Potential sale of F1 by CVC

[Richard C]

Heard this on the radio this morning...

http://www.theguardian.com/sport/201...nie-ecclestone

Thoughts?

Richard

[chillibowl]

considerably less then what they were hoping to get via the flotation no?

history of other sports ownership so perhaps there is hope that the focus will be on strengthening the league as opposed to just returns on profit.

[old man]

Whoever buys the shares has to understand the sport and the reasons for the present woes and neither of the people mentioned strike me as experts. The Miami Dolphins guy may be good at making money out of sport, Bernie is good at that but we are in this mess on his watch. The German sports marketing guy says Bernie has not done enough marketing of the TV rights, I think the TV companies might disagree with that opinion. Using phrases like "transform the sport" is easy, it falls into the category of "magic words" in my book, easily said in PR, more difficult in practice.

Of course the sport would be transformed if financial balance was created so that smaller teams can survive but we have all said that so many times. Easier access for new teams would strengthen the grids but that probably means less stringent technology rules. At the risk of upsetting our American friends the possible injection of American thinking is a worry, I look at Indycar and the various other single seater series in making this comment.

What I do like about the US scene is that it is possible to win actual money in the feeder classes. Drivers that fail to raise the budget in F1 appear to be able to go to the US and get drives, survive, progress but I am not expert enough to know how it all works.

In the FIA single seater theatre it is all about budget with no potential return on the investment, a drivers connections find millions to get through from F4 and into the other junior series only to be asked for ever larger budgets to progress. €150k might get you on the grid in F4, when it comes to RWS that figure is €1 million for a top seat and even if you win that championship there is no seat for you in F1 without even more money. I know at least one driver now in F1 with debts to his last team in the high 6 figure bracket.

If we are to see someone with ideas to transform the sport I hope it includes some ideas on how the cash is spent to feed talent into the teams.

[chillibowl]

Originally Posted by old man

Of course the sport would be transformed if financial balance was created so that smaller teams can survive but we have all said that so many times. Easier access for new teams would strengthen the grids but that probably means less stringent technology rules. At the risk of upsetting our American friends the possible injection of American thinking is a worry, I look at Indycar and the various other single seater series in making this comment.

looking outside of motorsports, the NFL/american type thinking may be just what F1 needs.

among the reasons why the NFL is the most profitable and most watched leagues in the world:

-every team is an equal stake holder with an equal vote
-the owners/teams appoint a commission to run the sport
-centralized and unified promotional strategy
-money/profits from tv and sponsorship deals are split evenly among the teams
-desire for parity. rich teams subsidize poor (small market) teams thus every team has a reasonable chance of winning the title or at the least the opportunity to compete on a equal playing field
-hard salary cap
-in house production team which uses historical footage to advertise the sport
-league owned TV network which is responsible for news and some game coverage but essentially there for promoting the sport as a whole
-respect for its fans.

[JeremySmith]

Good thread, thanks guys !

[wolfhound]

This news is being mentioned in a number of motorsport columns. Its a question of whether the only bidders are the Qatar investors along with RSE Ventures from the USA.

Take note of Messers Eccelstone, Mateschitz and Lauda all talking down F1 in recent days. Now why would they do that?

http://plus.autosport.com/premium/fe...594.1432368537

https://joesaward.wordpress.com/2015...e-and-mirrors/

http://www.motorsport.com/f1/news/qa...1-bid/?v=2&s=1

[bjohnsonsmith]

Former FIA president Max Mosley says, if this does go ahead, Formula 1 chief executive Bernie Ecclestone's role "won't change".

http://www.bbc.co.uk/sport/0/formula1/33260515

[Richard C]

Originally Posted by bjohnsonsmith

Former FIA president Max Mosley says, if this does go ahead, Formula 1 chief executive Bernie Ecclestone's role "won't change".

http://www.bbc.co.uk/sport/0/formula1/33260515

So I know nothing about RSE Ventures, Stephen Ross or Matt Higgins other than what I found via Google a few minutes ago. My perception is that CVC as a private equity fund feels it absolutely needs someone like Bernie to run F1/FOM. However RSE is a sports centric organization. I expect they will see the value in having continuity and the expertise of someone like Bernie, however they also likely will feel that Bernie would be their resource and not the other way around. And they may not quite go along with all of the Bernie shenanigans. I just have a hard timing seeing this work with Bernie remaining in place for any significant period after a buyout. Especially if the new owner is someone like RSE.

Richard

[Nikki Katz]

I really do worry about the series. It just seems like everything we're experiencing now is as a result of having to create large short term profits for it to be profitable in comparison to the massive amounts it was bought for. Do I remember correctly that it was largely funded by debt?

How can Bernie's role possibly not change soon? He's 84 and keeps getting involved in corruption court cases. But as much as I want rid, I don't really see any other solutions either. The big teams in F1 are far too powerful as it is, F1 run by the teams would be a mess of conflicts of interest. I don't see F1's teams dropping their beneficial status to become more like the NFL, the big teams would have too much to lose.

[Richard C]

For better or worse, I think a sale would at least be... different. And clearly Bernie is unlikely to live forever. So he will exit the drivers seat at some point. And if any buyer is not just a holding/investment company, I expect they will have their own ideas on how to do things. Again... better or maybe worse, but at least something different.

Richard

[Paradise City]

I think Eccelstone's departure will be more pivotal tbh. Qataris would probably be conservative enough -- although you'll have to excuse my easy stereotype - but the Americans may want to showbiz it up a bit at further expense of the sport.

I don't expect any NFL-esque egalitarian revolution or any other type of revolution here.

[Armco Bender]

looking outside of motorsports, the NFL/american type thinking may be just what F1 needs.

1 hours racing with 4 hours of ad breaks.

[bjohnsonsmith]

Originally Posted by Armco Bender

1 hours racing with 4 hours of ad breaks.

No time outs in F1.

[wnut]

Originally Posted by bjohnsonsmith

No time outs in F1.

Don't get cocky now BJ, there is a thing called the F1 Strategy group, and a safety car, next you know the teams will get to call a random safety car/ virtual safety car to make space for adverts and" spice things up"!

[Akrapovic]

Originally Posted by Armco Bender

1 hours racing with 4 hours of ad breaks.

Maybe we could park the cars after each corner and swap drivers depending on if its a left hand corner or a right hand corner.

[bjohnsonsmith]

Originally Posted by wnut

Don't get cocky now BJ, there is a thing called the F1 Strategy group, and a safety car, next you know the teams will get to call a random safety car/ virtual safety car to make space for adverts and" spice things up"!

There are always random NASCAResque track inspections. IndyCar tried that out at Texas a couple of weeks a go. It left people a tad confused.

[AoB Special Stage]

Originally Posted by wnut

Don't get cocky now BJ, there is a thing called the F1 Strategy group, and a safety car, next you know the teams will get to call a random safety car/ virtual safety car to make space for adverts and" spice things up"!

It's called a competition caution

Originally Posted by Akrapovic

Maybe we could park the cars after each corner and swap drivers depending on if its a left hand corner or a right hand corner.

You can't do that, that's ridiculous. Use a two seat, two steering wheel car.

[NaBUru38]

Great news! Coming up: salary cap and F1 Driver Draft.

Originally Posted by AoB Special Stage

You can't do that, that's ridiculous. Use a two seat, two steering wheel car.

But drivers must rest!

[chillibowl]

in the past i have read some speculation/unfounded theories suggesting that BE and others were seeking to lower the value of F1 in order to buy it back from CVC at a more favourable rate.

a couple of years ago the plan was to float F1 for around £6.5bn and now the latest rumour is that there is an offer for £5bn.

a pretty serious reduction in valuation and i cant help but wonder how much of that is due to a couple of years of bad rules, failure to embrace the new tech, move to PPV, the promoter downplaying the sport, no successor, and general unhappiness from all the teams etc etc.

around a 20% drop in value in two years is pretty staggering and while this is all just tinfoil hat type thinking but what if all of this nonsense has been intentional?

im not entirely sure if that would make me like F1 more or less!

[Moneyseeker]

Originally Posted by chillibowl

in the past i have read some speculation/unfounded theories suggesting that BE and others were seeking to lower the value of F1 in order to buy it back from CVC at a more favourable rate.

a couple of years ago the plan was to float F1 for around £6.5bn and now the latest rumour is that there is an offer for £5bn.

a pretty serious reduction in valuation and i cant help but wonder how much of that is due to a couple of years of bad rules, failure to embrace the new tech, move to PPV, the promoter downplaying the sport, no successor, and general unhappiness from all the teams etc etc.

around a 20% drop in value in two years is pretty staggering and while this is all just tinfoil hat type thinking but what if all of this nonsense has been intentional?

im not entirely sure if that would make me like F1 more or less!

Was it ever worth £6.5Bn though? I think CVC have probably had the best years out of F1 financialy for the forseeable future, they have been lucky to derive a great income from F1 with almost no investment. I read in one of Joe Saward's pieces recently that F1 is one of their best ever investments with a 5 fold return on investment.

However, now F1 needs investment either in the form of increased payouts to teams, maybe better deals or revenue share with some European circuits and some marketing and PR investment.

In many ways F1 is a diminishing asset, when TV deals come up for renewal I am sure they will cite the fall in interest in F1 and new regs as a reason for paying less. Maybe some circuits will be brave enough to play hardball and some of the far flung dreamers will decide not to spend their governments money on F1 after all.

We have probably witnessed a golden era for F1 owners if not for actual racing and fan engagement.

[Richard C]

I just can't see a future owner doing things the same exact way. Given the potential new owner has a background in NFL, I think that might be a good model to pull ideas from. The question is if they have the courage to go toe to toe with someone like Ferrari when it comes time to negotiate a more equitable distribution of revenue.

Richard

[old man]

Much of what Chillibowl says about the NFL model makes sense but I wonder if it would work in such a capital intensive sport as F1?

Any new owner has deal with what he buys and the prospect of simply tearing up contracts and starting again is very distant. It has struck me before that the whole thing would have to collapse before it can be rebuilt. Derek Warwick said on the Sky F1 Chanel that he thought the Strategy Group was ok it was just the people on it that were the problem. 😀. From his further comments he was advocating that teams should be taken out of the rule making process, that is the job of the FIA. I tend to agree with that.

For new owners to make such changes the situation has to be worse than it is I think. The new owners are not buying it out of concern for the state of the sport, they are interested in the earning potential and I can only see any new consortia allowing more of the same, in their view it is a golden goose.

[Jimmy Magnusson]

Whoever buys F1 needs to know to look to other sports for inspiration, and understand that F1 is a sport. Other motor racing series are poor inspirations. NASCAR is not F1 and I don't think people come to those series for the same reasons.

The rules could use a few tweaks. A few, but not many. But I think the real key is changing how F1 thinks about social media and the availability of the show. Lots of people need to see F1 so lots of people can like it, and they need to start young, because people get older. I was 8 when I saw my first F1 race and I'm still here. And they need to be more active. Instead of shutting down people who upload old races on Youtube (or not noticing them) they should upload the material themselves. I mean, how much money could there really be in rubbish DVD's covering 10 seasons in 90 minutes?

Oh, and a more evenly distrubuted prize fund would be nice, too. And knowing the value in a GP in media value, not only in $$.

[chillibowl]

Originally Posted by old man

For new owners to make such changes the situation has to be worse than it is I think.

good point. i may have a tendency to make things out to be a lot worse than they are but with the amount of money being discussed any potential new owners would most likely be of the belief that there is far more right with the sport then there is wrong.

short of a massive collapse, a wholesale change of the rules and structure is unlikely.

[Richard C]

Originally Posted by old man

For new owners to make such changes the situation has to be worse than it is I think. The new owners are not buying it out of concern for the state of the sport, they are interested in the earning potential and I can only see any new consortia allowing more of the same, in their view it is a golden goose.

I didn't quote your entire post, you are you talking about new owners enacting some type of revolution or a total rebuild. I doubt anyone would do that. I don't follow the valuation and speculation as to how much this deal might be worth, but I expect anyone buying in is seeing the following...

1. Existing value
2. Potential for growth
3. Now is the time to buy before someone else does (i.e. the price might be right).

Those all seem very optimistic, but I think it also implies that things are not good or well run. F1 might look like a good, but distressed business. I would be shocked for someone like RSE who has a sports background to NOT make some changes. With that being said... F1 loves to fiddle with sporting regulations as a way to enact change (and deflection), but to leave the business side alone. I expect any changes would be focused on the business side, so even small changes would seem significant and maybe "revolutionary" to many who are used to the status quo.

Richard