What Does The Stake Sale By Bernie Mean To The Future Of F1

[narain fan 0]

NOVEMBER 25, 2005

What does it all mean?

If the sale is confirmed, the Formula One Group will soon be owned by CVC Capital Partners. The anonymous bankers who have been flitting around the paddock in recent years, trying to learn the business, will disappear and make way for another set of newcomers, leaving Bernie Ecclestone to continue to use his many and varied skills to run the business. It is not yet clear whether there will be a new management contract for Ecclestone but in all probability this will be the case. If you are a venture capitalist investing $1bn in a new company, you want it to be run by someone who knows the business. The sale will thus have poured some more money into the Ecclestone Family trust funds while cementing Ecclestone's position for another period of time, probably three to five years. And Ecclestone is cashed-out of the business that he started, which is probably no bad thing given the way the political situation is developing. If it all goes horribly wrong with the manufacturers he can walk away without any losses. As usual Ecclestone has played his hand well.

CVC is in the process of trying to buy the remaining shareholdings in the business from JP Morgan and Lehmann Brothers but these negotiations mean little for the sport as BayernLB (or the Bayerische Landesbank as it is soemtimes refered to in F1 circles) recently acquired the voting rights from its two partners. Their involvement is thus based solely on money and they have no voice beyond the ability to sell their 25% at some point.

The difference between CVC and the banks is that CVC has people who know how to run a sports management company, having owned the Dorna company since June 1998. The involvement has been low-key but has enabled the FIM World 500cc Motorcycle Championship to develop, rebranding itself as MotoGP in 2002 and doing very well in terms of its financial development. CVC obviously plans to do the same thing with Formula One and it will be interesting to see what now happens to Dorna as there is a fairly clear clash of interest with F1, although a venture capitalist might not be too worried as both series have co-existed for many years and are likely to go on doing so - even if they are competing for the same viewers.

There will no doubt be pressure from CVC for F1 to make the most of the potential that has currently not been exploited but the biggest problem remains the need to do a deal with the car manufacturers

[Taku 0]

huge news. a venture capitalist firm sees value in f1 which means they see a settlement between the manufacturers and the fia and themselves. this is good for the outlook of unity of the sport. or the vc's could just be making a massive gamble which i doubt very much. i see a settlement in the next 12 months which will see mosley's power reduced somewhat.

[narain fan 0]

huge news. a venture capitalist firm sees value in f1 which means they see a settlement between the manufacturers and the fia and themselves. this is good for the outlook of unity of the sport. or the vc's could just be making a massive gamble which i doubt very much. i see a settlement in the next 12 months which will see mosley's power reduced somewhat.

vc's take moves that are high risk high return,had the people buying or selling been sure of the future i doubt if the banks and brnie would have sold ,the fact that bernie is intelligently selling indicates he wants to

escape with minimum loss ,anticipating the gpma to materialise ,if it doesnt,he still manages f1 for the nxt 5 yrs according to the terms of sale ,so it is a smart move(as expected from bernie)

[narain fan 0]

WILLIAMS WELCOMES F1 BUY-OUT

Last Updated: Friday, 25, November, 2005, 13:09

CVC Capital Partners' proposal to buy-out the rights to Formula 1 from SLEC shareholders BayernLB and Bernie Ecclestone has been welcomed by at least one top team as a step in the right direction for the sport.

WilliamsF1 has come out in support of the deal, which would see CVC take control of F1's commercial rights while leaving Ecclestone in charge of the day-to-day running of the sport.

The deal has the potential to end uncertainty over the commercial stability of the sport and even inspire confidence among the teams at a time when a breakaway series is being considered seriously.

Sources at Williams told ITV-F1.com that its reaction to the news was positive.

CVC Capital Partners demonstrated a positive track record across its many investments, but specifically had been a force for good in relation to Moto GP and Dorna.

The popularity of the FIM World Motorcycle Championship has exploded since Dorna revamped it in 2002.

The sources added that a shareholder in SLEC that actively seeks to participate and grow Formula 1 must be good for the sport, its teams and the supports.

The three German banks, BayernLB, Lehman Brothers and JP Morgan which currently own the majority shareholding in the commercial rights to the sport, have always been considered reluctant partners.

They inherited ownership in the wake of Kirch Media's bankruptcy.

This reluctance has fed uncertainty over the sport's commercial future and is a key concern of the breakaway manufacturers Renault, BMW, Mercedes, Honda and Toyota which have demanded a more transparent financial structure.

[Taku 0]

CVC confirms deal

CVC Capital Partners, Bayerische Landesbank and Bambino Holdings are pleased to announce that a new company, Alpha Prema has reached agreement to acquire Bayerische Landesbank's and the Bambino interests in the Formula One Group. The deal must get approval from the European Union. The shareholders in the new company will be CVC, Bambino, Bernie Ecclestone and "the Formula One management team". It is not clear who this is and the new company says that this information is confidential, which does not suggest that the new arrangement is going to be any more transparent than the previous one. We hear that a couple of the F1 teams may be involved. The exact shareholdings are not yet clear but what is certain is that JP Morgan and Lehmann Brothers each hold 14.175% of the business, which translates to 28.35% of the company. However neither of these banks has any voting rights as these were recently sold to Bayerische Landesbank. The rest (71.65%) is what is being divided up by new group with CVC taking a majority, Ecclestone increasing his involvement and the mysterious "Formula One management team" joining the party.

As part of the new deal Ecclestone (75) will stay on as chief executive on the board with Gerhard Gribkowsky, a Bayern executive (an odd thing given that the company has sold its shares), Donald Mackenzie of CVC and a representative of Bambino.

The deal must also be ratified by the FIA which has a right of veto as there has been a change in control of the Formula One group.

"We await full and final details which will be considered by the FIA Senate and World Motor Sport Council in due course," said a spokesman.

The Grand Prix Manufacturers Association has also reacted to the news.

[pumpdoc 2]

Just trying to fatten their wallets some more.

[Taku 0]

indeed. as long as it means a united f1 with less of an fia/bernie dictatorship then i will not complain. what concerns me though is the continued lack of transparency.

[pumpdoc 2]

indeed. as long as it means a united f1 with less of an fia/bernie dictatorship then i will not complain. what concerns me though is the continued lack of transparency.

Yes the share holders must be informed..........and thus the public....