FORUMula1.com - F1 Forum

[Fred_C_Dobbs]

More companies join group which isn't bidding for F1
12/05/2011

Just two days ago in a detailed analysis explaining why Rupert Murdoch's News Corp media empire and investment fund Exor aren't buying F1, Pitpass' business editor Chris Sylt wrote "perhaps Sky News will next come up with reports about other investors who have joined Exor and News Corp in their bid to maybe never bid for F1." Sylt didn't think that he would be proved right so soon.

Surprise, surprise, Sky News has now released details of other companies which have joined News Corp and Exor to not make a bid for F1.

First Sky revealed that News Corp and the world's richest man Carlos Slim may bid for F1 and we were expected to believe that the duo was happy with Sky telling this to the world even though it hadn't yet approached F1's owner CVC. Then Slim was quietly dropped in favour of Exor which released a statement confirming that "there can be no certainty that this will lead to an approach to Formula One's current owners." It was followed by every single one of F1's powerbrokers saying that the sport is not for sale.

Now we are told by Sky News' business editor Mark Kleinman that "some of the global media industry's biggest names, including Google's executive chairman and a former president of Facebook, are poised to become backers of an emerging bid to buy Formula One motor racing, I have learned."

Let's get this straight, we now have 'news' about companies which are "poised to" join a group which has not yet made a bid for something which the owners have declared is not for sale.

If this isn't dragging the story out then what is? What next - another story confirming that the companies poised to join the group have joined the group (which has not made a bid)? Or maybe one which confirms the involvement of others who are happy to get the publicity from being connected to this phantom bid. From their perspective it is a win-win situation because any connection to F1 raises their profile though whether it should be considered as news is certainly an open question. It puts Sky News on an ever closer footing with its American counterpart Fox News.

Given this backdrop it is almost not worth explaining the details of the company which has allegedly joined the group to maybe never make a bid for F1. However, for the sake of completeness, we can say that the company in question is Raine, a boutique bank which Kleinman says "is not a name known to many people outside Wall Street and Hollywood." However, at least one person involved with F1 knows all about it.

Raine is a client of Sylt's Formula Money, the F1 industry monitor, and incidentally the Royal Automobile Club will next week host a glittering launch of its 2011 edition which will contain some real news about F1's financial position. Pitpass, of course, will have all the details from the launch for its readers but we would certainly not say that this relationship implies that Raine will invest in F1 - quite the opposite in fact.

Pitpass has already written a great deal about why a News Corp-linked takeover of F1 won't happen and nothing has changed on that front. The latest 'news' just makes it all the more entertaining. We can only imagine how much Ecclestone laughed when he heard about it over dinner yesterday at Sale e Pepe.

It is worth pointing out that although Kleinman notes that a bid for F1 has not been made (despite a challenge to him from Ecclestone) he adds that Raine's involvement "adds a powerful backer to what is becoming a fascinating bid to acquire control of the world's most glamorous sports franchise." That "fascinating bid" will be the one which has not even been made...

Interestingly, Kleinman also states that "the idea of [CVC] holding onto F1 in perpetuity is not credible." This contradicts with the view from Ecclestone who has said that CVC gets such a high dividend from F1 that it may never sell. The 2011 edition of Formula Money will reveal for the first time the annual profit made by CVC from F1 since it bought it in 2006 and when Pitpass covers the news readers will be able to see exactly what Ecclestone means.

Nevertheless, we cannot rule out CVC selling at some stage in the distant future. As FIA president Jean Todt said at last weekend's Turkish GP, "from what I know CVC has not the intention to sell. If it will be true in five years, 10 years, honestly it's not a question for me."

CVC bought F1 on 24 March 2006 so it has only just held it for five years. Sky News could do a lot worse than bearing in mind that CVC held its previous motorsport involvement - that of MotoGP's rightsholder Dorna - for eight years and only sold it because the European Commission forced it to. Yes, there is a difference between eight to ten years and in perpetuity but likewise, there is a big difference between five years and eight to ten. Given the return CVC will eventually make on selling F1 (as Sylt's Formula Money will reveal), anyone who thinks that it will not wait for at least as long as it held Dorna is certainly on the wrong track.

When there is real business news to be dug up about F1 one wonders why some prefer to promote details of companies which are poised to join a group which has not yet and, by its own admission, may never make a bid for something its owners have confirmed is not for sale.

[Fred_C_Dobbs]

F1 heavyweights meeting to discuss F1 ownership
Friday 13th May 2011, 19:14

The rumoured meeting of four team principals from the four biggest teams in Formula One, Ferrari, McLaren, Red Bull and Mercedes, it would seem, isn't 100% accurate.

In fact, it is understood that the teams will instead be represented by far more senior members of staff.

Luca di Montezemolo, chairman of Ferrari S.p.A, will represent the Italian marque, whilst Mercedes will send Dieter Zetsche, head of the giant German car company.

Dietrich Matezschitz, owner of current championship leaders, Red Bull and sister team Toro Rosso, as well as the giant drinks company behind the name, will also be in attendance.

Is isn't yet known who will represent McLaren at the meeting, though team principal Martin Whitmarsh has confirmed it won't be him.

This news is quite significant given these men have far greater powers than their outfits respective team principals.

Recent news that NewsCorp and Exor are looking to takeover the sport from current owners CVC has prompted the meeting and it's thought that the main players from this consortium will also be attending the meeting to discuss the matter with Montezemolo, Zetsche, Matezschitz and McLaren's representative.

On Friday, the outspoken leader of Ferrari hinted to CNN that the teams may look at a breakaway series yet again, despite a failed attempt in 2009.

"At the end of 2012, the contract [Concorde Agreement] will expire, so theoretically CVC doesn't own anything. I think it is important to have alternatives," he said speaking about a breakaway series. "We will see. We have time to do it," he added.

Whitmarsh also confirmed that the teams are interested in owning a stake of the sport in which they compete.

"I think it ultimately is desirable to have team ownership of commercial rights," he told Autosport.

This meeting has prompted speculation that the teams are looking to discuss the matter with the potential new owners, possibly aiding them in taking over the sport if they can agree upon a deal which would see them take some sort of control.

Why is it so significant that such heavyweights will be attending though? In theory, these three men, plus McLaren, have the potential to buy a very large stake in the sport, alongside a possible NewsCorp/Exor bid. They also have the backing of huge multinationals with revenues in the tens of billions.

These are the men who can flash the cash, or make the ultimate decision to form a rival series to F1, not the team principals who are simply employed by these figureheads.

[Fred_C_Dobbs]

In case you didn't grasp the significance of that last dispatch, allow me to elaborate:

If Mercedes is sending Zetsche to the meeting, they're not discussing whether they will buy F1; they're discussing how, and exactly how they will groom the sport after the take-over.


And today there's this:



Revealed: The True Price Of F1

12/05/2011

All the recent speculation about F1 being sold has led to a wide range of of figures flying around the media regarding the value of the sport. In July last year F1's boss Bernie Ecclestone said he believes that F1 is worth "six or seven billion dollars" which comes to £4.3bn at most.

However, former team boss Eddie Jordan recently claimed that the sport could sell for as much as £7bn which gave rise to more talk of the huge returns its current owner, the private equity firm CVC, could make. Its returns of course depend on the price CVC paid for F1 and this too has also been the subject of speculation.

Sky News claimed that "CVC paid north of $2.5bn to gain control of F1 in 2005-06" but Pitpass has been handed a document which reveals the truth and then some.

The data comes from the accounts of the Jersey-based SLEC Holdings which was F1's ultimate parent company until it was bought by CVC in 2006. Prior to the sale 75% of SLEC was owned by three banks (BayernLB, JP Morgan and Lehman Brothers) through their Jersey-based company Speed Investments. The remaining 25% of SLEC was held directly by Bambino Holdings, the investment vehicle owned by the family trust of F1's boss Bernie Ecclestone.

The data shows just how much of a powerhouse CVC was buying. SLEC had an after tax profit of £182.3m ($313.7m) for the year ending 31 December 2005 and it had built up a whopping £402.5m ($692.5m) cash in the bank. The business was bought for precisely $1,710,312,000 in cash - far from the $2.5bn which has been speculated.

SLEC had just £12.8m ($22.1m) in tangible assets with £1.1bn ($1.9bn) in intangibles and goodwill connected to the commercial rights to F1.

This doesn't mean to say that all was rosy in F1's garden when CVC bought it. In fact, the teams were threatening to form a rival series and the Concorde Agreement was due to expire at the end of the following year.

With hindsight it is easy to see that the teams' threat of a rival series was utterly laughable since they never had anything even vaguely close to the commitment to follow it through and there is no evidence that anything has changed on that front. Nevertheless, in 2005, it looked like SLEC's revenues would dry up a few years later when the rival series was due to begin. Bearing in mind that the company owed a staggering £548.4m ($943.4m) at the end of 2005, any drop in income could have had a disastrous effect.

It shows just how true Ecclestone's recent comments were when he said that "CVC were very courageous when they bought." Likewise, it is yet further evidence demonstrating that F1 was not undervalued when it was sold to CVC contrary to claims which have come out of Germany.

Buying F1 was a big gamble for CVC but it paid off. CVC now makes so much money from F1 annually that Ecclestone says it won't sell. That sum will come to light soon and it is sure to open some eyes. However, getting there was far from straightforward. First CVC set up a new parent company called Delta Topco and took out a £196m ($334m) loan to buy the businesses which were contracted to handle trackside advertising and corporate hospitality. It then gave the teams 50% of Delta Topco's underlying profit which doubled their take. Then, after FIA president Max Mosley resigned, Ecclestone finally convinced the teams to sign a new Concorde.

Races and teams have been added since CVC bought the sport and it has motored through one of the worst recessions in history. What this means is that if it sells F1 it is going to want to receive a heck of a lot more than the $1,710,312,000 that it paid. Not only has CVC invested in the business but it has brought the sport back from the brink of disaster. It is hard to put a price on how much that is worth.

[Coronis]

This seems to be related...

[url]
http://www.theage.com.au/sport/motorspo ... 1enqd.html[/url]

Formula one up for grabs
Paris

FORMULA one is bracing for a period of unrest that includes the threat of a breakaway series, with Ferrari president Luca di Montezemolo doing little to play down the idea on Friday.

As rumours of a possible takeover bid from Australian media tycoon Rupert Murdoch's News Corporation persisted, di Montezemolo made clear that the sport's top teams would be open to anything from the end of next year.

"I think we have to be very pragmatic," he told CNN on Friday. "At the end of 2012, the contracts of every single team with CVC will expire. So, we have three alternatives.

Advertisement: Story continues below "We can renew with CVC or theoretically — as the basketball teams did in the US with great success — we create our own company, like the NBA. Just to run the races, the TV rights and so on.

"And third, we find a different partner. Bernie Ecclestone did a very good job, but he has already sold out three times so he doesn't own the business any more. It is CVC that will sell; it will be the teams' decision."

Reports of a liaison between News Corp and Italian investment group Exor, which has a relationship with Ferrari parent company Fiat, has intensified speculation that a breakaway series is likely.

"At the end of 2012, the [Concorde Agreement] contract will expire, so theoretically CVC doesn't own anything. I think it is important to have alternatives. We will see. We have time to do it," Di Montezemolo said.

He also criticised the current state of formula one and the introduction of too many "overtaking aids" like adjustable rear wings.

"We have gone too far with artificial elements," he said. "It's like if I push footballers to wear tennis shoes in the rain.

"To have so many pit-stops . . . I want to see cars on the track. I don't want to see competition in the pits.

"In the last race there were 80 pit-stops. Come on, it's too much. And the people don't understand any more because, when you come out of the pits, you don't know what position you're in. I think we have gone too far with the machines; [there are] too many buttons. The driver is focusing on the buttons when you have the authorisation to overtake. We have gone too far."

■The group behind bringing formula one back to the US next year is facing fresh criticism from sceptics who say a cash-strapped Texas can't afford the ambitious scheme.

With a Texas budget deficit estimated to reach $US27 billion over the next two years, some state lawmakers wonder where the $US250 million is going to come from to build a new race facility in the state capital, Austin.

The plan is to initially pump $US25 million into the facility then use the revenue generated to reinvest $US25 million each year for 10 years.

Opponents of the plan think the money would be better spent on education and preventing the lay-off of teachers. F1 is expected to make a return to the US next year with the purpose-built Austin circuit. Under the agreement, Austin will host the US Grand Prix until 2021.

[Fred_C_Dobbs]

Why CVC rejected Mubadala and what it may mean for Murdoch

15/05/2011

Over the past few weeks it has become abundantly clear that the phantom bid for F1 from News Corp suits Ferrari just fine. As Pitpass predicted, nearly two weeks ago, the involvement of the Exor investment fund, which ultimately owns a stake in Ferrari, gives the Italian team perceived leverage in the ongoing negotiations with F1's boss Bernie Ecclestone about the division of the sport's profits. It may seem like leverage to Ferrari but in fact, as Ecclestone knows all too well, it is really no less fanciful than FOTA's 2009 threatened rival series which lasted all of six days.

The Concorde Agreement - the contract which outlines the distribution of F1's profits - expires at the end of next year and negotiations about signing a new draft began last year. Ferrari has been given impressive concessions in previous years by using the strong-arm tactic of threatening to race in a rival series to F1. In 2005 Ecclestone paid the team $100m to stop its threat then in 2009 Ferrari was appeased by the FIA dropping its controversial team budget cap. However it has cried wolf one too many times.

As Pitpass' business editor Chris Sylt reported in December last year, after the laughable 2009 threat, which was over almost as soon as it began, Ferrari really had to come up with a new threat. The idea of a rival series really would be derided by everyone from Ecclestone right down to the fans.

In fact, Ecclestone had got so tired of the same old threat being wheeled out year after year that written into the current Concorde is a clause preventing the teams from publicly threatening a rival series until the end of 2012. What's more, with only two major car manufacturers now competing in F1, it was crazy to imagine that they could fund a rival series as had been proposed in previous iterations of the threat.

In December Pitpass suggested that instead, the teams should threaten to "only race half of the Grands Prix and they will choose which ones to attend." It seems that Ferrari had another idea.

When Sky News' blogger Mark Kleinman trumpeted the 'news' in April that News Corp was thinking of possibly bidding for F1 (but may never do so) he added that it "has been in preliminary talks in recent weeks with people connected to at least one of F1's big car manufacturers." Now who could that have been?

We didn't have to wait long to find out as two weeks later News Corp and Exor released a statement which was even more heavily caveated than Kleinman's original article. It proclaimed that it had joined with Exor to consider whether to bid for the sport but added that "there can be no certainty that this will lead to an approach to Formula One's current owners."

Pitpass, followed by the rest of the world, started to realise that it looked highly suspicious for any company to announce that it may bid for something before it had even approached the owners. In fact, it almost sounded like a threat - that if F1's majority owner CVC doesn't watch it News Corp and Exor may make a bid for their asset. Pitpass bets that Ecclestone didn't see that 'threat' coming. It even foxed FIA president Jean Todt who said last weekend "I feel it's strange [for someone] to say we want to buy before we know it's for sale. I think the first action would be for whoever is keen to take over the commercial rights to find out with CVC what is the situation."

True to form, once Exor had confirmed its involvement in the phantom bid, the floodgates were opened. First Ferrari team principal Stefano Domenicali said "at the moment everything is calm, but soon something will happen... A marketing partner is needed. It can be [F1's majority owner] CVC once more, but it must invest in F1 and develop." Then, on Friday Ferrari's president, Luca di Montezemolo, said "at the end of 2012, the contracts of every single team with CVC will expire. So, we have... alternatives...We renew with CVC, or we theoretically--as the basketball teams did in the US, with great success, we can create our own company, like the NBA. Just to run the races, the TV rights and so."

It seemed di Montezemolo thinks that the News Corp-Exor phantom bid gives him the support to yet again threaten an alternative to the status quo. However, Ecclestone is laughing just as much now as he was in 2009 when he was faced with a phantom series to rival F1 - now it's a phantom bid for F1.

The reality is that there is no way that News Corp and Exor would fund a rival series. Neither firm exists to invest in startup businesses and the risk of going up against F1 would be gigantic. Just to give a tiny indication, a rival series couldn't be called F1, Formula One, Formula Grand Prix, Formula GP or GP1 since CVC owns the rights to all these names. It couldn't even call its races Grands Prix. That's in addition to the fact that News Corp and Exor would face all the same hurdles which would be encountered if they were to make a bid for F1.

In addition, as explained above, the teams are prevented from publicly threatening a rival series before the end of 2012 so they aren't even allowed to claim that News Corp and Exor would back them in one. Exor can talk about an F1 takeover, since it isn't directly connected to Ferrari, but the teams cannot.

So, what kind of threat could be created with the News Corp and Exor phantom bid? In a nutshell, the teams want more money from F1 and so any threat would involve saying that if they don't get it then something will happen. But what something? It can't be a rival series for the reasons mentioned above.

However, Ferrari could imply (and some may say it has already done so) that if it doesn't get more money, its ultimate owner Exor will buy F1. If this were to happen, it would put Ferrari (and probably the other teams too as no doubt they will join the phantom bid if they can use it as a bargaining tool) in the driving seat when it comes to dividing F1's profits.

Indeed, surprise surprise, Sky News has reported that the bosses of Ferrari, Mercedes, Red Bull and McLaren are meeting this weekend to talk about the phantom bid. Kleinman's mis-spelling of Red Bull boss Dietrich Mateschitz' name belies a serious point - that the Austrian billionaire ('Didi' as Ecclestone affectionately refers to him) is of course the F1 boss' most staunch ally and a personal friend. Good eyes and ears for Ecclestone to have in the meeting, not that he will need Mateschitz' assistance.

On the face of it, it would sound like Ferrari has one heck of a threat over Ecclestone - if he doesn't give it more money from F1 then its owner will buy the sport from CVC and it will be in control of the payment division. It sure would be an impressive threat if it wasn't for one serious flaw which seems to have been forgotten amidst all the gusto.

CVC majority owns F1 so it most certainly isn't in its interest for Ferrari (or any team) to get paid more from the sport. Any additional payment to Ferrari means less profit for CVC and it can't pay another $100m to the Italian team since, as Pitpass has reported, the Concorde states that all teams must be made the same offer. That could start to get expensive.

So, there is a simple solution if Ecclestone were to be faced with Ferrari threatening that Exor will take over F1 if it isn't paid more. All CVC has to do is tell News Corp and Exor that F1 is "not currently for sale." That of course is precisely what CVC has already done.

If CVC refuses to sell then the threat has absolutely zero power and even Kleinman pointed out that "if CVC refuses to negotiate with any bidders, a deal cannot get done." He could do a lot worse than thinking through the implications of that statement since it describes the current situation.

This brings us back to Mubadala which, as Pitpass recently revealed, was not even called back by CVC after enquiring about bidding for F1.

Could it be that it was rejected because CVC realised that pressure could be exerted through its links to Ferrari? Let's not forget that CVC's statement said that F1 "is not currently for sale." If a buyer emerges which has no conflicts of interest (unlike News Corp, Exor or Mubadala) then a sale would at least be possible and it wouldn't need PR by Sky News.

Of course, Exor might not want this little episode to stop following CVC's rejection as it would render a threat completely impotent and it would have to go back to the drawing board. Kleinman has 'revealed' that the investment bank Raine is "poised to" join the phantom bid and no doubt he will be promoting more companies by linking them to it. They will be happy to get the positive promotion from being linked to something as prestigious as a bid for F1 - particularly a small bank like Raine which, by Kleinman's own admission only has a total fund of $500m - around 5% of the sport's asking price.

As happened when CVC bought F1, you can be sure that F1's next owner will not have even been mentioned once previously in connection with buying the sport. And, as Pitpass has reported, we will have to wait at least until CVC has held on to F1 for as long as it owned MotoGP's owner Dorna. This was eight years which would put a sale by CVC in March 2014. That's surely got to be the earliest 'exclusive' in this whole sorry little saga.

[Fred_C_Dobbs]

SpeedTV (USA) are floating the idea that His Bernieness is contemplating buying F1 himself to prevent it falling into the dastardly clutches of the teams and Murdoch/Slim. That he would consider such a move is a certain indication he considers the risk of a FOTA buyout very credible and he otherwise is powerless to prevent it. I think it also demonstrates how committed he is to the idea that he and he alone knows what is best for the sport.

[darwin dali]

SpeedTV (USA) are floating the idea that His Bernieness is contemplating buying F1 himself to prevent it falling into the dastardly clutches of the teams and Murdoch/Slim. That he would consider such a move is a certain indication he considers the risk of a FOTA buyout very credible and he otherwise is powerless to prevent it. I think it also demonstrates how committed he is to the idea that he and he alone knows what is best for the sport.

That would be a big chunk of chump change even for BE

[Fred_C_Dobbs]

This fire is still smoldering:

Teams consider option of Formula 1 buyout
27 June 2011

Formula 1’s teams have discussed the possibility of buying out the sport when its current commercial rights holders elect to leave. This follows earlier bids this year from Rupert Murdoch’s News Corporation and Ferrari-connected Exor, which is a holding company of the Agnelli family which owns Fiat.

Although CVC Capital Partners have expressed no desire to sell, having bought the sport’s commercial rights for an estimated 1.7 billion dollars (£1.06bn) in 2006, teams have conversed over the prospect of owning F1 themselves in the future.

“The teams have discussed the possibility,” Williams Chairman Adam Parr explained to The Independent.

“It would be great for us to have a significant stake, though I don't think we should control the commercial rights. We could work alongside Bernie (Ecclestone, Chief Executive of the Formula One Management) and someone like CVC.”

[andrew]

There is now word of Channel 4 possibly throwing their hat into the F1 ring.

http://www.pitpass.com/fes_php/pitpass_news_item.php?fes_art_id=44067

This would be far better than Murdoch getting his hands on F1 and it would stay on free to air TV.

[f1usa]

SpeedTV (USA) are floating the idea that His Bernieness is contemplating buying F1 himself to prevent it falling into the dastardly clutches of the teams and Murdoch/Slim. That he would consider such a move is a certain indication he considers the risk of a FOTA buyout very credible and he otherwise is powerless to prevent it. I think it also demonstrates how committed he is to the idea that he and he alone knows what is best for the sport.

Both CVC and Bernie were blind-sided by news of a hostile takeover of FOM rights after 2012. Although SpeedTV (Murdoch) has to pay Bernie for broadcast rights of F1in the US, Murdoch's recent purchase might be better for future of F1, viewing races in different formats. Sometimes you have to get into bed with the devil (Murdoch) but I believe FOTA doesn't want Murdoch to own any part of FOM, but to pay for broadcast rights only. FOTA is looking to clip Bernie entirely out of the picture and force a sale that is financially beneficial for F1 team owners.

[Stealthgate007]

Well... I think Murdoch is going to put everything on hold after the outragious actions by News Of The World. Their demise is eminent.

[f1usa]

Well... I think Murdoch is going to put everything on hold after the outragious actions by News Of The World. Their demise is eminent.

You know Fox Network will lose more U.S. sponsors between now and Silverstone race on Sunday. The NOTW scandal will, IMO cause a backlash against all Murdoch companies on both continents.

[What's Burning?]

Can I just still be angry for having to watch the GP at noon on Fox instead of live?

[spankyham]

NOTW gone this Sunday - can't help but think that the journalistic world is better off without it. Which was worse, the tabloid itself or Brits that bought the 2.6million copies each week

[andrew]

NOTW gone this Sunday - can't help but think that the journalistic world is better off without it. Which was worse, the tabloid itself or Brits that bought the 2.6million copies each week

I bought the NOTW a while back as I was cleaning the flat and needed something to put a damp mop on. The paper was pure tabloid drivel.

Seriously though, it will be interesting to see if the reputed take-over by Murdoch will peter out. I think the accusations against News Corp' are very damaging and I cannot see anyone wanting to be associated with this crowd. However journalists being dishonest and underhand is nothing new.