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But this is all apparently to do with the new concorde agreement. And from what i've read it's not just Ferrari that will get shares, before all the idiots turn up...
Also apparently something about customer cars in the new agreement... all just hearsay atm though. Meh.
It was a fairly in depth story highlighting how Ferrari, LDM in particular would benefit greatly and also highlighting Redbull benefitting quite hansonly money wise.
I have learned that the owners of Formula One (F1) motor racing are preparing a radical shake-up of the sport's commercial structure that could hand Ferrari a direct shareholding in the sport and further entrench the power-base of F1’s leading teams for the next decade.
The negotiations over a new Concorde Agreement, which governs the distribution of F1’s commercial revenues and which would run between 2013 and 2020, come as F1’s owner - the private equity firm CVC Capital Partners -begins preparing to sell part of its shareholding in the sport for the first time since its 2005 takeover.
I can reveal exclusively that Goldman Sachs, the Wall Street bank, has been asked by CVC to examine plans for a placement of part of its stake in F1 potentially as soon as the next few months, which would form part of a process leading to an initial public offering of the business. A number of prospective investors, likely to include sovereign wealth funds, are expected to be sounded out about a deal ahead of a stock market listing.
Any agreement to sell part of CVC’s interest would be likely to value F1 at well over $10bn, according to people close to the firm.
News of the commercial overhaul comes as the F1 season gets underway in Melbourne, Australia, with Britain’s Lewis Hamilton on pole position for tomorrow’s Grand Prix.
A confidential document circulated last week among some of F1's leading constructors outline a series of measures proposed by CVC and Bernie Ecclestone, F1’s chief executive, aimed at strengthening the sport’s global appeal.
According to the papers, parts of which I’ve seen a copy of, Ferrari would be eligible to apply for a share in F1’s holding company by virtue of its status as the team which has competed in the highest number of seasons since 1950. Although it’s unclear from the document whether this share would have anything other than a symbolic value, it is conceivable that as F1’s most important team, Ferrari would be handed an interest worth tens of millions of pounds in the event of a sale or stock market listing of F1.
“The Commercial Rights Holder shall procure that Holdco grants to [Ferrari] the right during the term [2013-2020] to apply for the allotment to it of (and upon such application to be allotted) one redeemable ordinary share of $0.01 in the capital of Holdco (the LST share) for cash at par subject to Holdco’s articles of association,” the document says.
“The LST share shall rank pari passu with an ordinary share of Holdco including as to voting rights and dividend entitlements save only that…the LST share shall confer on the Longest Standing Team the following special rights until a Listing.”
The document then outlines the rights of F1’s longest-standing team – Ferrari – to nominate a director to the board of the holding company and for that director to sit on its audit and nominations committees.
I’ve learned that the Ferrari representative likely to be appointed to the F1 board (I would assume of a company called Delta Topco) is Luca di Montezemolo, the company’s chairman. Either Dieter Mateschitz, the Red Bull founder, or Christian Horner, the Red Bull Racing team principal, will also be invited to join the F1 board as part of the new Concorde Agreement, F1 insiders tell me, although these directors would not be deemed to be independent for corporate governance purposes.
As the longest-standing team, Ferrari would also benefit from a minimum additional payment of $1.244m each year, according to the proposals.
Crucially, the document also pledges to guarantee similar rights to Ferrari after any listing of F1’s commercial rights company, including a board seat, “except to the extent that the lead bank advising on the Listing is of the view that the inclusion of those rights would adversely affect Listco’s appeal to investors or the value achievable on the Listing, in which event those rights will be replaced with a right to be consulted by Listco in relation to the relevant matter”.
I understand that Ferrari and Red Bull have already agreed in principle to sign up to the new commercial framework (which is unsurprising since they get by far the best financial deal from it). Both teams withdrew their membership of the Formula One Teams’ Association last autumn in a move widely interpreted as positioning themselves to secure an advantageous new Concorde deal with CVC and Ecclestone.
That also has broader significance, because by cementing the support of Ferrari and Red Bull (for whom Sebastian Vettel, the reigning world champion, drives), CVC and Ecclestone are diminishing the prospect of an outright takeover of the sport by another party. Last year, News Corporation and Exor, an Italian investment firm linked to Ferrari, said they were examining an offer to buy F1, although that statement was made before News Corp became engulfed by the phone-hacking scandal in the UK.
I should also point out that Sky News is owned by BSkyB, whose sports channels this weekend began broadcasting live F1 coverage for the first time. Just under 40 per cent of BSkyB is owned by News Corp.
Among the other proposals contained in the documents detailing the potential next deal between the teams and the commercial rights-holder are:
1. Overhauling the governance structure of the sport to create a formal process for appointing and removing a chief executive. People close to the situation told me this weekend that Ecclestone continued to retain the “unanimous support” of F1’s main shareholder but that formalising a governance process was an essential step towards a stock market listing.
In relation to Ecclestone, the F1 ringmaster who has had to testify in an ongoing corruption case in Germany relating to CVC’s takeover of the sport just over six years ago, the new Concorde deal states that “the engagement of the CEO who holds that position at the date of this Agreement (but not subsequent CEOs) shall not be terminated if the LST director and at least one of the independent directors both vote against a proposal to do so”.
The document also sets out a specific process for hiring the sport’s CEO, saying that a new boss can only be appointed if “the proposed candidate has been recommended to the Holdco board of directors by the nominations committee following a selection process during which all members of the nominations committee have an opportunity to meet and interview all short-listed candidates”; and that no candidate for the post will be recommended “if there are either objections from a director nominated by the largest shareholder or reasoned objections from the LST director and at least one independent director”.
I should say that it’s possible that this clause was contained in previous iterations of the Concorde Agreement, although that’s unclear to me.
2. The document is peppered with references to a flotation of F1, which Ecclestone has previously said would make sense in Singapore given the sport’s growing appeal in Asia. While no formal plan to secure a listing is underway and other options such as a share placement are being explored, a flotation is seen as being likely within 12 months. I’m also told that CVC would in any case seek to retain a controlling stake in F1 even after a listing on the stock market.
3. A further expansion of the prize funds available to teams (which has already grown more than threefold since CVC’s takeover). Under the new proposals, each team which signs up to the deal and which has won the constructors’ title, competed continuously in F1 since doing so and has not changed its chassis name since doing so will be paid $10m.
In addition, each team which has won the constructors’ championship since 2000 will earn an additional $5m per title; and each team which has competed every year since 2000 without changing its name without the commercial rights-holder’s approval will also earn $5m.
There is also a so-called annual Double Champions payment of $35m for which – if my knowledge of recent F1 history is correct – only Red Bull Racing would currently be eligible, since the sole criterion is the first constructor to win the manufacturers’ title “in any two or more consecutive seasons including or after the 2008 season”.
These multimillion dollar signing-on fees (which are required to be signed before 15 February 2012) are aimed at coalescing support for the new Concorde deal and giving financial certainty to the teams. Insiders say that coupled with F1’s Resource Restriction Agreement, which imposes a ceiling on costs, the new incentive structure is likely to offer the most compelling commercial deal for the teams in the sport’s history.
What these prize funds add up to, I’m told, is 47.5 per cent of the adjusted earnings before interest, tax, depreciation and amortisation in each calendar year between 2013 and 2020, although the Longest Standing Team payment and any Double Champion payment would be made on top of this guaranteed prize fund. This would work out, sources tell me, as a marginal increase on the distribution of F1’s commercial revenues paid to the teams under the current Concorde deal.
4. A proposal for the introduction of Single Car Customer Teams which would allow new entrants to use cars deployed by other constructors during the previous season.
5. Being appointed to the F1 board could add significantly to di Montezemolo’s wealth. According to the documents, the LST director “shall be entitled until a Listing to the same remuneration as is provided by Holdco to its other non-executive directors (being at the date of this agreement $50,000 per annum). The first LST director shall also be entitled to a one-off 0.25% award under the ‘Delta Topco Management Equity Plan’ at a consideration payable by the LST director of $26,693”.
I should point out that none of the negotiations over the new Concorde agreement have yet been finalised, and that the ultimate terms may yet differ from those outlined in the document. Discussions led by CVC have, though, been taking place for several months, and I’m told that the current majority shareholder is confident that its current proposals will avert any lingering suggestion that F1’s teams could revive their threat of a breakaway motor racing series.
That said, it seems likely that some of the smaller constructors will be nervous about the prospect of customer teams which are allowed to acquire the previous year’s car from a leading outfit such as Red Bull. Indeed, one team official raised the prospect with me this weekend that technical changes introduced between seasons could have the perverse effect of making a new customer team racing an old car quicker than one of its rivals which is racing two new cars.
Ecclestone’s ability to divide and conquer the warring factions in the F1 paddock has been demonstrated many times before. The latest version of the Concorde deal will show whether he has managed to repeat the trick: those close to the sport tell me that such a conclusion is all-but-inevitable.
The F1 teams are due to meet in a few hours – on Sunday morning (local time) – in Melbourne to discuss various issues including the latest Concorde deal outlined in the documents I’ve obtained.
CVC declined to comment today.
Reports over the Australian Grand Prix weekend suggest Ferrari and Red Bull could be offered special deals under the next Concorde Agreement.
The Concorde Agreement is a tripartite contract that binds the teams, the FIA and Formula One's commercial rights holders together and dictates the split of the sport's revenues. The current contract is set to expire at the end of 2012 and the teams are in the process of negotiating new terms with Formula One's CEO Bernie Ecclestone.
A Sky News report on Saturday said Ferrari and Red Bull could be offered positions on the board of a new holding company after the sport is floated on a stock exchange in Asia. The story was later removed from the Sky News website, but caused a stir in the paddock as rumours swirled that the deal would also secure Ferrari a direct stake in the sport.
However, when team principal Stefano Domenicali was asked if Ferrari had signed a deal, Autosport reported him as saying: "No. Not at the moment."
Talking about the Concorde negotiations, Domenicali added: "I think that what I can say is that we are in discussions, and the discussions are going on in the right way. But there is no more than that at the moment."
Red Bull team principal Christian Horner also said Concorde Agreement talks are ongoing, but did not want to comment on a possible flotation of the sport or its implications for the teams.
"A flotation is really down to the shareholders," the Times quoted him as saying. "It is not really the teams' business. It is more of a question for Bernie or CVC [the sport's majority shareholders]. "
How other major teams, such as McLaren and Mercedes, fit into the flotation plans is unclear at present, but the Times reports that there are no seats for them on the board.
In 2009 the teams negotiated the current Concorde Agreement under the collective umbrella of the Formula One Teams' Association [FOTA], but when asked if the teams are better off united when negotiating with Ecclestone, Horner told ESPNF1 last week: "There are two views of thought on that. I think it's very difficult to take a fully collective position because within the group some people have different outlooks."
Red Bull and Ferrari left FOTA last year after a row over cost controls, and some reports are now connecting that decision to the rumoured deals.
ESPN on the story now. This is typical Ferrari they piss me off so much with their politics f***ing over the sport! Now Redbulls learning from the best manipulators out there! I hope they both fail miserably!
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