The Liberty SiriusXM Group (LSXMK) Q1 2019 Earnings Call Transcript

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The Liberty SiriusXM Group (NASDAQ: LSXMK)Q1 2019 Earnings CallMay. 09, 2019, 11:00 a.m. ET

Contents:

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  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to Liberty Media Corporation 2019 Q1 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 May 9. I would now like to turn the conference over to Courtnee Chun, Senior Vice President of Investor Relations.

Please go ahead.

Courtnee Chun -- Senior Vice President of Investor Relations

Thank you. Before we begin, we'd like to remind everyone, 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 our most recent Forms 10-K and 10-Q filed with the SEC.

These forward-looking statements speak only as of the date of this call and Liberty Media and Liberty TripAdvisor expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Liberty Media or Liberty TripAdvisor's 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 including adjusted OIBDA and adjusted EBITDA. The required definitions and reconciliation for Liberty Medium and SiriusXM Schedules 1 and 2 can be found at the end of the earnings press release issued today, which is available on our website.

Now, I'd like to turn the call over to Liberty's, President and CEO, Greg Maffei.

Gregory B. Maffei -- Chairman and Chief Executive Officer

Thank you Courtnee. Good morning to all of you. Today speaking on the call, we will also have Liberty's CFO, Mark Carleton; and Formula One's Chairman and CEO, Chase Carey. During the Q&A, we will also be available to answer questions related to Liberty TripAdvisor.

So beginning at Liberty SiriusXM, we did continue our repurchases of Liberty SiriusXM stock. In the period of February 1 to April 30, we bought an additional $160 million. If you take the effect of look through price, in which we're buying SiriusXM, it was up about $4.32 a share, which we find pretty attractive. While the discount to NAV is off from its all-time high of around almost 35%, the discount between SiriusXM and LSXM remains stubbornly high, and we will continue to take advantage of it. Our ownership at SiriusXM today is about 68.6% as of April 22.

Looking at our iHeart investment for a sec. iHeart did emerge from bankruptcy May 1 and we received the following $17 million (ph) CCO shares representing just under 5% -- about 4.7% of the stock, 7 million iHeartMedia Class B shares and warrants representing about 4.8% of the stock, and $284 million of total par value of iHeart debt in a couple of tranches.

We have subsequently sold the iHeart debt at a slight premium to par. We think this frees up some liquidity at SiriusXM, which will allow us to pay that margin debt or utilize it for other purposes. We will evaluate our holding of the other remaining stakes and determine what we want to do with holders or raise cash for other purposes.

Looking at SiriusXM itself, solid Q1 results, which now include Pandora. Made good progress on several fronts around Pandora's integration and continue to execute financially. During the period, up to April, 22, SiriusXM also returned almost $900 million of capital to its shareholders, mostly via buyback.

Looking at the Formula One GroupI think we are continuing on the path of strategic objectives, we outlined upon our purchase and Chase and team are doing a great job. We're off to a promising start to the business in 2019 and are benefiting from a couple of years of investment that we have made in several areas. We continue to have positive fan reaction, both in viewership and attendance for the first four races, this season.

The brand also continues to grow and resonated across many mediums, I hope some of you have checked out the well received Netflix series Drive to Survive or looked at Will Smith's, the Bucket List and we also launched the third installment of our Esports series. First European race is this week in Barcelona and we're quite excited. Turning to Live Nation, just another outstanding quarter, revenue up 17% posted its highest first quarter operating AOI ever, Live Nation expects to deliver double-digit operating income and AOI growth for 2019 and the whole.

Looking at the Braves, Braves are 2018 and 2019 very competitive (inaudible) leased. Recall that 2018 did include several positives that benefited the baseball side of the business, including a very favorable home game scheduled, a competitive team that went into the end of the season, a post season play and non-game day special events. While year-to-date attendance looks pretty good, for the season, many of these drivers that I just mentioned will continue to play out and the lack of it may impact results.

We broke ground on the second phase of our Battery development in April, excluding that second phase Battery development has been quite successful, is now fully leased through all segments except for the retail portion, which is 92% leased. The expected NOI from Phase 1 of the Battery in 2019, we expect will be consistent with the stabilized NOI we provided to you at our November Investment Day.

We estimate that to be around $23 million, adjusted for our 50-50 JV on the hotel.

With that, I'll turn it over to Liberty TripAdvisor, solid Q1 results and on track to deliver full-year double-digit, consolidated adjusted EBITDA grew growth despite the continued investment in new areas like experiences. The market reaction to the first quarter results, seems kind of odd to me, but we'll let it play out over time. Through increased hotel marketing efficiency, the expanded EBITDA margin -- excuse me -- the EBITDA margin was expanded by 1100 points to 41% for the hotel, media and platform segment.

Experiences in dining segment grew revenue about by about 29%. TripAdvisor is very focused on rapidly increasing the bookable supply available in the experiences and dining areas. TripAdvisor now has 760 million reviews and opinions and that's up about 20% from a year ago.

With that, I'll turn it over to Mark for some discussion of our financial results.

Mark D. Carleton. -- Chief Financial Officer

Thank you Greg. At quarter end, Liberty SiriusXM Group had attributed cash and liquid investments of $36 million and that excludes $62 million of cash held at SiriusXM. The value of the SiriusXM stock held at Liberty SiriusXM as of May 8 was $18 billion , and we have $1.2 billion in debt against these holdings. Total Liberty SiriusXM Group attributed principal amount of debt was $8.5 billion , which includes $7.3 billion of debt at SiriusXM.

At Formula One Group, we had attributed cash and liquid investments of $112 million, excluding the $260 million of cash at F1. Our Q1 is typically a high watermark in cash for Formula One due to the timing and the receipt of advanced contract payments for the 2019 season. Formula One Group has attributed public market securities with a market value of approximately $5 billion as of May 8, including the intergroup interest in the Braves Group, and our stake in Live Nation with $2.1 billion of attributed debt, excluding the debt at F1.

Total Formula One group attributed principal amount of debt was $5 billion , which includes the $2.9 billion of debt at F1. F1's total net debt to covenant OIBDA ratio, as defined in their credit facilities was approximately 5.8 times as of March 31, as compared to a maximum allowable leverage ratio of 8.25 times. This is a substantial reduction in net leverage ratio, but I would point out that the race calendar variances between 2018 and 2019 resulted in 22 races falling in the trailing 12 months measure for their covenant calculations versus 21 the previous year. We set a target total net leverage ratio for Formula 1 of 5 times to 6 times bank covenant OIBDA, and I'm pleased to note these leverage ratios are for the Formula One business not the Formula One Group.

Lastly, the Braves Group, had attributed cash and liquid investments of $163 million, and attributed principal amount of debt of $480 million.

Now, I'll turn it over to Chase Carey to talk about Formula One in more detail.

Chase Carey -- Chief Executive Officer

Thank you Mark. While it's still early in 2019, we feel good about the momentum of the business, and believe we are beginning to take advantage of the foundation, we've built the last two years. As noted before, we evaluate our business on an annual basis as variations in the quarterly race calendar make year-on-year comparisons difficult. In the first quarter 2019, we had two races versus one a year ago. Nonetheless, we were pleased with our first quarter results and we are on target with our goals for the year. On the track, we have four races into the season, the results in the track so far have not quite delivered the drama or surprises hoped with Mercedes for the first time ever, finishing one, two in all four races. However, it is early in the season, and we believe Ferrari and Red Bull have shown the potential to take Mercedes on, and the competition in the midfield is tighter than ever, with six teams battling each other week to week.

And the rivalry between Lewis Hamilton and Valtteri Bottas for the top spot has the potential for some interesting story lines. A new dynamic introduced this season is a point for the fastest lap, if that driver finishes in the top 10, it's been well received by fans and created some new excitement. This extra point is the reason Bottas leads Hamilton by one point, season to-date.

In spite of races that did not deliver -- for on-track drama, our TV audience through four races is up 3% and our attendance is up 6%. In addition, we continue to drive strong growth on digital platforms. For example, on social media our video views year-to-date increased 55% and minutes watched increased 83% from a year ago.

That being said, we know we have to make our racing better and one of our top priorities continues to be improving the competition action and unpredictability of our support on the track. We're increasingly enthusiastic about the changes planned for the next two years in regulations, car design, tracks and other areas.

This weekend, we hold our first European race of the season in Barcelona, and while we still have 17 races to go in this year, much of our energy and focus is on future years. We're in the process of finalizing our 2012 race calendar. We have agreements in principle and two renewals and are actively engaged on three other renewals. In addition, we've already announced our new race in Hanoi and construction has begun on the track and facilities.

It will be a street course that is one of the most unique and challenging race tracks in the world with 22 corners and a couple of long straightaways, designed with which we have been intimately involved. I was in Hanoi, a few weeks ago and the excitement was palpable. To mark to 12-month countdown to the event, 13-time Grand Prix Winner, David Coulthard and Red Bull simulator driver Jake Dennis performed car runs, while DJ Armin van Buuren provided the soundtrack.

This event also marks the official launch of ticketing with 5,565 tickets being made available to represent the length of this 5,565 meter circuit. In addition to Hanoi, we also have an agreement in principle to add another new circuit to our calendar in 2020. We have not finalized the number of races in 2020, but currently expected to be 21, the same as 2019. Obviously, the math means that we will not be able to renew all our current races. We value our partnership with our existing promoters. However, we believe it is important for our fans, and the growth of our sport and business that we both add exciting new locations and manage a limited level of churn.

We're in the fortunate position of having more demand than supply, but recognize we need to manage that dynamic in a thoughtful manner. The factors we consider in deciding on a race, include the quality of the track for great racing and the location is one that captures the world's imagination. The level of fan and broader support enthusiasm in the host city and country, the historic importance and future potential of the track and race, the global balance of our schedule and a number of other factors.

We clearly have demand for more than 21 races in 2020, and do expect that number of races in a year, will increase slightly after 2020. However, we want to make sure we're maximizing the opportunities for the sports and fans, not rush the decisions. And we do believe the limited expansion of the calendar and churn are important for creating a fresh and exciting dynamic for fans and for our ongoing growth.

Regarding our other primary revenue streams, we recently signed distribution deals with NBC in the Middle East, North Africa region, DAZN in Japan, Sky Germany and Poland to ELEVEN SPORTS. This completed our global coverage for 2019 in time for the first race for the season. In sponsorship, we announced partnerships with Puma and Liqui Moly, the latter of which will have a track side presence at 11 Grand Prix.

We have designed innovative new partnerships to appeal to both Formula One aficionados and those not familiar with Formula One. We announced a global auction collaboration with Sotheby's, which will feature collector cars and memorabilia and form the Middle East first ever, major, international, collector car auction. To focus on a wider audience, we are partnering with Westbrook Studios to create unique content across multiple digital platform formats with top celebrities to align with the 2020 season.

We already debuted the premiere episode of Will Smith's Bucket List, which has garnered over 28 million views on Facebook. We're also focused on fan engagement in many other forms. Formula One held our 1,000th race in Shanghai in April, along with our first fan festival over the year, sponsored by Heineken. As part of the festival, there was a live car run with Formula Two rising star Guanyu Zhou, driving a Renault powered car and renowned stunt driver Jessica Hawkins behind the wheel of Sauber C30. Our next fan festival will take place in Chicago, just prior to the Montreal race on June 9 and we will announce the additional detail shortly. The Netflix show, Drive To Survive has been well received, both by existing fans and those not familiar with Formula One. It told the compelling stories behind our teams and drivers and made Guenther Steiner a household name. Fans both current and new, are even more invested this year as they see how Daniel Ricardo fares at Renault, watch the season unfold for two legacy teams, Williams and McLaren and we'll keep an eye on the ascent of Charles Leclerc, who has already captured the fans' imagination and already won Driver Of The Day, twice this season.

Netflix has begun to film the first races of the current season, and we're constructively talking with all the teams, including Ferrari and Mercedes to produce Season 2 of this show. The Formula One TV over-the-top product had its full launch this year and we've been pleased with the response, unfortunately we had a few technical issues, mainly on the occasion of the Azerbaijan Grand Prix, along the way as we work to provide the best viewing experience.

We are diligently testing and improving the product constantly, as we evaluate content and distribution opportunities. We kicked off the third installment of the Formula One New Balance Esports series in April. This season will be extended to include more racing and the prize money has more than doubled to $500,000. We've again partnered with New Balance, Codemasters, Gfinity and Fanatic and new in 2019 we will bring F1 Esports to China for the first time, through our partnership with (inaudible) Telesport. The potential within Esports is exciting, as a commercial opportunity and as a way for us to engage with the next generation of motor sports fans.

The Formula Two Championships started on a high, with exciting events in Bahrain and Azerbaijan and a number of young talent who are attracting wider and diverse audience, like Mick Schumacher, the son of the 7-time Formula One World Champion Michael. The Chinese driver Guanyu Zhou and the first female driver in the of category, Tatiana Calderon. This weekend in Barcelona there will be the debut of the new Formula Three championship, which will complete the racing ladder to Formula One. If you become an F1 fan, we encourage you to check out the action at F2, F3 as well.

We met with the teams and the governing body before the Bahrain Grand Prix, and continued our discussions on a new agreement that addresses cost structures, revenue distribution, regulations and governance. As I mentioned before, there are a lot of details to be agreed upon and I'm positive about the progress we've made as we look toward the 202 season. When the timing is right and we have details to announce, we will do so.

The outlook for 2019 remains positive and our previous investments across the business are paying off. We remain firm in our commitment to growing this business and creating value for the long term, for the teams, our partners, Formula One and our shareholders.

And I'll turn the call back over to, Greg.

Gregory B. Maffei -- Chairman and Chief Executive Officer

Thank you Chase. And thank you to our listeners out there. With that, operator, I think we're ready for questions.

Questions and Answers:

Operator

Yes, sir. (Operator Instructions) We'll hear first from Jeff Wlodarczak from Pivotal Research. Please go ahead.

Jeff Wlodarczak -- Pivotal Research -- Analyst

Good morning. I had one for Chase and one for Greg. Chase, you mentioned the F1 OTT products had some technical challenges. How close do you think you are in terms of getting those issues solved? And then, have you all started to figure out ways you can differentiate the OTT product enough for what's available on broadcast and cable to get consumers interested -- more interested in that product?

Chase Carey -- Chief Executive Officer

I don't know. Well, I'll answer that and you can ask Greg's question. I mean, actually I think, we actually felt pretty good about the product. The issue that rose in Azerbaijan really was sort of unexpected, that's the nature of these platforms. So, I think you have to deal with it. But some degree the unexpected obviously is always -- it's always troubling. But, it was not sort of in the main stack of what we're trying to build there. I think that probably -- the unexpected will occur occasionally, but I think we felt we've made pretty good headway.

We're not far enough along to ever sort of say, there won't be another problem, but the problems before that had been probably quite manageable. These things aren't perfect, and it will probably still take us another year to get -- all the small bugs out of it, but the significant glitch we had there was really something outside the core of what we've been building in the platform.

And so, we need to make sure we're looking at into wider context, but I think the core of what we expected to be in the platform. I think we actually feel is functioning pretty well, not perfect, but pretty well. I think, in terms of the content, I think we said before, I think getting the content -- the content experience and content includes video, data expanded. I think probably realistically is a two year to three-year process, and I'm sure we're two years in.

Some of that takes time to build on data, in terms of building some of that -- and making accessible to consumers. Some of the expanded data that we think will be interesting and compelling to them is still a work in progress. So, we certainly have forms, I'll call it content, sort of broadly defined, that we will be adding at the end of the season that we're working on now. We still clearly have not tapped in at any really in all -- into things like the archives, where I think you want to have the great race of the '90s, the great race of the '80s, great finishes, great passes, those sorts of things in a digestible form, really isn't there. So, there's still a lot of work going on to expand and build the content and honestly we'll probably never stop it.

But, I think that to get content sort of where we want it to be, and I guess what I call Phase 1, we've got a fair amount on the -- that we're working on now and so, it's probably between getting into next year and the beginning of the following year that we really get sort of the Phase 1 what we feel is the -- over-the-top product that we probably envisioned going into it. And that timetable is probably one that's not -- it's largely maybe -- I think we initially probably thought we could get there two years. I think some of the -- obviously last year, we were a bit behind, so probably what initially we thought we'd get there into is probably more likely in three, starting with again we didn't get the the platform launch to begin the 2018 season. So, I think where we're getting there, dealing with problems, always again, sets you back a little bit, but I think we actually feel we are making headway and feel we're getting to where we planned and hoped to be.

Jeff Wlodarczak -- Pivotal Research -- Analyst

Thanks Chase. And then Greg, I was hoping you could shed some light on why you, I guess, ultimately decided to walk from the Fox Regional Sports Nets. I mean the market, at least, based on what Sinclair stock has done since they made that deal has seem to think it was a pretty inexpensive price. So, if you could shed any light there that would be helpful.

Gregory B. Maffei -- Chairman and Chief Executive Officer

Yes. Mr. Wlodarczak. Look, I think on -- those are in a sense are very interesting properties. They clearly have a lot of visibility and high profile aspect. There are also products that I think -- I've said before, I have a view and always happy to let Chase comment as well, as he's got a little experience with this, that they have risk and that they are among the most expensive programming they -- per engaged viewer base is that most MPVDs look at. So, unless you had confidence, you could get sufficiently long contracts with MPVDs to ensure time and pay on rates that would be sufficient to ensure that, as there is potential cord cutting and cord shaving, you could get enough of your capital protected. We weren't willing to go there. I think, Sinclair was one to extend themselves further then we were they obviously have an asset in retrains, it is to my mind, a little bit of a perversion of public policies that we were trying to ensure that cable companies weren't charging for free broadcast has now being given leverage to somebody like Sinclair to create leverage to ensure carriage of RSNs. But that's for greater minds in Washington D.C. to worry about. But that perversity has led to giving Sinclair probably an edge. I do think the market reaction is way over done. These are interesting properties, once we were interested in, but ones that are not without risk, and we'll see how plays.

Jeff Wlodarczak -- Pivotal Research -- Analyst

Thanks Greg.

Operator

We'll move to the next caller in the queue, Amy Yong from Macquarie. Please go ahead.

Amy Yong -- Macquarie -- Analyst

Thank you, and good morning. I guess two questions as well. First on Formula One, Chase can you talk about some of the sponsorship and advertising activity that you're seeing. Is there a healthy pipeline? And can you talk about some of the conversations that you're having with interested parties. I think a lot of us look at the Live Nation opportunity and we think about double-digit growth, should we expect a similar or even faster pace of growth for Formula One? And then Greg, SiriusXM stock has been under pressure since the Pandora deal. Are you surprised by the market reaction and what do you think investors are missing or looking for. Thank you.

Chase Carey -- Chief Executive Officer

I'll address the sponsorship firstly, Greg can answer the second part. I think the sponsorship. Yeah, I guess, there is a positive and a negative. I think -- actually I think the pipeline in the interest, we feel great about. I mean I think in the last months that I've had, and they were not first meetings -- follow-on meetings with at very senior level with three different potential new sponsors, four major sponsorships.

So, I think the interest, we actually feel great about. We've got a long list of meetings. I think people increasingly enthused as we tell the story around the sport. So yeah, I think that the activity around it, and the energy around it and the interest in it I think we feel very positive. I think the challenge -- there's no question in the sponsorship world it's probably tougher than it was a few years ago. I guess I said before, I think for anybody who's not Google or Facebook. The broader advertising world is probably more challenging. I think we also probably needed to do a -- did underestimated the job of telling the story that Formula One. The story hadn't really been told about Formula One. So, we were probably starting from closer to a square one, when we were reaching out to new sponsors of educating in forming and creating excitement around it. So, that's taken time to connect and tell the story and build that interest, as we go forward. So, I know they also -- I guess probably the third fact you have today is sponsors want much more uniquely tailored products; they don't want to just buy signs in a wall. They want to have a relationship that identifies their message and their product uniquely with the sport, so that there is a real tie. And part to do that, we need to create more capabilities. So, whether it's technical areas like virtual advertising or Esports or conferences or fan events, all of those give us more ways to create unique offerings for those sponsorship.

So, I think probably, I think it's fair to say that sponsorship world is probably been more challenging than we would have looked at it, when we would have expected it to be a couple years ago for those reasons. I actually feel good about the headway we're making and the level of interest. So, I think we feel that the future is promising for us to continue to really get the sponsorship portfolio to where it should be, because clearly we still have categories and opportunities that we can take advantage of and as we educate and meet with some of these, I think the interest again is encouraging to us.

It's -- we certainly have a room in expectations for some real growth there as we go through the next few years.

Gregory B. Maffei -- Chairman and Chief Executive Officer

Great. On the SXM stock, Amy, I think implicit in your question is the idea that the market has unfairly punished SiriusXM for the purchase of Pandora and I would tend to agree. If you look what's happened, we've moved from a condition where Pandora was losing money to where it is now, cash,and earnings positive. The purchase of that because we issued stock at about $7 a share and effective by this quarter or next quarter, we'll have bought back all that stock that we issued at more like $5 or $6 excuse me $5.75 or $6 a share.

We pretty much cordoned off that -- the cost of Pandora and the stock is down, far more than the cost, and it ignores what we believe is the strategic benefits that Pandora can offer the company in terms of leads on new customers, ways to provide new content across our limited channels that we have available on satellite, a whole host of flexibility to go between good-better-best, share the content as I mentioned, and expose new audiences to SiriusXM's content and vis-a-vis. So, we think there's a lot strategic benefit and we've turned it from a potential money loser into a break-even or better company already with lots of long-term upside. The market was probably looking for -- its focused perspective on share repurchase only at SiriusXM, but I think it's a mistake, they've made a good strategic move in my judgment with relatively low risk, both in terms of what capital is outlaid and what is currently burning or not burning now and it gives them a lot of strategic upside.

Amy Yong -- Macquarie -- Analyst

Thank you.

Operator

We'll move next to Vijay Jayant from Evercore ISI.

James -- Evercore ISI. -- Analyst

Hi, it's James Acker (ph) for Vijay. Two if I could, one for Chase and one for Greg. Sorry, Mark. For Chase, given your experience thus far with F1 TV, how is this -- if at all affected your decisions and thought process about whether it's better to keep Digital Media rights or license those to a third-party distributor? And Greg, on iHeart, you mentioned that you'd sold off the iHeart debt, but you still have the iHeart and CCO equity. How do you think about the criteria for deciding whether those are strategically valuable or it just makes sense to monetize them? Thanks.

Chase Carey -- Chief Executive Officer

Yeah, I guess what I'd say -- again, I'll go first since you asked my question first. I think with the F1 TV, I don't think we're trying to make -- actually make that pre-judgment. I think it is important to have that vehicle and have some degree that direct control of our destiny and ability to develop that area of the business, but I think the digital arena is changing, it's changing so much and growing so much important, I think you sort of want to --what we're really doing is meeting, trying to engage with everybody in the space whether it's traditional broadcasters creating digital platforms or digital players coming into it with their own plans and our own initiatives and make sure we optimize it with both the short and long-term view.

And I think having that flexibility to decide what is the right mix and match, and to some degree, we got to figure out what are those opportunities drill down far enough, and get into deep enough discussions to make sure we're really optimizing what we think is the value of the content we have. So, I think having it as a part of the portfolio. I think it's important, how it mixes with the rest of the stuff -- the rest of the elements in our portfolio. I think it's something that we have to analyze and evaluate as we continue to engage with, again, existing television partners and players in the digital space who are clearly wanting to be bigger players for content like ours. We think that -- we think it's a great opportunity. But, I think we don't want to again prejudge what's the right way. But, I think it's important for us to have, I guess, what I'd call again the flexibility to optimize it overall.

Gregory B. Maffei -- Chairman and Chief Executive Officer

And James (ph) on the iHeart equity and the CCO equity. We both look at the fundamental valuations there and optionality and in particular in the case of iHeart, as you know we previously thought that could be an interesting company to be more associated with, have a larger investment in. So, we will watch the progress we congratulate Bob and Rich Bressler on getting it out and we'll see how they do, and we'll watch both the economics of the underlying equities, and our potential to do something more.

James -- Evercore ISI. -- Analyst

Great. Thank you.

Operator

David Karnovsky from JPMorgan. Your line is open.

David Karnovsky -- JPMorgan. -- Analyst

Hi, just on the F1, Chase on the calendar potentially going over 21 races, how do you balance that expansion against the potential team budget cap, which would limit spending and would more races require any adjustments to your promoter agreements in order to optimize the calendar?

And then, just one for Mark. In the event Formula One, post the team negotiations, move to a greater portion of the prize fund payments to fixed as opposed to variable component. Would that lead you at all to rethink your target leverage range? Thanks.

Chase Carey -- Chief Executive Officer

I think I didn't understand the promoter aspect of -- the promoter angle you were addressing on the question?

David Karnovsky -- JPMorgan. -- Analyst

Yes. To expand the calendar at all, do you have to -- just buying from the promoters in order to move races around and optimize the calendar?

Chase Carey -- Chief Executive Officer

Not really, no. I mean, we have a few races that clearly have places on the calendar, Monaco that's a place that is pretty established. Abu Dhabi is the last race, Australia is the first race, so you have -- you have those and you have a few that I mean for weather and other reasons will be somewhere in the calendar, but Bahrain is not going to be in the middle of summer.

But, we have enough flexibility -- I mean, really we have enough flexibility there, and I think we manage the promoters really -- not an issue. I think, as it relates to the teams. Yeah, what we probably do is you can sort of do the math, it's not that complicated to do the math, to probably make some adjustment for -- if you go above 21, we haven't finalized this, so we are discussing things like this. That's a pretty mechanical issue to address and ultimately is not there's freight and other things that come into incremental races, but you can bracket those pretty easily. So, I think addressing those issues are I think a pretty -- from a team perspective and a cost-cap perspective and the like, I think we're trying to be pragmatic about it, but I think they're manageable and pretty mechanical.

Gregory B. Maffei -- Chairman and Chief Executive Officer

Yes. In terms of the leverage, we're obviously -- we're very confident with where the Formula One Group is now on leverage and we pay close attention to the discussions and scenarios that may come about. I want to remind everyone a huge percentage of our revenue is contractual and flows in. So, I think we're very comfortable with where it is and we're very comfortable that we'll be able to manage it within those range -- within the bounds of where we want to be.

David Karnovsky -- JPMorgan. -- Analyst

Thank you.

Operator

Your last question today will come from John Tinker from Gabelli. Please go ahead.

John Tinker -- Gabelli -- Analyst

Thank you. Two brief questions. Jim Meyer has extended his contract for another year, or you extended his contract. As the year goes by this fast, how are you thinking as to the kind of leadership or what kind of leadership do you want in Sirius. And secondly, more of a technical question on the Braves. Are you including in the $200 million investment in the spring training facility. So, I think it's costing $125 million.

Gregory B. Maffei -- Chairman and Chief Executive Officer

Yes. I'm going to let, Mark comment a little more on Braves spring training facility, but I will note, we will receive quite a lot of capital from local authorities to help pay for that spring training facilities. So, our net number is less than that, but I'll let Mark come with a full number.

On Jim Meyer. I think Jim Meyer who is doing an unbelievably good job, and I want to keep as long as he can walk and talk and act sharp, which seems to be, he's got many years ahead of him. I think we're now in his fourth renewal, and I am very confident that we will continue as Jim for a longer time, partly because Jim is totally engaged and embraced on Pandora and excited about the prospects.

He became as big an advocate for Pandora as anybody, if not the biggest and want to see that work and succeed as he's on that path. So, I think we have more time with Jim than the one-year extension would lead one to think. And as I did note, I think we're on his fourth extension. So, I'm confident we'll have Jim for a longer period. Right

Mark D. Carleton. -- Chief Financial Officer

Yes. And I think John, the $200 million, you're talking about, does not include the spring training facility that is just for the Battery.

John Tinker -- Gabelli -- Analyst

Okay.

Chase Carey -- Chief Executive Officer

But the spring training facility is, netly, is not a huge number (multiple speaker) we received from the local authority. 10s of millions, lows 10s of millions.

Mark D. Carleton. -- Chief Financial Officer

Yes. 10s of millions, not big dollars.

John Tinker -- Gabelli -- Analyst

Thank you.

Gregory B. Maffei -- Chairman and Chief Executive Officer

I think that's it operator, and thank you to all our listening audience and questioners today. We look forward to speaking with you next quarter, if not before all the conferences ahead.

Mark D. Carleton. -- Chief Financial Officer

Thanks a lot.

Operator

That does conclude today's teleconference. We thank you all for your participation.

Duration: 41 minutes

Call participants:

Courtnee Chun -- Senior Vice President of Investor Relations

Gregory B. Maffei -- Chairman and Chief Executive Officer

Mark D. Carleton. -- Chief Financial Officer

Chase Carey -- Chief Executive Officer

Jeff Wlodarczak -- Pivotal Research -- Analyst

Amy Yong -- Macquarie -- Analyst

James -- Evercore ISI. -- Analyst

David Karnovsky -- JPMorgan. -- Analyst

John Tinker -- Gabelli -- Analyst

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