News of a potential new owner for the commercial rights for F1 was leaked last week. The bid is reportedly a joint venture between RSE Ventures and the Qatari Sports Investment fund and would see CVC’s 35%.
American business tycoon, Stephen Ross, is behind the RSE Ventures organisation who owner the Miami Dolphins NFL team. Qatari Sports Investment are the owners of French football club Paris Saint-Germain.
The Sunday Times suggested there were other parties interested in acquiring CVC’s stake in the F1 commercial rights and another consortium has emerged from the shadows.
Sky and Liberty Global and are said to be considering making an offer the controlling stake in Formula One and have already had informal talks with CVC.
In 2006 CVC purchased 35.5% controlling stake from a group of shareholders – including JPMorgan, Lehman Brothers, Bayerische Landesbank and F1 CEO Bernie Ecclestone, who still retains a five per cent stake in the business.
Ecclestone confirmed to the FT that talks had been held between RSE-Qatar and CVC and that were the deal to proceed he too would sell his 5% stake as part of any deal.
At the current valuations being bandied about, CVC would have received from a potential sale around five times their initial investment. Though it is unusual for a private equity firm to hold shares in target enterprises for 9 years, and would therefore not have delivered their target rate of return.
Sky’s rival broadcaster – BT Sports – has become a serious challenger since their recent acquisitions of the UK broadcasting rights to major European (Champions league, Ligue 1, Serie A, Heineken Cup Rugby) and North and South American Sports (NBA,NHL & MLB).
At present Sky Sports and the BBC own the UK rights to F1 broadcasting until 2018 and Sky has a dedicated F1 channel.
Since the news of the potential new F1 commercial rights holders broke, Eddie Jordan has called for F1 supremo Bernie Ecclestone to step down from his current role as CEO. Jordan believes this will pave the way for the sport’s next iteration.
“I think he’s done a remarkable job, but time has played its role and he should go,” Jordan told BBC Radio 5 Live.
“We need to leave it for the next generation in a better state. He has to keep asking himself that and where the time frame is for him to leave. I think it’s now.”
Former FIA president Max Mosley however believes that Ecclestone would negotiate to remain in his current role of chief executive irrespective of who the new owners are.
TJ13’s 2014 trilogy of articles entitled, “The Fall of The Empire” (part 1 – part 2 – part 3), outlined in detail how Ecclestone’s authority has been increasingly undermined over the past couple of years; and Eddie Jordan’s call for Bernie to stand down is the first from an influential figure within Formula One.
Ecclestone’s business model has for many years been effective. This has relied on maximising the revenue from race promoters, TV broadcasters and Sponsors. However, just 6 races have title sponsors in 2015 down from all but two in 2009. Further, race promoters are seeing large falls in attendance due to the price they are forced to charge for tickets.
Its clearly time a new business model for Formula One was developed.
Any new owners of the commercial rights may wish to seek new forms of income from digital opportunities, though this could require for example, not awarding a broadcaster the entire F1 rights for their country/region.
Internet revenues could be split from the TV rights, so either FOM can develop this income stream directly or allow a third party to pay separately for this potential income stream.
It is likely in the coming weeks there will be other interested parties announced who are considering bidding for CVC’s commercial rights shares. However, for those who wish to see the back of Ecclestone, we are a long way from any deal being done.