Liberty Formula One Group (FWONA) Q2 2021 Earnings Call Transcript

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Liberty Formula One Group (NASDAQ:FWONA)
Q2 2021 Earnings Call
Aug 6, 2021, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Liberty Media Corporation 2021 Q2 Earnings Call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, August 7.

I would now like to turn the conference over to Courtnee Chun, Chief Portfolio Officer. Please go ahead.

Courtnee ChunChief Portfolio Officer

Thank you. 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 Forms 10-K and 10-Q or Liberty Media acquisitions form S-1 registration statement filed with the SEC. These forward-looking statements speak only as 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 statement contained herein to reflect any change in Liberty Media or Liberty Media Acquisition Corporations’ expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

On today’s call, we will discuss certain non-GAAP financial measures for Liberty Media and SiriusXM, including adjusted OIBDA and adjusted EBITDA. The required definitions and reconciliations for Liberty Media and SiriusXM Schedules 1 to 3 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.

Greg MaffeiPresident & Chief Executive Officer, Liberty Media Corporation

Thank you, Courtnee, and good morning to all of you. Today speaking on the call, we will also have Formula One’s President and CEO Stefano Domenicali and Liberty’s Chief Accounting and Principal Financial Officer, Brian Wendling. So, beginning with Liberty SiriusXM, we continue to repurchase shares purchasing 141 million across LSXMA and the K shares from May through July. The discount remains and we therefore repurchased at a look through price for, I’m sorry of just over $4 per share. We continue to take advantage of the discount opportunity and I expect we will continue to do it going forward. And our ownership of SiriusXM is 78.1% as of July 23.

Looking now at Sirius itself; they had an outstanding results for the quarter, another beaten raise with record low churn at 1.5%. EBITDA also set a new quarterly record and new car penetration increased to 82%. We have a continued focus on growing the already strong presence in the car. There are 140 million vehicles on the road today which are enabled for SiriusXM and the 360-L enhanced feature set, we continue to evolve, based on data we received from users. We’re also growing gauged outside of the car and the rebranded SXM app is gaining traction. The variable margins are as good or better than satellite. I encourage you to get it today. And please don’t forget we are growing our advertising platform with 150 million listeners, the largest digital audio ad platform in North America. With all these combined platforms and capabilities, we believe SiriusXM presents a compelling, comprehensive offering for talent, media and social brands to create and monetize audio experiences.

So turning to Live Nation. The reopening accelerated led by outdoor concerts in the US and the UK with other countries coming along as vaccination levels increase. Festivals and amphitheaters are the focus for the summer led by Lollapalooza, Rolling Loud, Hip-Hop Festival in Miami, Latitude in the UK, between them they all had 750,000 fans, which is back to pre-COVID levels. Live Nation is helping to put on the New York reopening concert in Central Park on August 21 and weeks our streaming can service continues to be incremental Live revenue stream for us with Bob Dylan show later this month. Live expect all segments to return to AOI profitability in the second half of 2021 and all signs continue to point to a great 2022 and we expect 2022 activity and financial growth results will exceed 2019.

Turning now to the Formula One Group, that was phenomenal racing. The first half of the season, up until the summer break with a fierce battle between Lewis and Max, among the rest of the drivers, there is a tight competition for third and the Constructors Championship is also highly competitive with Mercedes and Red Bull going wheel to wheel and McLaren and Ferrari battling for the third spot. We remain impressed with the way Formula One as it continues to navigate the continued challenges within pandemic. I lost count of how many times we have made changes to the 2021 calendar. But we continue to move forward and the Formula One team continues to plan for the known and unknown variables that come back. We did a welcome a full crowd at Silverstone, 356,000 fans over the weekend, which was tremendous and we remain confident in our ability to have a full 23 race season. We also had our first Sprint event there, which was a resounding success. We make meaningful progress on sponsorship. We continue to and we are consistently announcing new partners and if you haven’t already, I encourage you to tune into the business breakdowns podcast with Stefano. He is quite articulate about the future of the business. The link to is on our IR homepage.

The Braves Baseball fans nationwide, but particularly in Atlanta and here in certain parts of Colorado, were devastated to Acuna end his season early. We do wish him a speedy recovery. The team has been battling despite setbacks. We had an impressive come back last night to sweep the Cardinals and the brands are now over 500. At Truist Bank — at Truist Park fans are back in any big way. We expanded the capacity of 100% in early May. Baseball revenue per home games is up in the second quarter compared to 2021 despite only partial capacity early in the quarter. Ticket sales concessions and retails per caps are all trending very favorably. We are having trouble keeping Jersey in stock, high quality problem. With the Braves do lead Major League Baseball in total attendance at over 1.5 million and average attendance at over 29,000 per game. With our financial strength, we are reinvesting in on field talent before the trade deadline. You saw us do that rather. And that the battery development revenue continues up in the quarter due to rental income from new tenants, TK and Papa John’s and the end of COVID related modified rents. You’ll also see the Phase 2 office tower. We are confident it will be fully leased in the near term and just in crump, will move into their new headquarters later this month.

Finally, we continue to make good progress on Almanac this back. We think the trends in the SPAC market which are challenging for many, actually play to the benefit of Liberty.

With that, I will turn it over to Brian for more on our financial results.

Brian WendlingChief Principal Officer of Liberty Media Corporation

Thank you, Greg, and good morning, everyone.

Liberty SiriusXM Group had attributed cash, restricted cash and liquid investments of approximately $418 million, excluding $1.1 billion of cash and restricted cash held at SiriusXM. We also have $1.1 billion of undrawn margin loan capacity at the parent level, related to our Sirius and Live Nation margin loan. Note that a portion of our cash will be used later in 2021 to repay our 2.25% Live Nation exchangeable bond. Based on the fair value of the liability at quarter end, the amount of cash use would be $517 million. As of August 10, the value of our SiriusXM stock held at Liberty SiriusXM Group was over $20 billion and the value of the Live Nation stake was nearly $6 billion. We have $3.2 billion of principal amount of debt against these holdings. Total Liberty SiriusXM Group attributed principal amount of debt $14.1 billion, which includes the $9.9 billion of debt that’s held directly at SiriusXM.

Formula One Group had attributed cash and liquid investments of $1.7 billion at quarter end, which includes $537 million of cash held directly at F1. The corporate cash balance includes $384 million that was received from LSXM in Q2 related to settling out the call spread. Total Formula One Group attributed principal amount of debt was $3.4 billion, which includes $2.9 billion of debt at F1, leaving $546 million of corporate level. F1 $500 million revolver remains undrawn. But we are still in the period of a covenant waiver that F1 target leverage for the business remains 5 to 5.5 times. Please note that during the three months ended March 31, 2021, F1 began reclassifying certain components previously reported in other revenue in the primary F1 revenue to better align with the way currently evaluating. Components reclassified in the primary F1 revenue include F1 TV subscriptions, F2 and F3-related fees, broadcast origination and support fees and digital advertising among others. Additional detail including the impact of the revenue reclassification for the years ended December 31, ’19 and ’20 can be found in scheduled three of our earnings press release, posted to our website.

Lastly to the Braves. At quarter end Braves had attributed cash liquid investments and restricted cash of $231 million and attributed principal amount of debt, $694 million. Liberty in our consolidated subsidiaries are in compliance with our debt covenants at quarter end.

And with that, I’ll turn it over to Stefano to discuss Formula 1.

Stefano DomenicaliPresident & Chief Executive Officer

Thank you, Brian. The 2021 season is exceeding expectation across the board; each we can on the track to brings drama and the unexpected. The Hungarian GP did not disappoint as Hong Kong playing its maiden victory and opines first at the newly branded team and also impressed with this expertise holding off [Phonetic].

The rivalry between Lewis and Max continues to be a buildup tight race for the championship which culminated with the instances at Silverstone, and with the unpredictable outcome on Sunday the Mercedes’ end to the summer break slightly ahead in the standings. And the battle for the third is tied between Norris, Bottas and Perez. The contest among the prospective is just the fierce between Red Bull and Mercedes at first and McLaren and Ferrari for third. Formula 1 is leading up to the promise and the fans are responding. We have a full crowd at Silverstone, posting 366,000 over the weekend, with the 120,000 new [Phonetic]. The source of attendance is unrivaled in the sport. Attendance was certainly aided by the tight battle for the championship. The inaugural F1 Sprint event produce compelling racing and the return off the part Luca [Phonetic].

On the Sprint, the first of three events in the season, we have received overwhelmingly positive feedback from the teams. drivers and fans. And certainly this provides additional opportunities for our promoter, media and sponsors. We will continue to discuss any lessons learned from the partners with the teams but the fundamentals are strong. We believe this can be expanded in 2022 and look forward to the next strength in those. Fans are engaging across the whole transfers. We have data through to a British Grand Prix and on the digital front, unique users for the F1 website after the season has up over 80% compared to 2020. Social engagement continues to grow, reaching almost 40 million social interaction for the British Grand Prix and we’ve seen this growth reflected in our total number and those growing as well on social media, which now stand at almost sports 42 million [Phonetic], giving opportunity and we have seen strong growth over 2020 and 2021 that in many markets, notably strong; The Netherlands, Norway, Spain Sweden and the United States.

F1 TV remains a great ways for fans to catch all the action of the race weekend. Peak concurrent views for race days have consistently been more than 2.5 times higher than the 2020 season average with millions view over the race weekend also up by more than 2.5 times versus last season. We are now level races into our Plan 23 races season. This time last year we had only completed four. 2021, as presented some of the same challenges as 2020, along with some new ones. I’m proud of our team and our partners as we continue to navigate the landscape. On our last earning calls, the Canadian Grand Prix had just been replaced by the Turkish Grand Prix. However, due to travel restriction related to Turkey, we have to quickly repeal it again and secure back to back races in Austria by moving the French Grand Prix a week earlier. Fortunately, we were able to secure a stock for Turkey later in the calendar. I think replacement for the Singapore Grand Prix. All of these changes require great nimble, creativity and hard work from our partners and the countries in which we race today.

Formula 1 has demonstrated ability to manage the logistics of COVID restriction in multiple countries and as said the gold standard in testing and effective protocols to deal with positive changes. Through the British Grand Prix, we have conducted 56,000 test on drivers, teams and personnel that produced 38 positive cases. Total positivity rate of 0.06%. Through these fine -tuned operation, we feel comfortable in our ability to safely deliver 23 racing. The demand to host Formula One races persist at all on high as evidenced by venues that were quickly able to fill slot in 2021 and we will still have interest in new venues that are now currently part of the 2021 calendar and existing venues that are open to hosting a race. As different parts of the world, that are emerging from the pandemic, governance view an F1 race as an exciting way to return to the public stage and was [indecipherable].

We have made tremendous progress in 2021 in sponsorship and the momentum has continued since our last earnings call in May. Crypto.com joined us a global partner an inaugural partners of the F1 Sprint series and will become the official cryptocurrency sponsor and as an NFT, partner of F1. They will present the brand new award that would be announced ahead of the Belgian Grand Prix. We have also welcome BWT as a title sponsor of the Austrian double header and last week announced that they will become F1’s official Water Technology Partner, working with F1 to deliver a single-use plastic-free paddock by 2025. Workday, regional finance and HR enterprise partner of F1 across the UK and Germany.

Finally, we completed a multi-year extension of our financings new covenant e-commerce and manufacturing, following an outstanding performance on our F1 offline stores. Sales on the official online F1 store grew by more than 40% in 2020 and accelerate to triple-digit growth through the first six months of 2021. The US market is the largest in term of sales on the F1 side, highlighting the increased rate of the sport in the country, prompting our goal to expand our reach, we announced in that Formula one partner deliveries for old and F1 teams will feature in the video game Rocket League’s latest Fan Pack, beginning a multi-year partnership.

We have less on how we’ve through the 2021 season, our planning to 2022 has been ongoing for some time. As mentioned before, there is a high demand from Venice to make 2022 calendar and we hope to announce the provisional calendar in September, October. We can confirm that the much-anticipated Miami Grand Prix will happen in the first half of May. Demands, well the ticket is high, even though sales have not officially started. We also forward to our move to St. Petersburg for the Russian Grand Prix beginning in 2023. These iconic city will provide a stunning season for Formula 1.

We have previously discussed the foundation that were put in place over the last few years with cost gap regulation and the new Concorde agreement. We have created a sustainable and the flourishing ecosystem for the sport. These along with a compelling products on the track has created interest and opportunities across the board. This includes ongoing discussion and the highest level with engine manufacturers who see the brand value in Formula 1, as well as opportunities for the new engine and development of sustainable fuels. Along these lines, we continue to develop programs and the Formula 1 WeRaceAsOne initiative. For the previous company we delivered a carbon-neutral broadcast. We plan to take these learnings as we work toward our goals for ensuring all F1 events are sustainable by 2025 and on our way to become net zero carbon by 2030.

We have also seen great interest from OEMs in our plans for the next Formula 1 and use to be 100% sustainable fuels and those positive discussions are continuing, but I want to focus to increase diversity and inclusion across Formula 1, we have recently announced commitments relating to engineering scholarship or underrepresented groups and apprenticeship and internship program within the F1 organization. We believe that as a truly global sport, we can make a difference by ensuring that we are diverse and inclusive in our own community as the communities we serve around the world. We thank Chase for his generous donation to funding these scholarships. As we are heading to August break, I want to thank everyone at Formula One, including all of our drivers, teams and business partners for their dedication and hard work so far this season.

Enjoy summer time off and we look forward to resuming racing in August 29. I want to do that full speed ahead and now I will turn the call back over to Greg.

Thank you so much. Bye-bye.

Greg MaffeiPresident & Chief Executive Officer, Liberty Media Corporation

Thank you, Stefano and Brian. In very exciting news, our Investor Meeting will be held on Thursday, August 18. The full experience will be offer in-person at the New York Times Center and virtually. Please save the date. Additional details will be provided soon. Please note that all in-person attendees will need to be fully vaccinated against COVID-19. We appreciate your continued interest in Liberty Media and hope you all stay safe and healthy.

And with that operator, I’d like to open the line for questions. Thank you.

Questions and Answers:

Operator

Absolutely. [Operator Instructions] And our first question will come from Ben Swinburne with Morgan Stanley. Please go ahead.

Ben SwinburneMorgan Stanley — Analyst

Hey, good morning everybody. Greg, just to clarify, is it August 18 or November 18?

Greg MaffeiPresident & Chief Executive Officer, Liberty Media Corporation

November 18. Did I say August?

Ben SwinburneMorgan Stanley — Analyst

You did. Yes, which I thought you meant November. So thanks for clarifying and exciting for in-person. Two actual questions if I could. Greg, just looking at the discounts Liberty Broadband, I know this is in a Liberty Broadband call but I think it’s relevant for Liberty Sirius, that discount has not improved. It’s probably wide and even since that buyback kicked into substantial levels and I’m just wondering what you take from that as we think about the opportunity to sort of go out for the discount at Liberty Sirius since you’re going to, in theory, have access to a lot more capital at some point over the next quarter or two?

And then, you guys commented in the release about F1 TV contributing to revenue growth. I feel like that product went from something we were really focused on as a business to sort of fading. And now I’m sort of wondering given COVID and just the popularity of the sport increasing, what’s the vision there? Is that something that you guys are investing more in? Do you see that as a big revenue opportunity or is it more of an enhancer of kind of the core rights and may be a driver of engagement.? Just maybe you can update us on how you’re thinking about the OTT streaming product at this point?

Greg MaffeiPresident & Chief Executive Officer, Liberty Media Corporation

Sure. Thank you, Ben. First on the discounts, well, I happen to be well aware since we have a Liberty price, what’s going on there, and we actually — during the quarter, for example, Charter was up about 15% and our NAV per share of Liberty Broadband of Charter was up about 17% because we were able to buy as much as we were able to buy this year at a discount. We are actually driving the NAV of Charter, excuse me, of LBRD [Phonetic], up substantially faster than Charter itself. So look, I think it will have its desired results. Good things come to those who wait. We are not necessarily hoping or suggesting everyone’s going to wait forever but we believe that will ultimately pay to our benefit. And we can already see those results mathematically, what’s happened to the NAV per share of LBRD compared to the underlying Charter. So I think we’ll go at it. And as you point out we’re going to have more capital. We expect in the coming months and we’ll see what we — how it responds.

On the vision for F1 TV, I think it has evolved. I will let Stefano comment as well. But I think you’ve just the sheer heft of what the amount of content we have caused us to think about whether that was going to be a meaningful way to connect with our customers or enhanced way, I would — it be as the primary way or an enhanced way and I think it’s still is going to be enhance way and how much of it becomes incremental revenue, how much of it becomes a way to join with our customers, that will evolve. But it’s, you’ve seen what’s happened for example with WWE going into Peacock and obviously the scale of content being much higher than us. I think it’s very difficult for a point service to think you’re going to replace but we have currently with scaled aggregated services, whether those are linear or whether those are scaled aggregated digital services.

So one way or another, I think that is — that those are going to be the primary way we get paid but we will find other ways to add value and revenue through things like F1 TV. Sorry. I hope I didn’t steal your thunder there.

Stefano DomenicaliPresident & Chief Executive Officer

No, Greg, I think that you are perfectly spot on. And I think, Ben, if I may add on what Greg has said is, F1 TV is a huge potential to make sure that we can enhance the experience with more and more content to our customers and we are exploring project together with our promoters to give real and live content we can offer in the special condition to the ones that are attending to the events and then extended the appetite of adding unique content for indeed, in our platform, in order to grow that experience because that’s really an incremental way of adding more and more appetite and content to people that they like Formula One. On the TV right, generally talking, I mean we have the privilege of — and many of our major deals have been already completed. And so we are in that situation where we can really see the evolution of the TV right, because this is something that is not uniform and it’s different from region to region and the OTT develop will sure have a big hit in the future.

So, we are in the position of having the biggest concert really ready on and then having the chance for explore to what we are positioned today in order to be ready at the right time to maximize the fact that Formula One is really great shape today.

Ben SwinburneMorgan Stanley — Analyst

That makes sense. Thank you, guys both of you.

Operator

And up next, we’ll take a question from Bryan Kraft with Deutsche Bank. Please go ahead.

Bryan KraftDeutsche Bank — Analyst

Hi, thanks. Good morning. I have one for Stefano and one for Greg, Greg, curious if there is anything from the infrastructure legislation that could be an opportunity or risk for Liberty that you’re watching, whether it’s something for an existing portfolio company or new opportunity for Liberty to invest behind sort of an open-ended question, but curious on your thoughts there. And then Stefano, sports betting was one of the opportunities that Chase had identified when he first became CEO. I’m just wondering if you could give some perspective on that opportunity for Formula 1 going forward and any plans or activity that you have going on in the sports betting area? Thank you.

Greg MaffeiPresident & Chief Executive Officer, Liberty Media Corporation

So, touching first on the infrastructure bill, I think we’re full on LBRD questions in a way that today already in the LMC call but that’s right, We’ll — I think there are some opportunities that will arise. Most of them are going to rise at Charter for GCI and if you look at our businesses, I don’t think we’re going to see a massive change at Siri, I guess, if you think about greater connectivity in general that’s probably a plus for our 360-L but it’s on the margin. It’s not like a massive opportunity, I think in and of itself it’s a continuation or acceleration of ongoing trend. The rest of the business is Formula 1, the Braves, not as Live Nation, not as obvious to me how the infrastructure bill is helpful. Obviously, Broadband and Charter and GCI, there are both opportunities there in terms of increasing customer supply of funds to buy broadband, increasing money around broadband, probably helping us extend some of our broadband footprint but there are also some threats there were new entrants, may be encourage.

So pluses gives and takes in that bill, I would say, from the perspective of Charter and GCI could have been far worse for some of the initial proposals. I think the ones in terms of the threat level, are way down from what might have been initially proposed about preferences for fiber over co-ax, preferences for over build, preferences for Muni’s — Munibuild, all of those things are muted compared to what might have been.

Stefano DomenicaliPresident & Chief Executive Officer

If I may, Bryan on your question with regards to betting. First of all, we don’t have to forget that we have already more partner whose money get back that we are working together. But as you know even the area of betting is an area with a lot these should be depending on the region of the country and we need to make sure that everything is really clear on that side. For sure it’s a big opportunity that could be explored in the future, so once again work in progress to make sure that the next step of our partners will be the right one, in terms of dimension opportunity that could be good for our sport.

Bryan KraftDeutsche Bank — Analyst

Okay. Thank you.

Operator

Up next, we’ll hear from David Karnovsky with J.P. Morgan. Please go ahead.

David KarnovskyJ.P. Morgan — Analyst

Hi, thank you. On Formula 1, Stefano, can you discuss in more detail your take-away’s on the Sprint race format, both in terms of how you think it was received by the fans, but also by our partners on the race promotion and television side and I think you mentioned maybe expanding the format next year. Any sense for how many races you could roll this out to? And then maybe one for Greg, you mentioned good progress on Almac. I know you’re somewhat limited in what you can say on this, but is there any more color you can provide on it or your position in the SPAC market overall? Thanks.

Stefano DomenicaliPresident & Chief Executive Officer

Thanks, David for the question. Well, first of all, when we talk about the Sprint format, the idea was to offer something different in order to make sure that was something new that we can offer to all the stakeholders in Formula 1. We have the — said that we wanted to do three — three tests, one has been done in Silverstone, the other one would be in Monza and the other one will be at the end of the season in Brazil. At the end of this complete test, we’re going to have a plan in order to see what will be the next step. What I can really say is that, after the first Sprint event in Silverstone, the response that we have both from the drivers from the teams, the media has been really positive. And also for the promoter, because if you think that every day we had something new to say. People come out and check on Friday, early June for the first qualifier on Friday. So the outcome of the first event has been dramatically positive, if I may say. And it’s great because that’s growth attention, interest TV and also partners, because thanks to that, we have built in for example people.com and so we have already seen our financial interest has been positive.

Therefore, there has been, if I may say good, good sign, very, very, very positive sign and we want to restore what we said. We’re going to have a full debrief team, if I may say that, at the end of the season. We have a plan for the future of course. We are developing that, we are fine tuning some of the comments that we received and what I can say is that, if we move as we should, I do believe so, in that direction, the future for sure there will be not every race. We have ideas to create a special format for certain starting with Grand Prix and certain special awards that we want to offer and add to the already incredible platform Formula 1. So very, very positive comments after the first exercise and ready to prepare at the end of the 3 events, a proposal that can bring home, what we can see hopefully would be a big step of investors at differentiation Formula 1, also in sporting proposition.

Operator

All right. And moving on, we are taking a question now from James Ratcliffe with Evercore ISI. Please go ahead.

James RatcliffeEvercore ISI — Analyst

Thanks. One on LSXM and one on Formula 1, if I could. First of all on Formula 1, in the couple of recent sponsorship deals, can you just give us an update on how many remaining or verticals you think are really available to you and are attractive opportunities? And secondly on Liberty Formula One, you bought back 100 assume on — it will be Sirius, you back $140 million bucks in stock in the quarter, you presumably are going to be able to get the cash flows from Sirius tax free at the end of the year, why not accelerate the buyback now? You’ve got quite $1 billion in debt or a bit more than that directly in margin loans and the massive value of the Sirius stake, why not take that buyback activity up to ramp it up now, rather than waiting until you have the ability to get the cash tax free? Thanks.

Greg MaffeiPresident & Chief Executive Officer, Liberty Media Corporation

Stefano, I’ll let you comment first. You want to comment on sponsorship?

Stefano DomenicaliPresident & Chief Executive Officer

Thank you, Greg. James, I mean, from my perspective, we have seen already a great the momentum this year in the sponsorship growth, that is connected to all what we have seen in the Championship. But they’re going to the better question regarding to how many verticals you believe there could be, still open in as our global partners. I would say, maybe one or two, and maybe the one on which we are working on that is very important for us is the technological provider. You know, that is something related to our possible commercial offer that we want to exploit to a great broadband to be available around the world. That’s mainly. I would say the most important one that I think will be important for us to work on.

Greg MaffeiPresident & Chief Executive Officer, Liberty Media Corporation

If I could add on sponsorship. I think it’s an evolving market and we certainly see new categories in technology as Stefano pointed out is one. You know when we bought the business nearly 5 years ago, I don’t think we thought about a crypto sponsorship. I don’t think that was really on our horizon, and now it’s a meaningful number. So I think new categories are created, things change, BWT was a team sponsor, now they’re one of our sponsors, things move around. So I’m not sure it’s a static that is able to answer this — this many or this number. I think it moves around and there are lots of opportunities still out there and it’s our challenge to go and pursue them.

On the question of LSXM, I think we have been ramping. We do have a plan, we will have more capital that comes in. I think given that our — the way to support the debt at LSXM is primarily with flows from Sirius, recognizing we don’t have an operating business there. We’ve been relatively cautious with margin — and the like. And we’ve been relatively constrained in how much exchangeables we could do, with this x amount of liquidity. So, I think we — you’ll see a plan that’s probably more aggressive, recognizing what’s coming. But those have been some of the constraining factors.

James RatcliffeEvercore ISI — Analyst

Thank you.

Operator

And our next question will come from David Joyce with Barclays. Please go ahead.

David JoyceBarclays — Analyst

Thank you. Couple of questions, one on Formula 1. I was wondering, given all the fluidity in the — the race schedule this year, have the race promotion contracts been renegotiated based on the regulatory allowance of capacity or they have they been fixed with the presumption that you still have — you have some normalcy coming back later next year and kind of secondly on that, would you be to kind of a normal period you think in capacity in race promotion revenue level by the fourth quarter? And then a second question on Liberty Sirius, it was kind of tax related in terms of your options, hypothetically if you were to sell into a Sirius share buyback program once you’re over 80%, with your sales of the somehow be tax free or is there any leakage from that? Thank you.

Greg MaffeiPresident & Chief Executive Officer, Liberty Media Corporation

So, I’ll —

Stefano DomenicaliPresident & Chief Executive Officer

Maybe Greg, on the first?

Greg MaffeiPresident & Chief Executive Officer, Liberty Media Corporation

No, you first Stefano.

Stefano DomenicaliPresident & Chief Executive Officer

Okay. Thank you, Greg. As you said, with the fluidity is really the things that we had to manage this year and we are heading into the second part of the season, where that would be the topic. The good thing is that, it’s a situation we have to manage is unique, different and because every agreement is different from the one that we have country by country, place by place. I have to say that of course the effort is always to make sure that from all the points that we need to manage and of course also on the financial side, is to optimize the dimension of it and minimize the any negative possible intro we can have. We have agreements where honestly the number of attendees doesn’t mean anything to us. Some other, we are working together to see what could be the benefit that we can bring home of depending on the situation and we are working closely with all the promoters and the authorities to make sure that we can really make the right plan for the future, knowing that, as Greg was saying before, the situation is evolving continuously and the thing that we have to do is to make sure that we are able to react in the right way and the things that we can say so far to date, that we didn’t have any material cash impact on our numbers.

Greg MaffeiPresident & Chief Executive Officer, Liberty Media Corporation

I agree with Stefano’s comments and obviously we work with our promoter partners to maximize the audience allowable and safely at each race and that will impact the revenues that occur, that will impact — obviously there, it’s a changing market every day. Delta, Lambda, we’ll see what happens. We’re obviously designed to maximize attendance in the safest way possible. We skipped over one comment or about Almac and it was, we were so excited about Formula 1, I think it’s probably what happened.

Look, obviously there’s limited amount I can comment, our observations about the SPAC market are probably consistent with most of the investors and analysts on this call. It’s gotten a lot harder to race back money and it’s gotten harder to get combinations done because the pipe market is particularly difficult and the discounts expected from fair trading value are probably widening. All of those have meant that weaker players have probably been washed out. We know of deals that were proposed at X price that didn’t get done at any price, not just below the proposed price and I think that trend, I’d like to believe, favors us both because we have a very strong investor group in Almac SPAC, who have expressed willingness to do a pipe with us, but also because unlike many sponsors, who are just playing for the promote, we are putting up at least $250 million into the deal and could put substantially more if we found the right opportunity, and then our willingness to affect via pipe investor alongside pipe investors, I think is a comforting thought to many.

I’ve recently been approached by numerous firms about, hey, we’d love to come along with you and partner on a deal, et cetera. So I think there is plenty of capital available for us for the right deal. The right deal is likely to involve something where there is more capital required, the scale, compared to a normal IPO or something like that. And it’s probably partly due to COVID-related recovery or the like. So all of those are speculations about what we’ll see. We have seen a lot of those kinds of opportunities, but have not found the perfectly price one opportunity like yet. So I’m confident we will.

On the question about selling into the buyback, our tax treatment will vary depending on whether we sell to the company. We currently have no arrangement to do or whether we sell into the market. And when the first would be, the latter would be taxable to former would be tax free.

David JoyceBarclays — Analyst

Great. Thank you very much.

Operator

And up next, we’ll hear from Jason Bazinet with Citi. Please go ahead.

Jason BazinetCiti — Analyst

I think this going to be an easy question for you to answer, but if I just fast forward a bit, and we get to the point where there is some sort of equity exchange or takeover between LSXMA and Siri where we get the one operating business in one security, Is it obvious to you, which one of those is the surviving entity? Can you just talk about the pros and cons? Thanks.

Greg MaffeiPresident & Chief Executive Officer, Liberty Media Corporation

Thank you. Jason, no, I don’t think it’s a known. I’m not sure it’s an easy question, Jason. I’m not sure it’s known that you could imagine scenarios where an effect Siri becomes an operating subsidiary of Liberty with its own tracking stock or you can imagine scenarios where there was effectively an RMT Reverse Morris Trust where our shares were subsequently spun out to our shareholders and Siri became a freely traded company. Both of those are imaginable scenario, certainly.

Jason BazinetCiti — Analyst

Okay. So no real constraints to go either away from your perspective.

Greg MaffeiPresident & Chief Executive Officer, Liberty Media Corporation

No.

Jason BazinetCiti — Analyst

Okay, thank you.

Operator

All right. And our last question will come from Matthew Harrigan with Benchmark. Please go ahead.

Matthew HarriganThe Benchmark Company — Analyst

Thank you. No, it’s John [Phonetic]. Think that comps were, I guess the default rate question. Stepping back in the Braves and looking at MLP overall, you got good new TV contracts to 28 albeit pretty thought centric and the time you having a lot of feel even the non-baseball because you have some real issues over a longer period of time with ratings for the sport and the competition in the field. Do you think demand for it and the owners Group overall or amenable to like draconian measures like maybe even moving back to the Pitchers may get more excitement into the game. I know that’s kind of a sports question but it translates to financials over a period of time as well. Thanks.

Greg MaffeiPresident & Chief Executive Officer, Liberty Media Corporation

Thank you, Matthew. We remain super excited about the Braves. There are continuous work led by commissions, which involve both owners representatives, MLB represents, player represents to look to make the game even more exciting. A lot of that revolves around speed to try and shorten to playing times, innovations like double headers, going to 7 innings at least for this period of time. You’ve seen innovations around — during COVID about starting a tie game, starting Runners at second phase, things like that. So, there are certainly attempts to speed things up and I’m not convinced moving to pitchers amount is going to be happening anytime soon but all things are open and possible. I think people respect the tradition of the game but also want to create as much excitement as possible and that balance will be tried to be maintained.

Matthew HarriganThe Benchmark Company — Analyst

Thanks, Greg.

Greg MaffeiPresident & Chief Executive Officer, Liberty Media Corporation

Thank you to our listening audience and the questioners. We hope to speak with you next quarter if not sooner, and at our Investor Meeting in November. If there was any doubt. Thank you very much.

Operator

[Operator Closing Remarks]

Duration: 45 minutes

Call participants:

Courtnee ChunChief Portfolio Officer

Greg MaffeiPresident & Chief Executive Officer, Liberty Media Corporation

Brian WendlingChief Principal Officer of Liberty Media Corporation

Stefano DomenicaliPresident & Chief Executive Officer

Ben SwinburneMorgan Stanley — Analyst

Bryan KraftDeutsche Bank — Analyst

David KarnovskyJ.P. Morgan — Analyst

James RatcliffeEvercore ISI — Analyst

David JoyceBarclays — Analyst

Jason BazinetCiti — Analyst

Matthew HarriganThe Benchmark Company — Analyst

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