Secret share placements: Why is F1 selling 9% to North American Pensioners?

A chance discovery

I reported this yesterday, but from the number of visits there’d been many of you may not have seen the original short news bulletin. In the short time since I’ve further added some reflection and so this is too long for the daily news section.

Let’s remember that the only reason this story came to light was because I’ve been trawling Texas small and local media for F1 news prior to the circus arriving in town and became familiar with a number of publications.

“Formula One racing has received a $200m investment from the ‘Teachers Retirement System of Texas’. The largest public retirement system in the state invested the capital alongside Delta Topco Ltd., a holding company for Formula One Group”, the Austin American-Statesman reports.

The Austin Business Journal adds to this stating that according to analysts Formula One is valued at nearly $7 billion and the he investment by TRS represents 0.18 percent of its portfolio, which is valued at $113 billion.

So the teachers are hardly risking their retirement plans – more of a flutter. 4 days earlier, the ‘Canada Pension Plan’ announced it was investing $400 million in Formula One. That’s 9% of F1 owned by the Pensioner’s of North America. 

Why the secrecy?

Has anyone told them of Bernie’s impending court case in Germany where the rights to F1 may be revoked by the FIA due to fraudulent trading by Ecclestone and CVC? In that case, all co-investing parties would lose everything. Oh well, F1 cements its relationship with North America in many and colourful ways I suppose.

This is a serious matter, particularly as this news didn’t hit the radar of the financial world in London – where most F1 deals are reported, Delta Topco Ltd is a UK company. It as far as I can see has been reported only in local media outlets, and then as a byline.

Why not shout it to the world – “teachers support F1 – why not get an F1 education”, I dunno, must be some mileage in the fact over half a billion dollars has just been invested in F1 by North American pensioners. “Even the old our senior citizens feel the need for speed”. Of course Methamphetamine’s do tend to have that effect I suppose.

How much have CVC now sold?

There’s something not quite right about this. because we all knew about the following F1 equity sales transactions earlier in the year. See article “Ecclestone to load a mountain of debt onto F1“.  The first transactions were made when it was clear there would be no F1 float this year and CVC needed quick cash to prop up its cash strapped Channel 9 media investment; these included nearly 21 per cent to Waddell & Reed, a US-based institutional investor, with a further 6.9 per cent sold to BlackRock and Norges Bank Investment Management.

Over the weekend of the Singapore GP reports emanated that not only was the future of the race secured after previously being in doubt over the hosting fee, but also that a further 9% was sold to the Singapore sovereign capital fund for around $1bn. Now we have 9% to the NA Pensioners – making a known total of nearly 46% has been sold.

The big question is, how many other secret ‘9%’ deals are out there having been done? . Of course Ecclestone’s the response would predictable be, “it’s a privately owned company – what’s it got to do with you?”. Mr. E has this same attitude to all tax authorities, in fact anything in authority that seeks to enquire or interfere into ‘Bernie’s World’.

Do the teachers really own 3% and does it matter?

Yet there are only so many 9%’s which go into 100% – and when you sell for example 12 lots of 9% for the price of 100%, you’ve defrauded everyone out of 8% (12 x 9 = 108). I have had a brief search (3 hours last night) and can’t find any other F1 deals, but had I not been hunting in all the local Austin press for days, I would never had seen the by-line that instigated this story.

There is a further problem with CVC/Ecclestone selling F1 shares, whilst they may be telling the teaches of Texas they have 3% – that is based on an F1 valuation of $6.66bn. Reports earlier this year claimed the float would raise $10bn, and I realise placements will incur discounts, but 33% is pretty severe or demonstrates someone who is pretty desperate.

Anyway, at a certain point CVC/Ecclestone will breach (maybe again) the terms of the rights if they sell on too big a percentage.

The potential scam

This gives the F1 commercial rights holders even more reason to keep diluting what they are selling by placement and infer investors may be getting a bigger slice of the pie than really they are. If you think this is just one massive conspiracy theory because this sort of thing is not reported in the business news – Remember this is a privately quoted Channel Island Tax Haven Company – remember Sandford?

The protection for international investors is not great because they are playing in the risky and mostly unregulated world of International Equity Finance – high risk capital transactions where rewards may be 5-600% but you expect to lose your shirt on 2 out of 3 deals.

This is not really the risk profile teachers pension funds should be looking for, but I accept it is less than 1% of the entire $133bn value the Texan Public fund has invested. Having a flutter on F1 may become another example of the USA’s most profitable oil region’s extravagance – which only they can really afford. (Article coming – why Texas has been hoodwinked by F1).

Texas has now invested both publicly and privately nearly 1$bn dollars in F1 and this makes anything ever spent by any other nation of the world look puny.

Some eyes and ears please

If any thejudge13 readers hear or read of any state, county, national funds investing in F1, I would be very much obliged if you could let me know.

In conclusion, herein lies all the ills that are part of the modern F1 world, “It’s a privately owned company – what’s it got to do with you?” The days of the late 70’s and 80’s are long gone but it appears back door deals are as prevalent now as they were then.

I still think this is a wind up somewhow.

20 responses to “Secret share placements: Why is F1 selling 9% to North American Pensioners?

  1. Really great article—where else could I read this sort of article?

    I love your blog thejudge13, it’s the perfect blend of investigative journalism, F1 history, and gossip! Keep the articles coming!

    • You’ve made my 9 weeks and a day. Thank you very much

      That is exactly what I find problematic with F1 media. its too serious, or too shallow.

      I know it takes time to establish the site, I just wish people would comment more – after spending several hours a day writing and researching it feels like no ones connecting with what I’m sayng.

      So thanks for you comment

  2. Great article again, don’t know where you get all this information from, but I’m glad you have brought it to our attention. Ecclestone has done wonders for the F1 brand, but I think he has a few skeletons that could come out to bite him and CVC on the ass. I think it’s time for him to retire and for F1 to take back control of the sport. It’s a tragedy that Americans still don’t have a grasp on a sport that I think is vastly superior anything NASCAR or Indy have to offer. The commercial rights holder should be ashamed.

    • Agreed re:Bernie I cant think of any other administration, corporation or Sporting Organisation that appears to operate with such impunity.

      I know we have a lot to ‘thank’ Bernie for, but I’ve been attending races since 86, and if im honset, not a huge amount for the average fan has changed. Yes the circuits are better with nicer facilities, and they are safer, but im still in a tent, eating burgers, queing for the toilets, and sitting in a deck chair for 10 hours a day 🙂

      With all the money involved in F1, im still staggered that so much is taken out of the sport. Again, is there any other sport comparable to the way F1 is run ?

      Keep up the great work. Terrific site, giving us,the F1 fan something refreshing to read other than the usual re-hashing of offical press releases.

  3. No thanks. You need to be congratulated on not just relying upon rehashing the usual press sources/releases, and actually giving us F1 Fans something we want to read. I’m spreading the gospel according to Judge13 to all my fellow F1 Fans.

    It’s about time someone shined the light on Bernie’s Business Practices, especially by someone who doesn’t have to fear for their F1 Press Pass. A majority of fans have spent years being frustrated by his administration of the sport we enjoy. My biggest fear is that he has held on to control of sport for one reason. To keep the skeletons firmly locked away in the cupboard. I’m convinced that all will be revealed when he either dies or steps down. Is it a coincidence that Madoff and him share a christian name 🙂

    Keep up the stirling work!

  4. thejudge13. You are my only stop for news now. I have been following since I first found your link on bbc. Great articles and great research being undertaken. Keep up the great work, and the resulting articles

    On another note. We have all known for a long time what a weasel mr e is. I live in Australia, and travel regularly to the Melbourne GP. Every year without fail is the news that mr e wants a night race, mr e is going to pull the Australian GP. How much longer can he get away with holding countries and people to ransom? The current management is killing this sport. Time for a long overdue change.

    • Good to hear from you. I think there’s a tipping point coming for BE and its very close.

      Never been to Aus but hoping to do Melbourne and Malaysia next year. Will drop you a line if I make it

  5. Your investigations into Mr E’s affairs is very intriguing, all the back door dealings is going to show how corrupt this guy is, hope the future of F1 is safe. Judge13 keep up the great work, look forward to your article every morning…….thxs

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