through March 31, 2022. When we acquired the business, we approached the 8x leverage ratio, and we substantially decreased that with cash operations generated, as well as a primary equity issuance. Both efforts significantly reduced the leverage before the pandemic.

Operator, Operator

Our next question comes from David Beckel of Berenberg Capital.

David Beckel, Analyst

Sort of piggybacking on your commentary about reopening. I was wondering if you could help us think about revenue recognition for the promotional side, really all the revenue streams under a variety of different scenarios. It seems as if the vaccine rollout, for the most part, is going better-than-expected in many parts of the world. Should we be thinking about race promotion revenue being materially affected in H1? Or is that somewhat protected given the concessions you made last year? And then sort of as a follow-up to that, I'd love to hear your thoughts on how the team payment structure might affect earnings or EBITDA for F1 this year? Specifically, if you could frame that in relation to 2019 levels, if your EBITDA level, pre-team EBITDA, exceeds 2019, should we expect marginal upside in the current year?

Gregory Maffei, President and CEO

I'll state that I think promotion will still be reduced in '21, certainly when compared to what we would have in a non-pandemic year. We'll likely see restricted audiences and fans at some events. So I do predict that, while we can't make firm forecasts partly due to uncertainty, from an overall perspective, it will definitely be impacted.

Stefano Domenicali, President and CEO of Formula One

I couldn't agree more. And I think what is essential is that, with the new government — meaning the new Concorde Agreement and with the new cost control measures, we're positioned to think bigger. This provides the right fundamentals driving us the right way, both from commercial and fan engagement perspectives, to be part of this incredible championship.

Operator, Operator

The next question today comes from David Joyce of Barclays.

David Joyce, Analyst

One, on the broadcast side of the Formula One business for this year. Would there be any lingering COVID-related impacts? Or should we think about it as being sort of comparable to 2019 and grossing up for step-ups, escalators, and number of events? And then secondly, on the Braves. With the Sinclair RSN agreement, this was already touched on a little bit earlier in the call. Where do you stand with them moving towards having a hybrid over-the-top model? How does that play into your economics? And what could that do for further fan engagement even as that could tie into sports betting once that becomes something on the horizon in Georgia?

Gregory Maffei, President and CEO

We anticipate a fairly stable broadcast revenue stream, given our 23 races now. Once again, this is subject to the unpredictable influence of COVID. We aimed to take the pain from 2020 into account to offset any broadcasting concessions made so that '21 can be brought back to normal.

Operator, Operator

Our next question comes from Jason Bazinet of Citi.

Jason Bazinet, Analyst

I guess having extra liquidity is always a big thing. But I was wondering if there's any color that you might add regarding these amendments that you did to unencumber some of the passive equity stakes. Was there something specific that you were looking to do, or some need that you have? Or is it more just general optionality?

Gregory Maffei, President and CEO

You know we're into optionality, Jason, but I'll let Ben Oren, our relatively new treasury lead, answer.

Ben Oren, Treasurer

Sure. With respect to the SIRI margin loan, we did do an upsize, but we kept it to the same 1 billion shares collateralizing that loan as we had previously under the $1.35 billion. We're maximizing our ability to access dollars. Regarding Live, it's primarily a function of what transpired in the previous margin loan, where we repaid it and had numerous shares in that collateral pool; subsequently, we rightsized the loans to $200 million, adjusting the number of shares underlying to something closer to a realistic loan-to-value for a margin loan.

Operator, Operator

The next question comes from John Tinker of Gabelli.

John Tinker, Analyst

Terrific numbers in the Battery and the Braves, which unfortunately, I think, get a little lost, given most people focused on the same. Do you have any — would you ever consider in any way highlighting that valuation, or would it be your property in any different way?

Gregory Maffei, President and CEO

John, when we have great analysts like you writing up the value for us, we don't need to do the work. Come on! That's — no, I think you're right; there is significant value in the Battery, and it is impressive, thanks to Georgia being a relatively open place and the great job the Braves management has done to create a secure environment. People are willing to come and enjoy it. While I’m not sure we're going to create a tracker or do something different around that, we'll aim to make sure we highlight that there is value in the Battery and our real estate developments.

Operator, Operator

And the final question today comes from Matthew Harrigan of Benchmark.

Matthew Harrigan, Analyst

Even though Formula One probably generates more data than any other sport in collaboration with AWS, Intel, and Qualcomm. It was really underdeveloped under the previous management that we're seeing improvements with Bernie. You had a lot of success at Universal Grand Prix now. Can you talk about the potential there, and how you see that developing? It feels like you've made some strides, but there's still a lot of potential in terms of what you could do on the TV side and the video game side?

Gregory Maffei, President and CEO

Yes, that's a great point, Matt. If you consider the evolving world, we have increased — starting on the broadcast side, we have the potential for increased digital players. The number of cameras we have, the angles we've introduced, and your ability to select your preferred angle will enhance the experience, particularly benefiting those digital players, which differs from a standard linear feed. Consequently, I believe our sport will gain from increased attention on the digital side in terms of viewership. It will provide a different experience where fans can tailor their viewing. On data, proprietary data is crucial; we began leveraging our contract with ISE, which didn't yield great results as we anticipated. However, moving forward, we are keen to explore opportunities related to that, focusing on gambling or offering valuable fan information. We have a robust position relative to most sports because of our extensive data and the proprietary nature of some of it, therefore, I see tremendous growth opportunities in both areas.

Operator, Operator

Thank you to our listening audience for your continued interest in Liberty Media, and we look forward to speaking with you again next quarter, if not sooner. Ladies and gentlemen, that concludes today's conference call. We thank you for your participation. You may now disconnect.