Earnings Call Transcript - FWONA Q1 2025

Operator, Operator

Welcome to Liberty Media Corporation's 2025 Q1 Earnings Call. As a reminder, this conference will be recorded on May 7. I would now like to turn the call over to Kleinstein, Senior Vice President, Investor Relations. Please proceed.

Shane Kleinstein, Senior Vice President, Investor Relations

Thank you, and good morning. Before we begin, I want to remind everyone that this call includes certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Actual events or results could differ significantly due to various risks and uncertainties, including those outlined in our latest 10-K and 10-Q filings with the SEC. These forward-looking statements are valid only as of today’s date, and Liberty Media explicitly disclaims any obligation to update or revise any forward-looking statements to reflect changes in expectations or in events, conditions, or circumstances related to those statements. Today, we will discuss certain non-GAAP financial measures for Liberty Media, including adjusted OIBDA. You can find the required definitions and reconciliations for Liberty Media Schedule 1 at the end of the earnings press release issued today, which is available on our website. Speaking on today's call, we have Liberty's President and CEO, Derek Chang; Chief Accounting and Principal Financial Officer, Brian Wendling; Formula One's President and CEO, Stefano Domenicali; and other members of Liberty Management who will be available for Q&A. Now, I would like to turn the call over to Derek.

Derek Chang, President and CEO

Great. Thank you, Shane. Good morning, everyone. It has been a great start to the year at Liberty. Importantly, the priorities we have outlined for 2025 are progressing well. Namely, number one, we are working towards the close of the Dorna acquisition; two, continuing our path towards structural simplification. And three, we continue to drive momentum at Formula One. Starting first with the Dorna acquisition. We are progressing with the Phase II regulatory process and working constructively with the European Commission. We hope to receive approval by the long stop date of June 30, 2025. The Moto GP kicked off 2025 with its first ever season launch event in Bangkok. The event generated massive buzz bringing together all 11 teams to showcase Moto GP as a thrilling sport and premium entertainment brand. MotoGP will host a 22 race calendar in 2025 compared to 20 races last year, which was impacted by race cancellations necessitating two replacement races scheduled mid-season. The season is off to a great start with incredible on-track action and growth independence across the first five races completed to date. The Argentina Grand Prix set a new attendance record for the track with over 200,000 spectators. Thailand's attendance was up 15%, and Coda hosted its largest crowd since 2018, and our rest saw the highest attendance since 2015 with 24% growth over 2023. The company announced several commercial agreements to start the season, including Pirelli as the new tire supplier starting in 2027 and the extensions of the Barcelona, French and Valencia GPs through 2031. Our second priority is continuing to progress our structural simplification, including the planned split-off of Liberty Live. Our third priority is continuing to drive momentum at Formula One. The confluence of excellent racing and commercial momentum is benefiting engagement and financial results in 2025. There are several areas currently in focus worth highlighting. We are seeing continued momentum in sponsorship and licensing to start the year, an excellent showcase with the LEGO partnership last weekend in Miami, where all 10 teams rode fully drivable LEGO F1 cars for the drivers' parade. The project took over a year to come to life and required 400,000 legal bricks per car. It was an amazing collaboration that captivated our fans and the Internet and our drivers loved it. Looking ahead, pulling the sponsorship pipeline forward has allowed our team to focus on 2026 and beyond and emphasize securing blue-chip names aligned with the F1 brand. The appeal and breadth of the F1 brand are uniquely resonating with sponsors across B2B and consumer brands alike. Second, we are focusing on improving LVGP stand-alone economics and maximizing the overall benefit to the F1 ecosystem. Tickets went on sale in early April and volumes are trending ahead of this time last year. Lower initial ticket prices are driving momentum, which we expect will drive greater sell-through. With the first two years having demonstrated clear benefits to the wider Vegas ecosystem. We are engaged in encouraging discussions with key local stakeholders, to ensure their support and best position the event for future growth. Finally, our current U.S. media rights agreement concluded at the end of 2025, and we are in active and productive discussions for a new deal. F1 is a strong product for broadcasters with solid growth in the U.S., including this season and an attractive demographic with one-third of viewers under age 35, females representing 42% of the fans. We remain focused on finding the right partner to continue to innovate on broadcast offerings and sustain our momentum in the U.S. While it's early in the year, performance today is strong. The contractual nature of that Formula One's cash flow provides high visibility into our business performance for the next several years and will be especially important in this macroeconomic climate. As of March 31, Formula One had $14.2 billion of future revenue secured under contract. Advanced ticket sales for our promoters and hospitality tickets for the remainder of the season remained strong. We continue to actively monitor changes in consumer sentiment, though historically, Formula One's business model has proven resilient in times of economic uncertainty. We are encouraged by the strength of the business and look forward to completing the rest of an exciting season. Now, I'll turn it over to Brian for more on Liberty's financial results.

Brian Wendling, Chief Accounting and Principal Financial Officer

Thanks, Derek, and good morning, everyone. At quarter end, Formula One Group had attributed cash and liquid investments of $2.8 billion, which includes $1.5 billion of cash at F1 and $69 million of cash at Quint. Total Formula One Group attributed principal amount of debt was $2.9 billion at quarter end, which includes $2.4 billion of debt at F1, leaving $526 million at the corporate level. F1's $500 million revolvers undrawn and their leverage at 3/31 was 1.2x. As a reminder, all MotoGP transaction-related financing is in place and deal contingent. Turning to the Formula One business, I'll make brief comments on the quarterly results. Though as we all know, the business is best analyzed on an annual basis given the variability in the year-over-year race calendar and timing of events. Note that every quarter in 2025 will have incomparable race count and mix, which will impact year-over-year comparisons of quarterly results throughout the year. Most of the variability in year-over-year results is due to the two races held in Q1 2025 compared to three races in Q1 2024. Race promotion revenue decreased due to the mix of races with Australia and China occurring in the current period compared to Bahrain, Saudi Arabia and Australia in the prior year. Media rights and sponsorship declined as only the two out of the 24 projected season-based revenue was recognized compared to three out of 24 last year. Sponsorship is also impacted by the calendar shift as the Saudi Arabia and Bahrain races both have race-specific local titles sponsorships and recognition of that race-specific revenue shifted with the timing of those races. However, the decline in sponsorship revenue was largely offset by strong underlying growth from new and renewed deals impacting 2025. Media Rights revenue is benefiting from contractual increases in rights fees and continued growth in F1 TV, benefiting from the launch of the new premium subscription tier. Other revenue declined during the first quarter as a result of one less Paddock Club event and the mix of races held. Adjusted OIBDA declined alongside revenue during the quarter driven by the calendar variance. Other costs of F1 revenue increased due to higher freight costs with longer routes flown and increased commissions and partner servicing costs, servicing the overall primary F1 revenue growth as well as higher cost for Grand Prix Plaza due to more activity compared to Q1 2024. On a full year basis, we expect other costs of F1 revenue to be consistent with prior years as a percentage of total revenue. SG&A increased in the first quarter due to marketing costs associated with the season launch event at the O2 and should be viewed as a percentage of total revenue for the full year. Team payments decreased in the first quarter due to the lower pro rata recognition with one less race held, partially offset by the expectation of higher full-year team payments. As a reminder, a reminder that team payments as a percent of pre-team adjusted OIBDA was 61.5 in 2024, and we expect that percentage to continue to come down as we complete the term of the current Concorde agreement at the end of 2025. In connection with all 10 teams signing the 2026 Concorde commercial agreement, Formula One paid a total of $50 million to the teams in the first quarter. This cost is excluded from adjusted OIBDA and presented separately from team payments. Although revenue and adjusted OIBDA were lower year-over-year due to the calendar variance, we are seeing strong financial start to the year and are tracking well against our internal plan. Grand Prix Plaza in Las Vegas officially opened its new year-round activations on May 2. Revenue from these activations will be recognized at the F1 opco level that we expect results will have a modest impact in 2025 as we scale that business. The vast majority of the CapEx required to build out Grand Prix Plaza activations was incurred in the first quarter. Total F1 CapEx was approximately $33 million year-to-date, including slightly less than $20 million incurred related to Grand Prix Plaza. Looking briefly at Corporate and Other results in the first quarter. Revenue was $53 million which includes Quint results and approximately $6 million of rental income related to the Las Vegas Grand Prix Plaza. Corporate and other adjusted OIBDA loss was $12 million and includes Grand Prix Plaza rental income, Quint results and corporate expenses. Reminder that Quint's business is seasonal with the largest and most profitable events taking place in Q2 and Q4. Q1 has modest event activity while still incurring ordinary course operating expenses. Quickly turning to the Liberty Live Group. There is attributed cash of $314 million and $400 million of undrawn margin loan capacity relating to our Live Nation margin loan. As of May 6, the value of our Live Nation stock held at Liberty Live Group was $9.3 billion. We have $1.15 billion in principal amount of debt against these holdings. Liberty and F1 are in compliance with their debt covenants at quarter end. With that, I'll turn the call over to Stefano to discuss Formula One.

Stefano Domenicali, President and CEO, Formula One

Thanks, Brian. Formula One is off to a great start in 2025. We have six races into the season and continue to see exciting on-track action. The wins have been spread across teams and the rating is tighter than expected. While early in the season, we expect the action to continue. The strong on-track performance has fueled fan engagement. Attendance is up over last year with sellout crowds and nearly all races to date. We reached a new record crowd for the Australian Grand Prix with an outstanding 465,000 weekend attendees. Demand for the balance of the year is strong as well. Mexico sold out in a matter of hours for the tenth year in a row. And Montreal again experienced strong demand with the majority of the 2024 guests returning in '25. Demand for hospitality products also remains high. Season to date, we sold over 12,000 tickets at Tower Paddock Club, and we have seen strong advance yields across the remainder of the season. We remain focused on opportunities to increase capacity and are working on alternative and innovative hospitality products where demand outstrips supply. Turning to viewership statistics across our top 50 markets, live TV viewership grew for the first five races of the season. We had over 60 million cumulative viewers for the opening Grand Prix weekend in Australia. The U.S., in particular, has seen strong growth with ESPN viewership up 45% across the first five races. The Australian Grand Prix was the most viewed edition of the race ever for the U.S. audience. Other markets with notable linear viewership growth include Brazil, France, and Australia. Highlights viewership on F1's YouTube channel has increased by 31% compared to last year, emphasizing the significance and growth in our digital channels finding new ways to engage with our footage on and off the track. Social media followers have now reached 100 million, growing 30% year-over-year. The first quarter growth was particularly driven by Instagram, TikTok, and YouTube. Looking more broadly, Nielsen released new fan data in March, showing the continuous surge in F1 fandom. With our total fan base as of year-end over 826 million, adding nearly 90 million new fans in 2024. These engagement figures are not just numbers. They represent the growing global appeal and genuine engagement with our sport and validate our initiatives to enhance F1 for our fans. The strong engagement figures are part of a broader picture of commercial success, where I'm pleased to report we continue to have strong momentum. On race promotion, we are working toward finalizing our '26 calendar. We were excited to announce renewal of our Mexico race through 2028 and Miami through 2041, the longest contract currently secured and a statement to our success in the U.S. market. The vast majority of our races have now secured under medium and long-term contracts. Demand from potential new race hosts remains robust, and we are evaluating various opportunities for the future. The Netherlands will host their final race in 2026, and Spain will race in alternative years from 2027, leaving an opening on the calendar in 2028. Tickets for Las Vegas went on sale April 9, featuring new ticket pricing and offerings. Tickets now start at $50 for a single-day general admission and $400 for three-day general admission in the Flamingo zone, and we communicated to the fans that the price will not be going down from their initial sales, helping to drive urgency and momentum in sale. To date, we are very pleased that our sales velocity in Vegas is meaningful, outpacing last year. Our media rights business continues to demonstrate the growing competition for media rights. F1 TV subscriber growth continues to be robust, with total subscribers up 4% year-over-year, led by the U.S. market, up 20%. The launch of our new F1 TV Premium Tier has outperformed expectations, especially in key markets like the U.S. We are in active and positive discussions for our U.S. media rights with multiple partners and look forward to sharing updates once finalized. Of course, there's more content beyond just the race. Additional series like Formula 2 and Formula 3, the Spirit and F1 Academy are providing broadcasters with more content and value. Viewership for Sprint races consistently shows strong year-over-year growth with the Sprint at the Chinese Grand Prix seen over 1 million viewers for the live broadcast on CCTV in China, and viewership doubled in Italy as Lewis Hamilton celebrated his maiden win for Ferrari. Outside of the race weekend, Drive to Survive Season 7 reached Netflix's Global Top 10 for another year and appeared in the top 10 list across 39 countries. The F1 Academy docuseries without sanction is going live on Netflix on May 28. The Apple movie announcement its premiere date on June 16 with the film soundtrack and field merchandising released just last weekend in Miami. On the sponsorship front, we entered the year with high visibility for 2025 and a strong pipeline for additional growth potential. Recent new deal announcements include Barilla Pasta as an official partner and PwC as our official consulting partner. As part of the PwC agreement, they will provide strategic consulting to our global business to help enhance our performance and drive operational efficiency and excellence. Our team continues to focus on both '25 and '26 pipeline with progress being made on a number of high-value renewals and new partnerships. Licensing continues to be a matter of focus on growth. Our new license partner, LEGO has seen high demand for its phone products, selling on average one piece of LEGO every second in the month of March. We saw an exciting activation in Miami, where all the drivers took part in the regular drivers parade in fully drivable LEGO cars. On the experiential licensing front, F1 Arcade continues to expand to new locations. The Boston and Washington DC venues held sold-out watch parties for the Australian Grand Prix to kick off the season. And New York is opening in Philadelphia on May 29, with Denver, Las Vegas, and Chicago opening in the fourth quarter. The F1 exhibition has sold more than 530,000 tickets in the last 12 months. Buenos Aires opened on March 22 and sold over 40,000 tickets in its first month. Amsterdam opened in April with 45,000 tickets sold in advance on its first day. In March, we held a launch event for new activation experiences at the Grand Prix Plaza in Las Vegas, which opened to the public last week. The venue now offers an opportunity to immerse fans in F1 year-round and provide the Las Vegas community with a new fun and engaging daytime activity center. Grand Prix Plaza features an F1 inspired cartoon experience incorporating part of the Las Vegas Grand Prix Circuit, an immersive F1 exhibit, the latest F1 racing simulator, a fast casual eatery, a retail store, and three private event spaces. These activations are set to operate through the first three quarters of the year annually, generating revenue from the site when it is not required for the Grand Prix. On Formula One's sustainability efforts, I'm proud to say that we recently issued a report on our progress from the 2024 season, with a full impact report due to be published later this year. We made significant investments in sustainable aviation fuel. Ninety percent of our promoters improved fan access and travel options, and 100% of promoters work with local community organizations on programs targeting the next generation. In addition, from 2026, the F1 cars will be powered by 100% sustainable fuel, a technology that is becoming increasingly important for the automotive sector as countries look for solutions to reduce greenhouse gas emissions from road transportation. Our recent Power Unit manufacturing meeting Helena demonstrated a clear commitment to the planned 2026 regulations and maximizing the success of those new routes with all parties working together to ensure the best racing for the championship. We expect all the F1 teams to start shifting their focus to the 2026 engine as the season progresses. Looking forward, while we are early in our '25 calendar, we already have an eye toward '26. We have agreed on the basis on which Cadillac will enter the championship in '26. We have also agreed to a new Concorde Commercial Agreement with the teams for 2026 through 2030 and are making good progress on the governance terms. Both the commercial and proposed governance terms are financially attractive for the entire F1 ecosystem and represent the collaboration and partnership we have built with the F1 teams, with the shared goal of growing F1 for our mutual benefit. In closing, we are very pleased with our start to the 2025 season. Our strong on-track performance, growing fan base, and robust financial results position us well to deliver an excellent 2025 and beyond. Avanti Tutta, full speed ahead. And now I will turn the call back over to Derek. Thank you.

Derek Chang, President and CEO

Thank you, Stefano and Brian. Very quickly, known and exciting news. Please save the date for this year's Liberty Media Investor Day. Changing things up this year, Investor Day will be held alongside the Las Vegas Grand Prix on Thursday, November 20 in Las Vegas. We will have more details to share in due course and look forward to seeing many of you there. We appreciate your continued interest in Liberty Media. And now I'd like to open the call for questions.

Operator, Operator

Our first question today is from Stefan Laszczyk of Goldman Sachs.

Stefan Laszczyk, Analyst, Goldman Sachs

Maybe to start just on team payments and the budget for the year. Brian, curious if you could talk a little bit more about how the team payment budget is structured for the year. And if there were opportunities for upside in that budget in terms of what you pay the teams, what some of the larger opportunities out there could be over the course of 2025 as you execute against them and reach the potential of what you think this business could produce this year.

Brian Wendling, Chief Accounting and Principal Financial Officer

Yes. Thank you for the question. At the beginning of the year, and as we've talked about in the past, there's always prudent financial forecasting at the beginning of the year. We do think that there's opportunities for upside, but we want to be conservative in thinking about the variables that we have out there, which are the Las Vegas Grand Prix towards the end of the year, and then sponsorship. Everything else is contracted. And as you've seen in the past and we've talked about in the recent quarters, the company is moving away from large sponsorships in the current year and focusing on future years. Are there still opportunities? Yes, there's probably some opportunities there. But the biggest unknown will ultimately be ticket sales, which you've heard are trending well currently.

Stefan Laszczyk, Analyst, Goldman Sachs

That's great. And then maybe just a follow-up on the sponsorship business. It sounds like there's still some focus on bringing in sponsors or renewing in '25. Would be curious if you could just comment on what those are and to what extent this could still move the needle. And then I guess as we look out into '26, it sounds like your attention is focused there as well, with longer sales cycles on the sponsorship side. Something you've been focused on. Just curious if you could give us an early read or early look into the '26 sponsorship funnel and to the extent you think that could grow off of '25, what the banded outcome could potentially look like on that? Thank you.

Stefano Domenicali, President and CEO, Formula One

Thanks, Stephen, for the question. Thank you. I mean, I think that we have proven in the last couple of years that our strategy regarding sponsorship is quite solid. The main focus is for sure to maximize our revenues, but we need to make sure that the partners that we have are stronger and invested with us in our experiential world. We have a strong pipeline and what we have said already, and it is concerned to be here, is the quality over quantity and a very, very genuine activation with our partners because this is crucial at this moment where we want to make sure that our platform is what really our sponsor wants. And the evolution between the structure of our partnership between global, official, regional, and technical is getting stronger and stronger. So the focus is definitely to see if we have seen some opportunities in '25. But the big one is to keep going on in the next couple of years, and it just reminds us all of where we were just four or five years ago and now where we are today. There is still a long way to go, and we are very optimistic about the fact that we will continue to grow that as a revenue stream and also as a potential awareness increase through them to our partners regarding our products.

Derek Chang, President and CEO

Thanks, Stefano, this is Derek. I want to mention that I've had the chance to spend some time with Stefano at the track over the past few races while talking to both current and potential sponsors. I've never witnessed such energy and excitement around the possibilities of engaging with the sport and F1. In my past experiences with major sports leagues, there was often a more balanced situation with sponsors coming and going. Here, it feels like the excitement is building, and everyone is eager to see what happens next. This enthusiasm extends beyond F1 and involves the entire sport, with teams also expanding their sponsor bases, which is fantastic. I had a conversation with Zac Brown last week, who is one of the most influential marketers in the paddock, and he shared with me his plans to sell the underside of his shoe. We'll see how that turns out.

Operator, Operator

The next question is from Ben Swinburne of Morgan Stanley.

Ben Swinburne, Analyst, Morgan Stanley

I'm not sure if Stefano or Derek would like to address this, but regarding the media rights process in the U.S., one significant development for the business is the growth of F1 TV over the past few years. Particularly in the U.S., how do you view that as an asset in your U.S. media rights negotiations? Are you considering bundling it in a broader deal with a streaming partner, or do you think it's now substantial enough to remain a standalone product? Additionally, I'm unsure if the Concorde agreement has been finalized, but could you provide insight on whether you anticipate any team payment leverage occurring during the 2026 to 2030 period? Any insights, especially in light of previous comments made in past earnings calls on this topic, would be appreciated.

Derek Chang, President and CEO

Stefano, why don't you go ahead and start?

Stefano Domenicali, President and CEO, Formula One

Yes. Thank you, Ben, for the question. I mean on the media rights, first of all, it's interesting to see the speculation going around with regard to moments where there were optimistic, negative comments, and so on. But apart from that, I would say we come back from this weekend in Miami really with the fact that we are engaging with multiple partners, and there is a lot of potential interest from many of them, of which we need to hammer down because we have the time to do it with the proper proposal. As you were correctly saying, the F1 TV product is growing and is very, very positive, and the feedback, mainly in the U.S., is very, very strong. Therefore, we need to make sure that this asset is right and very valuable. Therefore, we are open to any kind of possible discussion depending on what will be the end and what we believe is the right way to make sure that we keep the penetration in the market as high as possible and monetize out of it. But the dynamics are very positive. So we keep working on it with them. And I think that the next month will be crucial to see really where we're going to be, but we come back from Miami, as I said at the beginning, then with a very good feeling because I think the U.S. audience figure in Miami that were very, very strong shows the potential that we have. And I'm sure that the media partners understand that for a possible asset also for them to develop another small business together.

Derek Chang, President and CEO

Yes, this is Derek. Following up on what Stefano just said, we are having productive discussions with potential partners regarding the U.S. media rights deal. It's interesting to see that the sport continues to grow. As noted earlier by Stefano, viewership over the weekend has increased about 45% year-over-year. F1 TV's growth in the U.S. stands at 20%. The overall health of the business is strong, which has implications not only for this year but also for future renewal negotiations. In the long run, this is quite significant. We are still in the early stages of F1's growth in the U.S. The current uptake of F1 TV indicates a strong passion for the sport, which positions us well for the future. When considering how to balance F1 TV with a broader media rights deal, we'll observe how things develop, what partners require in their agreements, and what makes the most sense for F1 in terms of reach while also providing products that help us understand our customers better. This is important for engaging our fans beyond just content delivery. There are numerous ways this can unfold, but there is undeniably strong demand for F1 and the engagement from fans in the U.S., which is encouraging.

Stefano Domenicali, President and CEO, Formula One

Ben, on your second question, on the '26 commercial agreement, Concorde commercial agreement, yes, we do expect leverage in '26 versus where we finish the full year of 2025. And then going forward, we expect a more simplified structure that benefits all the parties in the ecosystem.

Operator, Operator

The next question is from Kutgun Maral of Evercore ISI.

Kutgun Maral, Analyst, Evercore ISI

I just want to ask about MotoGP. I think it's encouraging that we're getting closer to regulatory approval here. Now that maybe there's a bit more clarity on getting that deal done, could you talk a little bit about if anything's changed since the deal was initially announced in terms of the broader opportunity that you see ahead with Moto.

Derek Chang, President and CEO

This is Derek. I'll address this. The deal is not finalized until it is, and we are still collaborating with the European Commission to reach a conclusion on this matter, remaining optimistic about our prospects. From our viewpoint, we perceive continued potential in MotoGP, and our confidence has likely increased after spending more time with them during our allowed engagements. With any premium sports entities, the challenge lies in transforming them into mainstream entertainment attractions. We've successfully accomplished this with Formula One, and it's evident in various other sports as well. There's a similar opportunity here. Once the deal is finalized, we will actively work with MotoGP's management to implement our strategy.

Operator, Operator

The next question comes from Peter Supino of Wolfe Research.

Peter Supino, Analyst, Wolfe Research

A question on sponsorship and one back to the media rights. On sponsorship, 50% fewer races so far year-over-year. And so of course, sponsorship revenue has that headwind. And yet, it looks largely offset by growth from new sponsors. And so we're wondering maybe this is too simplistic, but does that imply that sponsorship growth must have been close to 50% on an underlying basis adjusted for races as we think about modeling the year. Is that a useful number? And then on the media rights, what are the opinion that the media rights are sort of uniquely misunderstood because the race times mean that the casual fan struggles to engage with the live broadcast. And so maybe the nonlinear format of streaming could really expand access for casual fans. And then of course, the media rights don't have any advertising. And so I wonder if you could comment on both of those opportunities for the media rights.

Stefano Domenicali, President and CEO, Formula One

Yes. Thanks, Derek. I mean, I can start definitely with the media rights. I think that it is definitely very important to recognize one thing. And that is clearly in our situation where we saw the growth of all our social platforms. We saw definitely the interest of the young generation to access our contents through YouTube and other forms of engagement. But this is relevant, and we need to make sure that this becomes part of the global strategy not only in the U.S. but all around the world. But it's definitely important to ensure the clarity of the fact that our clients that are getting more engaged with us will have the chance to connect with the right product is really the key for our strategy and our decision. And I think that what we need to ensure that because now we have different types of positive fans, they need to have the possibility to engage through different options that we need to offer to them. That's the biggest strategic thing that we want to put in place. And of course, this is relevant to the partner, but we need to choose and work together into the future. It is relevant because we see the dynamics that are different. Of course, if we see where we are in Europe, we have a long-term deal with our broadcaster that will enable us to understand what the evolution of that market will be. And we know that this is a different situation that we need to monitor all around the world. But in a nutshell, I think that our strategy will fit with the right partner that will be part of us in developing the knowledge of our sport. This is what I can say on the media side. On the sponsorship side, if I may, Peter, I think that the relevancy of what we are doing is confirmed by the quality and the numbers that we put in place every year, and that means that as correctly as Derek was saying before, the partners that are working together with us really differ from B2B opportunity to consumer, and we are offering an incredible opportunity of engagement that I would say without being disrespectful that our platform is becoming really very, very relevant. And this is the reason why we feel very, very positive and strong with our future even the next couple of years.

Derek Chang, President and CEO

Thanks, Stefano. This is Derek. Peter, your comment about F1 being unique, I agree with that. I think that we are uniquely positioned. And I think when you, again, think about media rights in this day and age, it's not about just what's happening on race day for the 1.5 hours to 2 hours of the race. It's what's happening over the entire weekend. It's also sort of the way different demographics will engage with the property. And that's what we are focused on, is continuing to deliver not just sort of the content of the race or even the practices and the qualifying but other content around the sport, but also delivering it across multiple platforms. So that there are multiple ways that fans of any age, of any demographic, of any interest can engage with the sport. Because as soon as, as I mentioned earlier on MotoGP, as soon as you're sort of a broad-based entertainment product, you have to recognize that, and you have to be able to touch all of those people and all of those fans. I'll let Brian finish up on that.

Brian Wendling, Chief Accounting and Principal Financial Officer

Yes. And just to add on to the sponsorship side, Peter, we're not going to give you a specific number in terms of that. But what I would encourage is patience because when you get to Q2 on a year-to-date basis, you have 11 races year-to-date, they'll be the exact same races you should get a really good feel for the trend in sponsorship. But there are lots of different revenue recognition aspects to the yearly full sponsorship that impacted. There's the calendar change, there's new sponsors, there's contract uplifts, and there are lost contracts from last year that rolled off. So there are lots of different things in there that make it more complex than how you described it.

Operator, Operator

The next question is from Steven Cahall of Wells Fargo.

Steven Cahall, Analyst, Wells Fargo

Brian, thank you for the guidance on other cost of revenue. Just thinking about that guidance. So I think you said it's going to be consistent with prior years as a percentage of revenue. I think most of us think revenue is going to be up sort of high single digits this year. I think that's an acceleration in other costs versus what you saw last year. I was wondering if you could just help us understand what in that? Is that due to labor? Is that the Las Vegas Grand Plaza or something else? And then congratulations on the new Concorde agreement. I'm wondering how it contemplates continued focus on competitive balance. And if there's anything in the new agreement that might help start to improve the structure of some of the second-tier teams eventually moving up into more competition with the top-tier teams.

Derek Chang, President and CEO

Yes. I'll start with other costs. So on a full-year basis, there's going to be items that increase. We always see that. We have increased partner servicing and commission costs that support the overall revenue growth of the business that are in there. You have some increased Grand Prix Plaza costs as we start the year-round activations. Obviously, those will be offset by the revenue that's being generated there. Otherwise, those are kind of the big things that you would expect. And as we've talked about in the past, we continue to focus on the growth of the business, and so there are growth initiatives that are in there as well to drive future revenue growth in the upcoming years. Stefano, do you want to talk about the Concorde?

Stefano Domenicali, President and CEO, Formula One

Yes. I mean, thanks, Stephen. I think that, as you know, for us, it's essential to ensure that the growth of the sport is done organically in a way that we can take mainly three bullet points. The first on the sporting side is to make sure that the teams can be competitive. We need to ensure that the regulation is done in a way that if there are gaps in performance, there is the chance for them to recover that. The second part relates to the financial side, and we see definitely that a healthy system allows, through also Concorde and other sponsorships that have become important for the teams – we have a solid team that wants to stay and be even stronger and competitive for the future. The third point is the awareness that the sport is living and bringing interest and money to all the ecosystems that will regenerate the possibility of organic growth through what we are doing. Therefore, I think that what we have done with a fair and balanced approach to Concorde has brought the right approach and right settings for a very, very healthy ecosystem that will be there for the future. The next couple of years will be characterized by these kinds of elements.

Operator, Operator

The next question is from Ryan Gravett of UBS.

Ryan Gravett, Analyst, UBS

Curious if you can give us an update on how renewal discussions are progressing for some of your non-U.S. media rights. I believe there are some deals coming up in Latin America and some Asian markets. So any color on the competitive tension you're seeing for those rights and if you're likewise seeing any interest from digital players?

Stefano Domenicali, President and CEO, Formula One

Yes. Thank you, Brian. Yes, of course, that is a more dynamic and, I would say, year-by-year situation. We have so many countries around the world that in a certain area, we can start to see some competition with regard to the streaming side of it that are still smaller than what you can imagine, but it's definitely a healthy situation. We have countries like Japan, for example, that is quite big for us or Olavarria in the Far East Asia and also in Brazil, for example, that will have an evolution, and we will have a positive impact on our relationships starting from next year.

Operator, Operator

The next question is from Joe Stauff of Susquehanna International Group.

Joe Stauff, Analyst, Susquehanna

I was wondering first question on whether or not you could share with us any organic or same race commentary. Any KPIs you have with respect to the two races in the first quarter? And then secondarily, Stefano, maybe a follow-up on an earlier question about team competition. It certainly seems parity where the competition has increased, especially the last season and maybe season to date. And I was just wondering, of those three buckets you mentioned, what were the most important reasons or improvements that you have made thus far.

Brian Wendling, Chief Accounting and Principal Financial Officer

Sorry, go ahead Stefano.

Stefano Domenicali, President and CEO, Formula One

I was saying, Brian, if you want to give your comment on the organic and KPI as the first question, and then we'll jump in on the second question of Joe.

Brian Wendling, Chief Accounting and Principal Financial Officer

Yes. All I would say is do the math on what we've reported here. We can't give you anything more specific than kind of what we're already showing. But there's a mix of races, obviously. And so you've got Australia and China this year. You've got the two Middle Eastern races last year with China not being in the mix. And you can see the impact that you have there on revenue and OIBDA. I was just going to say, Stefano, if there's anything you want to add on attendance at the one race where we had it, you can add that, but that'd be about it.

Stefano Domenicali, President and CEO, Formula One

No, I think Brian was absolutely correct. The comparison of different types is quite evident, and it's clear that we're not looking at the same kind of balance. As you pointed out, we'll have a clearer picture moving into the next quarter as we begin to see the organic growth we are experiencing across various areas. This is certainly promising news happening globally. It's not just about the commercial agreements we have but also about all the other activities related to Grand Prix that vary from place to place. The true competition will become apparent when we review the final results at the end of the year, but everything is progressing positively. Regarding Joe's second question about competition, we should remember that in addition to the three points I mentioned, the natural evolution cycle tends to bring teams closer together. This year, especially in qualifying, the time differences are measured in milliseconds, which is quite impressive. Therefore, it's important to note that when we decide to change regulations, it's part of a normal process, and there are valid reasons for it. Initially, this may create wider performance gaps, but the new regulations we are implementing aim to reduce the time required for teams and new power unit manufacturers to adapt, allowing new teams to respond. The three key pillars are crucial, particularly with the significant regulatory changes planned for next year. We must also remember that we intend to permit new power unit manufacturers to enter and emphasize sustainable fuel and hybrid engines, which are essential for keeping our sport's technology relevant going forward.

Operator, Operator

The next question is from Spencer Amer of Deutsche Bank.

Spencer Amer, Analyst, Deutsche Bank

Thanks for the question. You announced a 10-year extension for the Miami Grand Prix with a number of years left on the current deal. I was wondering if you could shed some color on what made you decide to extend the Grand Prix so early?

Stefano Domenicali, President and CEO, Formula One

I can answer that, Derek. Yes. Thanks, Spencer, for the question. We believe that the Miami Grand Prix is a very important pillar of our strategy in the U.S. I mean the job done is really very, very impressive. And of course, we want to give the possibility for them to keep investing and the more we can provide that kind of certainty, the more they will invest to grow together, not only on the business evolution but also in order to have the right partnership to develop the American strategy together with them. They've been proved to be a very, very solid and strong partner, and that's the reason why we have anticipated now because there was no reason to wait.

Derek Chang, President and CEO

Yes. And just from my standpoint, I went to the first Miami race and then just this last one, and I think the improvement and what has happened there on the ground has been pretty impressive. So kudos to our partners in Miami for what they've done, and we look forward to their continued investment in the race.

Operator, Operator

Our next question is from Jason Bazinet of Citibank.

Jason Bazinet, Analyst, Citibank

I just had a very simple question. You rightly pointed out that your business is defensive and is viewed as defensive by investors. The one question we get is people aren't quite sure how to think about the defensiveness of the sponsorship revenue if there was an economic slowdown.

Stefano Domenicali, President and CEO, Formula One

Jason, I think that the answer to that is no one has imagined both, but what we can see is that the credibility of our platform and the fact that we are very close to them with the fact that we are discussing on a daily basis what are the need that we need to supply to them is our strength. And the fact that we have long-term agreements with sponsors is, of course, a financial covenant in terms of the risks that we have. But it's more the relation that we have built on trust and understanding each other what they need. That's why, as I said, we are always very prudent, but the relationships we have and the quality of the parts that are working together with us allow us to be very, very positive. We have long-term contracts, but of course, that will reduce that financial risk. The good thing is to stay connected and to try to see if that is happening, how we can work together to make sure that our platform will offer to them what they need.

Derek Chang, President and CEO

Yes, I want to build on what Stefano mentioned. The quality of our partners and the long-term nature of our agreements should help shield us from any potential economic challenges in the near term. Our partners are seeking broad global exposure, and we deliver that effectively, often better than our competitors. The supply for them isn't extensive, and we are dedicated to enhancing our relationships with our partners to support their goals and initiatives. From my discussions with our partners, their enthusiasm remains strong despite the ongoing economic concerns that have been present for a few months now. They continue to express their commitment to growth and how we can assist them in reaching their objectives, which is very reassuring.

Jason Bazinet, Analyst, Citibank

Is it fair to say it's not as contractual as we do right now? I was just going to ask just to add that we haven't seen.

Derek Chang, President and CEO

Go ahead, Jason. Can you hear me? Go ahead, Jason. Why don’t you just ask your next question and then Stefano can answer both.

Jason Bazinet, Analyst, Citibank

Okay. I was just going to say that for investors, is it fair to say it's not as contractual as media rights but may be more defensive than if you had an advertising business? Is that the right framing of it?

Derek Chang, President and CEO

No. I think these are not like media deals or advertising deals that are purchased on a quarterly or annual basis. These are long-term agreements, similar to our media rights deals. We aren’t going to disclose the specifics of how long each one lasts, although we may have mentioned some of them before. However, much like media deals on the sponsorship side, as we discussed regarding Miami, our partners want to invest in what they have engaged with, and that investment process takes several years to activate and realize the benefits. Therefore, from the partners' perspective, they prefer to enter into long-term agreements with us. As a result, we have mid- to long-term contracts with most of our partners, which benefits us during times like these. But Stefano, do you want to finish up?

Stefano Domenicali, President and CEO, Formula One

No, I totally agree, Derek. To be very transparent, we haven't seen any slowdown in our conversation despite the market fluctuations we have today. This is related to the credibility of our platform and the fact that we believe in being a global sport, which allows for differentiation in the strategies that need to be adopted. So I would say that's the situation we find ourselves in today. So it's good.

Operator, Operator

Our last question today comes from Matthew Harrigan of Benchmark.

Matthew Harrigan, Analyst, Benchmark

Thank you. As everyone knows, the LEGO drivers parade was marketing genius incidentally. I have a question. You're really putting up great engagement metrics across the board. I mean, linear is encouraging as well as social. And I think you're probably breaking out maybe more than anyone else in social. But nonetheless, I mean, that doesn't really monetize and sometimes it doesn't even really translate to people watching the linear channel. I think it's just younger people's way they consume content in shorter form, including sports and F1. Do you have any thoughts on how you might be able to better engage people or better monetize rather people who have shorter attention spans versus someone who's going to get up and watch a race for two hours?

Derek Chang, President and CEO

Stefano, do you want to start?

Stefano Domenicali, President and CEO, Formula One

Well, Matthew, can I. Yes. No, thanks, Derek. I think thanks for the comment we take with pride because we never stop. We try to be different from the other platforms to create some sort of bits of what we are doing. And by the way, as Derek said at the beginning of the call, the great news is that we have our drivers and our partners that are embracing our strategy because they understand the value of it. It is clear that the more we are able to do this kind of things, the more we're going to be able to monetize all what we are doing. It would be wrong to believe that you can monetize everything straight away. And that's why on that we have a strategy that needs to be diverse but also very complete. We need to make sure that our relations with our fans is not only out of the race on Sunday, but we need to have a 365 days a year of engagement trying to tailor the content and this is really what we try to do in order to get access to the data we are available in order to get into the consumer habits of our fans. This is something new for us. So that's why I see potentially another important revenue stream that will allow us to be strong in an area where so far, we were maybe a little bit weak, but the potential to grow is definitely there. And the only thing that can come is if we are able to be creative as much as we can in order to be different from the other proposition.

Derek Chang, President and CEO

Thank you for the question, Matthew. Following up on the discussion, Stefano is absolutely correct. We are creating an ecosystem aimed at engaging as many people as possible with the sport. Historically, some platforms have proven to be more directly monetizable than others. However, our focus isn't solely on maximizing revenue on each specific platform or context with fans. We are developing a broader universe and ecosystem. For instance, while a fan interacts with us on social media, which may not generate immediate revenue, they might go on to purchase an F1 shirt or attend a race. They could end up visiting Las Vegas and want to go to Grand Prix Plaza or encourage their parents to watch races. There are numerous ways we can eventually monetize these interactions, so not every single touchpoint needs to generate revenue on its own. With that, I will conclude this quarter's call. I want to express my gratitude to everyone who participated and for the insightful questions we received. We appreciate your support and look forward to ongoing conversations. Thank you.