F1 management furlough 250 staff as bosses take pay cut

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After McLaren, Williams and Racing Point, the Formula One Group has confirmed half of their full-time staff will be furloughed due to the coronavirus.

As the financial implications of the current pandemic bite, 250 employees have been temporarily cut leaving the UK government to pick up 80 per cent of their salary.

In addition, all senior staff, including CEO Chase Carey and motorsport director Ross Brawn will also take a 20 per cent pay cut for two months.

This comes as the health of F1 economically is becoming increasing uncertain with eight races already postponed or cancelled and more expected to follow.

Red Bull advisor Helmut Marko recently suggested the losses for the sport could be in the hundreds of millions of dollars and its expected Liberty Media will have to spend money too, to put on the rescheduled season they are planning.

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Last week, ratings company Moody's changed F1's outlook to positive to negative in another sign of pending financial strife.

Though even in the worst-case scenario, they believe the sport will manage.

“F1 has strong liquidity and a sufficiently flexible cost base to manage through a severely curtailed 2020 season, which Moody’s consider would likely be able to support a full cancellation,” it said in a statement.

“As of 31 December 2019, F1 had substantial liquidity headroom of around $900 million, comprising $400 million cash balance and $500 million undrawn committed revolving credit facility.

“[That should be enough] to absorb cash outflows from potential refunds of advance payments from promoters, sponsors and broadcasters, team payments, other overheads and interest costs in the event that the 2020 season is cancelled.

“Moody’s considers that F1 is relatively well placed to recover post coronavirus crisis, underpinned by its contracted revenue nature, strong franchise, large fan base and high cash conversion.”

The ratings company also pointed out Liberty Media's ability as the parent company to help F1 through this period though did see a "relatively high probability" that a leverage covenant, a limit on debt, would be breached, requiring an amendment or waiver with creditors.