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Liberty TripAdvisor Holdings Inc (NASDAQ:LTRPA)
Q3 2019 Earnings Call
Nov 11, 2019, 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 2019 Third Quarter Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded November 11. I would like to turn the conference over to Courtnee Chun, Chief Portfolio Officer & Senior Vice President of Investor Relations. Please go ahead.

Courtnee Alice Chun -- Chief Portfolio Officer & Head of Investor Relations

Thank you. Good morning. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in 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 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 and 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 reconciliations for Liberty Media and SiriusXM Scheduled 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 Greg Maffei, Liberty's, President and CEO.

Gregory B. Maffei -- President, Chief Executive Officer & Director

Thank you. Courtnee, good morning. Today speaking on the call we'll also have Formula One's Chairman and CEO, Chase Carey, and Liberty Media's Principal Financial Officer, Brian Wendling. During Q&A, we will also be able and available to answer questions related to Liberty TripAdvisor.

So beginning with Liberty SiriusXM. We continued our repurchases of Liberty SiriusXM stock, buying an additional $60 million in the period August 1 to October 31. If you look at that, We effectively bought the underlying SiriusXM shares at a look through price of $4.47 per share. We will continue to take advantage of the discount NAV as long as you, the marketplace, continue to give it to us. Our ownership today stands in SiriusXM at 71.5%. Actually it was as of October 29. Looking at SiriusXM itself, fantastic results yet again-robust subscriber growth, solid expansion of adjusted EBITDA and free cash flow.

The Pandora acquisition has increased our scale to approximately 100 million users. Continued focus on distribution and content. We have a new deal with Google making SiriusXM available on Google Assistant and Google Max devices. We have a collaboration with Marvel to create scripted and unscripted podcasts.

Year-to-date through October, SiriusXM has returned over $2 billion of capital to shareholders. Formula One Group made tremendous progress during the period regarding the regulations for 2021 and beyond, also experience exciting racing on the track. Lewis Hamilton won his 6th World Championship in Austin, and Mercedes clinched their 6th Constructors' Championship. It was fun to watch Ferrari come back to win three in a row, the thrill with Red Bull and the return of McLaren with close battles among the best of the rest.

Live Nation continued strong execution, the highest AOI quarter ever, expect to deliver double-digit growth for the year. Demand for live events continues to grow with 92 million tickets sold through mid-October.

Turning to Braves. Braves won their second straight NL East division title with a host of individual awards, including: Donaldson being ML National League comeback player of the year; Brian Snitker was National League Manager of the Year finalist; Sirocco was a national Rookie of the Year finalist; and this weekend three players were named Silver Slugger Award winners-Freeman, Acuna and Albies; and most trophies to any club this season in the first time any club has had multiple winners under 23 years old in one season.

Turning to the more mundane, but important, we have a number of exciting new tenants moving into the battery, including an indoor Topgolf type experience and a dueling piano bar. Blocks in H continue to progress on time and on budget, and we look forward to our new Braves Academy at Northport opening in early January.

Over at Liberty TripAdvisor. Trip had a difficult quarter with trends worsening in the hotel click-based auction. We still see opportunity in experiencing, but that category is probably -- it is growing quickly but slower perhaps than we originally forecast. TripAdvisor does plan to return capital to shareholders and they announced a dividend of $3.50 per share, which will translate into a $108 million of proceeds to Liberty Trip. We also announced that they would increase their share repurchase authorization by $100 million to $250 million. In light of these, these are done really in light of the fact that despite the challenges to some of the click-based auction items, the business does generate and will continue to generate strong free cash flow. They are also planning to evaluate their cost structure and prudently reduce and reallocate expenses among the groups.

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

Brian J. Wendling -- Principal Financial Officer, Senior Vice President & Controller

Thank you, Greg, and good morning, everyone. At quarter end, Liberty SiriusXM Group had attributed cash, restricted cash and liquid investments of $54 million, excluding $90 million of cash and restricted cash held directly at SiriusXM. Value of the SiriusXM common stock held by Liberty SiriusXM in November 8th was $22 billion, and we have $950 million in debt against these holdings. Total Liberty SiriusXM group attributed principal amount of debt was $9 billion, which includes $8 billion of debt that's directly at SiriusXM level.

Formula One Group had attributed cash and liquid investments of $65 million, which excludes $354 million of cash at that one Formula One Group has attributed public market securities with a market value of approximately $5 billion as of last Friday. That includes the intergroup interest in the Braves Group and our stake in Live Nation.

Total Formula One Group attributed principal amount of debt was $5 billion, which includes $2.9 billion of debt at F1, leaving $2.1 billion of debt at the corporate level. F1's total net debt to covenant OIBDA ratio, as defined in F1's credit facilities for covenant calculations, was 5.3 times at quarter end as compared to a maximum allowable leverage of 8.25 times. We have set the target total net leverage ratio for Formula One of five to six times bank covenant OIBDA. Please note these leverage ratios are for the Formula One business, not the Formula One Group. Braves Group had attributed cash liquid investments and restricted cash $210 million at quarter end and attributed principal amount of debt $540 million.

With that, I will turn it over to Chase to talk about Formula One.

Charles Carey -- Chief Executive Officer

Thank you, Brian. We've made tremendous progress on defining the future direction of Formula One, and we're pleased to announce the unanimous ratification by the FIA World Motor Sport Council of new regulations beginning in the '20-'21 season. These rules are the result of a detailed 2-year process that included input from the teams and other stakeholders that we firmly believe achieve the goals we set out to deliver. From 2021, on Formula One will have cars that are better able to battle on the track, a more balanced competition on the track a fully enforceable cost cap of $175 million per season and a better and more sustainable business model for participants.

There is a wealth of information online if you'd like to see all the details, but let me talk a bit more in depth about closer racing current. Formula One cars can lose up to half their down for us, when following in the wake of another car. As part of the new regulations, we project that 2021 cars will lose just 15% of their down force when they're one car length behind arrival. And just 5% at three car lengths, is there a huge difference and will enable to battles are fans want to see these regulations are an important major step. However, this is an ongoing process. The regulations were married to a new governance and price fund structure which will enable the sport to grow and improve while further strengthening the business model. These agreements are in advanced stages with the teams.

In addition, we plan to address our initiatives around the environmental impact of our sport. We already have the most efficient engine in the world. It'll be launching plans to reduce and eventually eliminate the environmental impact of our sport and business. We believe we can play a leadership role in this critical issue in the automobile industry.

Now back to season. Lewis Hamilton clinches 6 Formula One World Championship, an achievement that puts him just one title behind the all-time record-holder, Michael Schumacher. It was also a tremendous season for Mercedes, which secured their 6th F1 Constructors Championship. Lewis' teammate, Valtteri Bottas, scored his fourth first-place finish of the season in Austin, and we look forward to seeing these teammates rivalry continue in 2020. Ferrari posted an impressive showing after the summer break and secured three wins in a row, including a Charles Leclerc at home in Monza. To be outdone, Sebastian Vettel posted a win in Singapore in several podium finishes, but suffered a dramatic suspension failure in Austin. Rounding out the top three teams, we've seen some fantastic racing from Red Bull's Max Verstappen and Alex Alex Albon, who hasn't finished below six and it's being elevated to the team from Toro Rosso.

Excitement on the track has been drawing crowds and viewers through 19 races, including Austin. Average weekend attendance is 204,000 per event, up 2% year-on-year. We set a new record in Italy, and Mexico drew a crowd of over 345,000. We had three races that attracted attendance over 300,000-Mexico, Silverstone and Melbourne. For TV viewership, we're up 7% through 15 races in Singapore, and we look forward to our last two races in Brazil and Abu Dhabi.

During in the quarter, we announced important race riddles [Phonetic]. Formula One will continue to race in Mexico City and will change the race name to the Mexico City Grand Prix to emphasize the support given by the government of the city. This event recently won the award for best live sporting event at the 2019 Leaders Sports Awards selected from among 450 events in five categories worldwide. We also announced the extension of the Italian Grand Prix Monza. This race has been on the calendar since 1950, the year the World Championship was established and it is an important part of our history. And we announced that the Spanish Grand Prix will return in 2020 for its 30th consecutive season. These renewals, along with previous announcements of Silverstone and Melbourne, and the new race in Vietnam, and the return to the Netherlands, set us up for a record 22 race season in 2020. We continue to pay homage to the rich history of Formula One, while adding exciting new destinations.

On the broadcast front, we extended our partnership with ESPN until 2022. Since returning to ESPN in 2018, Formula One has seen viewership in the US increase 19%. The demographic of viewers age 18 to 34 has grown 81% over that same period. This new deal will see all Formula One races continue to air live and commercial free on either ESPN, ESPN2 or ABC. As an additional element, ESPN Deportes will serve as the exclusive Spanish language home for all Formula One races. This renewal rounds out carriage for the 2020 season.

Regarding sponsorship, we reached a new deal with Dubai Expo 2020, which will debut in Abu Dhabi this year, be featured at eight races to cross 2019 and 2020. If you watch the US Grand Prix, you might have seen signage from Caterpillar. We're in the final stages of signing our master services agreement with them for a long-term sponsorship arrangement and are excited to partner with them. We were also pleased to announce VinFast as the title sponsor of the Vietnam Grand Prix. Vietnam's largest car manufacturer has signed a multi-year deal for the Grand Prix, which will debut in 2020 on the streets of Illinois.

We held our third fan festival on Hollywood Boulevard in Los Angeles prior to the US Grand Prix. This event included our first ever doughnut contest between Daniel Ricciardo, Valtteri Bottas, Max Verstappen and Alex Albon. The event was featured on Jimmy Kimmel Live and Guillermo even stopped by to eat a doughnut.

We hosted our final fan festival this past weekend in Brazil with Heineken in the Santa family to celebrate Ayrton Senna and his 25-year legacy. The event featured modern F1 cars from Mercedes and Renault, and legends Emerson Fittipaldi and Felipe Massa driving Senna's historic cars. We'd like to bring your attention to our new corporate website can be found at corp.formula1.com. We felt we needed a site that was more user friendly to cater to sponsors, investors, media and prospective employees. Please take a look at the site when looking for corporate information and sign up for news alerts.

In summary, we're pleased with our results year-to-date and on track to hit our 2019 targets and look forward to continue to strong growth results in 2020. After years of effort, we achieved a milestone in the approval of the regulations for 2021 and beyond, and we look forward to working on the commercial agreements with the teams.

Now I'll turn the call back over to Greg.

Gregory B. Maffei -- President, Chief Executive Officer & Director

Thanks, Chase and Brian. All in all, a great quarter to Liberty Media. As a reminder, we will be holding our Annual Investor Meeting on November 21 in New York. The link to register is on -- at the homepage of our website. We look forward to seeing many of you there.

And with that operator, we will open it up for questions.

Questions and Answers:

Operator

Thank you. We will take our first question from Vijay Jayant from Evercore. Please go ahead, your line is open .

John Belton -- Evercore -- Analyst

Thank you. This is John Belton for Vijay. Two on F1. So first on these commercial agreements you're discussing with the teams, anything you can share on timing, when you're hoping to get these finalized, any regulatory deadlines that may or may not exist with these agreements? And then the second question on broadcasting. So I appreciate some of the details on the ESPN deal, but anything you can share about some of the competitive dynamics around that deal and then kind of how you're thinking about some of your core Western European renewals in light of the positive viewership trends so far this year? Thank you.

Charles Carey -- Chief Executive Officer

So I guess on the first part, timing. We'd like to obviously get it done as soon as possible in fairness of the teams. While I think the core business principles they've had for a while, the actual underlying agreements what your substantive they've only gotten the last few weeks, we've had meetings with both sort of financial and legal teams to take them through it. So they now have had a chance to digest it and certainly we plan to engage with them in coming weeks. Now, again, I'm not going to put a deadline to what it grabbing [Phonetic] good discussions and we'd like to get things done and finalized as soon as possible.

I guess on the broadcast, when you say competitive, do you mean competitive interest? Or I guess I'm not sure what you mean.

John Belton -- Evercore -- Analyst

Yeah, just, were there other bidders like ESPN or?

Charles Carey -- Chief Executive Officer

Yeah. And actually we have more interest than we did. This was -- it wasn't that long. The last deal I think was only a couple of years. So it was really just two years ago. We had better interest and we did two years ago to step forward for us, and we still have a lot of upside in the US. There is no question the US I think we said before, is a long-term proposition. We like the momentum there. We saw increased interest. We saw from parties an increased interest expressed in offers. But -- so we feel good about it, but clearly we think the US is a market that still has a lot of upside for us.

John Belton -- Evercore -- Analyst

Great. And then anything in the Western European renewals, which I think...

Charles Carey -- Chief Executive Officer

We're probably just turning to -- look, again -- I think we feel good about the momentum of the sport. We feel good about the interest in this sport, whether again it's attendance, it's viewership or just general fan research in terms of perception, which is very positive about the direction of the sport where we're in the early stages. Our agreements, that the significant European agreements you're talking about are in place for 2020. So the real renewals for 2021, we're probably in the earlier early stages of moving forward with those given there is still more than a year away. But I think we feel positive about no matter we have going and really the reaction engagement from parties about the sport.

John Belton -- Evercore -- Analyst

Right. Thank you, Chase.

Operator

And we will now take our next question from Bryan Kraft from Deutsche Bank. Please go ahead. Your line is now open.

Bryan Kraft -- Deutsche Bank -- Analyst

Hi, good morning. Thank you. I had two, one for Chase one for Greg. Greg, kind of an open-ended question for you. Podcast have become a bigger focus for virtually everyone in the audio entertainment space. Just wondering how you think this segment of the industry evolves from an industry structure perspective. And do you think there are any real economic winners and broadcasting over the long term?

And then, Chase, wondering if you can give us any color on the growth outlook in sponsorship and advertising for next year relative to this year just directionally. And can you give us any sense for the growth of this year in broadcasting relative to the advertising and sponsorship revenue within that primary revenue bucket? Are those probably relatively similar rates? Or is this materially different between the two? Thank you.

Gregory B. Maffei -- President, Chief Executive Officer & Director

Chase, do you want to go first and handle the more direct question and I'll ramble on the open-ended one?

Charles Carey -- Chief Executive Officer

Okay. Look, I think the sponsorship area, we said before, probably from a couple of years ago, I'd say it was probably a little slower to develop than we initially anticipated. I think the advertising market in general, it's probably a little tougher than it was a few years ago. But actually think we feel good about the momentum in the interest, and it's probably taken -- I think we recognize. We had to do more work telling the story about what we're doing with the sport, where we're going with the sport. We had to create capabilities for sponsors to create the type of offerings they want, whether it's virtual a regional or are other events like e-sports and digital and other vehicles we can use to create those offerings. We just I just referred to the two deals with Caterpillar and Dubai Expo, the interest right now we feel very good about. We always got to turn it into dollars. We are quite busy. I'd say the sponsorship group is realistically flat out, and I expect them to be flat out in the next few months before we get to that 2020 season. And significant deals. Again, I don't want to get ahead of ourselves. We got to turn them into dollars. But certainly the interest and engagement in the sponsorship area has been increasing significantly as we've sort of gone through the last year and certainly in the recent quarters. And they've probably never been busier. To be frank about it.

I think on the broadcast side, if you look -- I mean, the renewals this year -- well, we're probably not larger contracts. So directionally we feel good about where we're going, but the bigger markets are probably in 2021. So it's a positive, but they're not -- they weren't the larger markets that were being renewed in for 2020 great.

Gregory B. Maffei -- President, Chief Executive Officer & Director

Great. So, Bryan, thank you. That is a great question and one that you'll hear a lot more about from us and from me at our Investor Day, because I think podcasts are a great example of how audio content continues to expand. We believe there is a lot of room left to expand our audio day, unlike your video day, which is pretty much being capped out because everyone's got their device, and if the time at which you can use that device for video is limited has become maxed, the audio day between AirPods and Alexas and other kinds of distribution devices is only expanding and is well under tapped both in monetization and in time. When you think about how to differentiate that audio day, you moved from a world of music, which is somewhat of a commodity. It's table stakes. Everybody's got to have it to a world where things like podcast are an example of exclusive, something that Sirius has done so well at with things like Howard Stern or versions like CNBC and ESPN having exclusives at least for a window on audio. Podcasts are place where you can really go to exclusives. When you think about the economics of that, whatever a podcast maker charges in it, they might be pretty good being podcast company right now and trying to sell yourself because it's obviously hot. It's still far less cost per hour than what you get in video. So the reality is, all of these new forms of content, audio content, like podcast in our judgment, are really attractive economically and really attractive for consumers and therefore distributors. So you'll hear probably more than you care to at our Investor Day, because it really is one of our key focuses.

Bryan Kraft -- Deutsche Bank -- Analyst

Great, thanks to you both.

Operator

And we will now take our next question from David Karnovsky from JPMorgan. Please go ahead. Your line is open.

David Karnovsky -- JP Morgan -- Analyst

Thank you. Just one for Chase. During the last Concorde negotiation in 2012-'13, I think Formula One made some upfront payments to teams in connection with your future participation. So as you look to finalize the commercial agreements with the teams now, do you see payments like this is part of the process? Or was that really you unique to the prior period?

Charles Carey -- Chief Executive Officer

I don't think we're going to at this point to comment on the specific components of the deal while we're still engaged with the teams. I think we've put something on the -- we've got a proposal to the restructure. They've had this structure. I mean, again, the business -- it's the business elements of this they've largely had for a while. We think it's a proposal that's fair to us and fair to the teams, but we think it enables us to continue to achieve the growth we expect in the business. But I don't think we're going to get into company on what's in it and what's not in it and it was, and once we finalize it, we'll provide will provide appropriate color to what the agreement is.

David Karnovsky -- JP Morgan -- Analyst

Okay. And then you mentioned the agree with Caterpillar before. Is there anything incremental you could say on this? Is this a potential global or regional deal? And then just given the track side advertising it often, should we assume that starts in the fourth quarter?

Charles Carey -- Chief Executive Officer

Yeah, I mean obviously that's showed up in Austin. It will start where they show up. It's more than -- It's not a global deal in terms of all 21 races, but it's a significant deal. And I think it's an important partnership and one that certainly is one that we look to build on with them. So it's a dealer we're excited about. They've been quite enthusiastic about it, and we think they'll be a good partner. So certainly it's more than just a regional deal. It is a significantly multi-rights deal.

David Karnovsky -- JP Morgan -- Analyst

Thank you.

Operator

We will now take our next question from John Tinker from Gabelli & Company. Please go ahead, your line is open.

John Tinker -- Gabelli & Company -- Analyst

Hi, thank you. Just a quick question on sports gambling it looks like New Jersey has already got a better books in Vegas. How do you see that playing out in terms of how it might help the Braves?

Gregory B. Maffei -- President, Chief Executive Officer & Director

We just passed it here in Colorado as well. So you can see I think state by state you're going to continue to see this chip away. It will take time. And there are clearly some states which are unlikely ever for at least for a long time to pass it. But major states will do it as a revenue source. I think here it's going to be used for water, but you'll see it state by state, and I do think that's an opportunity. The league's have been trying to do things around verified data. It's not quite as clear what, how do you do that and baseball as you do it in something frankly like Formula One, where there is a much more proprietary data. And as you may recall, we have a deal to monetize some of that in Formula One. But I do think it's both, somewhat of a revenue opportunity, but perhaps even more of a fan engagement opportunity which will just strengthen baseball and to a degree that more and more of it becomes an opportunity to bet in game bet on parts of a game. You'll just see continued fan engagement much the way that fantasy built that, particularly in football.

John Tinker -- Gabelli & Company -- Analyst

In fact that's one more. You got out of Clear Channel Outdoor very well. I know you still have a couple of other small investments. I think you may have a little Viacom lest and some AT&T and in Formula One. How do you think about them?

Gregory B. Maffei -- President, Chief Executive Officer & Director

So I think we would look at them, mostly as a source of capital at the right time. Turns out the right time for Viacom was probably earlier than we've executed on it, but, so be it. We were probably more bullish that the merger would be positive than it has been. On the AT&T in particular, it's worth noting, we were actually don't really have AT&T there in any real sense. It is hedged by -- we aren't to hedge the exchangeables that we've issued. We have a couple of odds and ends that are in there that are capital sources, a partnership or two that is likely liquidating. Brian, you want to add in any of those note or substance?

Brian J. Wendling -- Principal Financial Officer, Senior Vice President & Controller

No, I mean, none of them are specifically material and they're not liquid. So I've got there's not I call out in particular. But in general, they are -- you ask about our philosophy on that, John, where are source of capital at the right time when we think it's the right moment and something we can probably get out of either tax efficiently or we have a use for the capital that says we want pay the taxes and go do it now.

John Tinker -- Gabelli & Company -- Analyst

Thank you.

Gregory B. Maffei -- President, Chief Executive Officer & Director

Thank you.

Operator

And we will now take our next question from Jason Bazinet from Citi. Please go ahead. Your line is open.

Jason Bazinet -- Citigroup -- Analyst

Thanks. I heard you guys sort of reiterate the five to six times leverage target and you guys have made nice progress bringing that down. Why is that the right leverage for this business? I know it's not cyclical, but it still strikes me as a pretty high amount of leverage to have on the business? Or is that just sort of the interim target when you get to five, you may lower it beyond that?

Gregory B. Maffei -- President, Chief Executive Officer & Director

I'll comment. Chase, if you want to add anything, surely you can. Our view is, is that this is an unbelievably secure, sustainable financing business, 90-plus percent on contract even in the case of a downturn because of the nature of how we share risk with the teams, limited downside. In our judgment, few businesses support leverage as well as this business and in a period of extremely low interest rates and our continued ability to refinance on more and more attractive terms, we like five to six times.

Charles Carey -- Chief Executive Officer

Thank you. I guess all I'd also...

Gregory B. Maffei -- President, Chief Executive Officer & Director

Sorry, one more thing, Chase, I'd note also two more things that are below the EBITDA line make that only more compelling, the low capex needs and the very attractive tax structure that we have make both of it probably be the case that 5 to 6 times while on the surface may sound large is actually not, particularly large if you look at the free cash. Sorry, Chase. Go ahead.

Charles Carey -- Chief Executive Officer

Yeah, and I was going to add on those and you get the only other thing that I'd add is I think also from a cost perspective, realistically at this point, we probably put the operate -- we don't really face any increased cost as we've got that -- we've built the organization to support and grow the business the last couple of years. So at this point, we feel good about the cost side of it and to the degree -- there're incremental cost events, some variable revenues like freight, where we have both freight revenue and freight costs, they're directly tied to revenues. So I think from a margin cost perspective, we equally feel very good about the business.

Jason Bazinet -- Citigroup -- Analyst

That's very helpful. Thank you.

Operator

We will take our next question from Bryan Goldberg from Bank of America Merrill Lynch. Please go ahead. Your line's open.

Bryan Goldberg -- Bank of America Merrill Lynch -- Analyst

Thanks. I've got a couple on Formula One. First, on your efforts in Miami, looks like local politics took another twist down there last week with a mayoral veto against the local opposition, and I was wondering if there was any kind of timeline you could help us think about within which you would expect to get clarity on whether or not this iteration of the Miami Grand Prix can go forward from a regulatory standpoint? And I guess if negotiations become meaningfully protracted, at what point would Miami appearance on the 2021 calendar become a bit problematic? And then I've got a follow-up.

Gregory B. Maffei -- President, Chief Executive Officer & Director

Okay. I guess, trying to handicap politics is probably really something ill-advised. I think your comment on the veto, I think it is accurate. There are some steps to go. They're very short term. The reality is for 2021, we really do need to resolve this in the short term say both next few months for it to be 2021 race. So, we have time. The reality is, most of the work -- most of the agreements you're done, certainly the business, the business agreements are done. So it really is the political issues around it, and they are active. But I'm probably not trying to -- trying to handicap local politics is probably beyond my pay grade, and we'll see. We think it'd be a great. We think it'd be great for Miami. We think it'd be great for us and great for all our partners. We have other options in the US that we think will be exciting, but we're hopeful about -- hopeful about Miami, but we'll see where it takes us in the next -- in the coming weeks.

Bryan Goldberg -- Bank of America Merrill Lynch -- Analyst

Great, thank you for that. My follow-up question is on the sponsorship side of the business, really I guess from the global sponsorship side. I was wondering if you could update us what are the key unsold verticals right now as you see them? Or said another way, which category is your sponsorship sales force team spending the most time on as you look to show everything up for the 2020 season?

Gregory B. Maffei -- President, Chief Executive Officer & Director

Well, I mean, realistically as I said, we've got -- I mean, I got an update yesterday. It's a three-page update engagement with potential partners. So I've said we really at this point are flat out in terms engagement, a number of them being large engagement and then there are certainly array of categories. I guess, areas like finance, technology, telecommunications, oil industry, sort of there -- an array of places that are probably obvious in some that I wouldn't have had Dubai Expo in the list a few months ago. Or probably Caterpillars and -- is a place that would have been as obvious. So there are some that are probably more obvious than historically tied to us and some that are less so, but I think we do -- we really do we feel it is taking time, but I think we're getting to where we think -- we're getting to the place we thought we could in terms of sponsorship. It's probably been a little slower going, but I think we feel good about the engagement, the momentum and the interest behind the sport and the story we have to tell.

Bryan Goldberg -- Bank of America Merrill Lynch -- Analyst

Thank you very much.

Operator

We will now take our next question from Drew Borst from Goldman Sachs. Please go ahead. Your line is open.

Drew Borst -- Goldman Sachs -- Analyst

Great, thank you. I wanted to ask a question about Formula One. Chase, when you look at the race calendar for next year, I think you renewed 5 races and added 2 new ones. Investors have come to expect that the race promotion revenue is is fixed, right, multiyear contracts with fixed escalators. I guess, I'm wondering if anything has changed after all these renewals in terms of the trajectory of that, is it less fixed? Is it more variable? Or has nothing really changed there? Thank you.

Charles Carey -- Chief Executive Officer

I think we probably today feel more positive about the upside in that category. Certain elements of it -- an individual races are probably more mature. But we do think there's upside there. And I think that probably -- in many ways, it's just the fact that I think the demand is continued to be a real positive. I mean, really across the world the number of places that are interested, again our -- we have a pretty full calendar in a long-term contract. So there are limits to how much you can do, but I think we do think there are opportunities. We have '22 as a full. It's pretty full calendar, but we do think there is room still to add a couple. I think we want long-term partnerships, but just as we changed this year, we will add races and we will selectively probably end up dropping races. There are a couple of places -- a couple of issues we've touched on in the past about races we inherited that -- agreements we inherited that clearly we're not reflecting of what we think the value should be. So I think there is upside to that that probably more than we would have -- if we were sort of two years ago, more than we would have sort of expected there, and we think it's a place we can continue to grow. And I think there are also sort of -- and I guess what I call related areas that equally have growth, I guess particularly something like hospitality, which is an important element. The high-end customer is increasingly important at these event, and it is about Paddock Club, the hospitality is an area there are few races where we really maximize that. I think there are a lot of events where we've got upside to the hospitality side of it as well as just the basic promoter agreements and an ability to add dimensions like title sponsors. We're still not fully -- not fall more in a sponsor area but as you add races, we still have opportunities to take advantage of things like title sponsorship we talked about the Vietnam opportunity. So there, I think the whole arena related to the promoter relationships and the related elements of the promoter relationships is an area that I think has more opportunity and more upside in it than we probably would have thought -- it would have said a couple of years ago.

Drew Borst -- Goldman Sachs -- Analyst

And if I may, while appreciating the upside scenario, is there any type of downside risk, like don't know. Again, I know you don't want to get into specifics about contracts just generally, like for example, are there hinges to serve the attendance at the race or any of those things? And if attendance didn't come through, or is that not really how the deals work?

Gregory B. Maffei -- President, Chief Executive Officer & Director

Yeah, I mean our agreements today don't generally have that type of variable. Obviously, the Paddock Club component of it is attendance base. So there is certainly revenue with these attendance base, but the base part of it is -- generally it's not attendance based. So look, on any renewal, I guess you see where a renewal comes in and what alternatives exist. So I'm certainly not going to say that there aren't risks. Today, we feel pretty well positioned given the breadth of interest from the array of places that we have. But we still got to get renewals executed, we obviously went through up a number of renewals in the last 12 months. And I think we feel good about the ability to navigate that space, and I look forward to take advantage of whether it's adding a race to the calendar or making some substitutions that are upside or fixing some of the issues we've got. But other than Paddock Club, which is a kind of -- I wouldn't say attendance at a in general is that's not generally a part of our agreements.

Drew Borst -- Goldman Sachs -- Analyst

Okay, thank you very much.

Operator

And we will now take our last question for today's call from Zack Silver from B Riley FBR. Please go ahead. Your line is open.

Zack Silver -- B Riley, FBR -- Analyst

Okay, great. Thanks for taking the question. I think when you guys first announced the deal to acquire F1, there was some talk around issuing shares for the teams that obviously never happened, but could this still be a possibility down the road? And also curious to hear your thoughts around financial mechanisms you have to promote higher economic alignment with the teams beyond the price board?

Charles Carey -- Chief Executive Officer

We're not discussing equity with the teams at this point. Obviously, we are discussing a long-term relationship. I guess more generally, one of our real efforts has been to try to create more of a shared vision about where we can go with the sport and the growth opportunities in it. I think the teams are actually quite positive about the changes and energy we brought to the sport. Again, they see the bigger crowds. They see the growth in events. The breadth of things that events, whether it's a fan faster or fan zone. I think the energy there is palpable. They see that we share with them the research about where we're going. So, and we certainly share with them probably more than would have been shared in the past with our partners. The prize fund that they share in is obviously that they receive makes them a partner in the business. So they share in the upside in the growth of it. And we are engaging with them on a much more regular basis. I mean, I meet them every race. We have a sort of a casual meeting on a Saturday morning just to make sure we're sort of sharing what we're doing, sharing the things we're trying to do when addressing any issues that exist. So a lot of how do you make -- how do you create a better alignment is just is dealing with them day to day and dealing with them in a more transparent and in a more collaborative way. There are obviously going to be -- always going to be tough issues we got to work through, and that's true in any business. Nut I think we are trying to bring a fresh mindset and a fresh perspective. And they all want the business to grow and I think they largely -- we're not perfect, but I think they believe we're doing a lot of the things we should be doing that are really adding breadth and depth and growth of the sport. So it's -- there's no magic bullet to how do you create alignment, other than treat them like partners and engage with them in an honest and transparent way.

Zack Silver -- B Riley, FBR -- Analyst

Got it. That's helpful. One more if I could. Okay. Just with leverage at the F1, the OpCo sort of at the low end in the target, can you talk about your view on buybacks at the F1 tracker and whether this is something that you think could happen in the near term or not?

Gregory B. Maffei -- President, Chief Executive Officer & Director

I think you're right. The restricted payments test that we have and the target leverage that we've discussed is going to start, allowing us to generate free cash flow from the F1 operating business up to the HoldCo. And we are looking at alternatives for that what we might do with that capital including share repurchase. And I think I'm going to punt a little bit on that and talk more about that next week, when we get to the Investor Day, because we -- I think we have a little more time we will spend there on that.

Zack Silver -- B Riley, FBR -- Analyst

Makes sense. Thank you, both.

Gregory B. Maffei -- President, Chief Executive Officer & Director

Thank you. Thanks to all of you and can we look forward to seeing many of you on next week. It is Veterans' Day. Thanks for the many veterans who are on the line and have served our country. And with that, operator, we'll say good afternoon or good morning.

Courtnee Alice Chun -- Chief Portfolio Officer & Head of Investor Relations

Thanks a lot guys.

Operator

[Operator Closing Remarks].

Duration: 45 minutes

Call participants:

Courtnee Alice Chun -- Chief Portfolio Officer & Head of Investor Relations

Gregory B. Maffei -- President, Chief Executive Officer & Director

Brian J. Wendling -- Principal Financial Officer, Senior Vice President & Controller

Charles Carey -- Chief Executive Officer

John Belton -- Evercore -- Analyst

Bryan Kraft -- Deutsche Bank -- Analyst

David Karnovsky -- JP Morgan -- Analyst

John Tinker -- Gabelli & Company -- Analyst

Jason Bazinet -- Citigroup -- Analyst

Bryan Goldberg -- Bank of America Merrill Lynch -- Analyst

Drew Borst -- Goldman Sachs -- Analyst

Zack Silver -- B Riley, FBR -- Analyst

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