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.
Ross is definitely a “tycoon.” Yet it’s difficult to judge his success in sport league ventures. In the National Football League the broadcasting and merchandising agreements are such that an owner’s team cam play at home eight times (seasons are 16-games) in an empty stadium and the owner can still make a profit.
However, going forward this could be very interesting. Should the NFL model of doing business, and doing business with television networks be on the horizon, we could see a new golden era in the popularity of F1.
Time for over the top delivery. Netflix anyone? They already practically do it through the F1 app with 5live doing commentary. Just add video and you’re done.
Exactly matt. New frontiers on the horizon. And with Haas joining the fray, this is prime time for F1 to focus on the U.S. – with, of course, the right guidance (not B.E.).
With NASCAR in similar difficulties as far as cost of the race weekend is concerned and lessening direct driver-fan interaction, turning the American auto racing audience onto F1 as a “super gladiatorial” endeavor would result in something really special.
BT have become a real pain in the ass for Sky, because they have shown that they can out bid them for the rights to stop sporting events when they tabled a £900m bid for the rights to the Champions league.
Surely Murdoch cannot afford to lose another blue chip event to their younger rivals when the tenders go out for 2019 and onwards.
It’s probably a question for James Murdoch, as Rupert Murdoch is starting the succession in earnest it seems. As for BT they do seem intent on smashing Sky’s dominance of the UK Pay tv market. Snatching the tv rights to F1 from Sky is something they might attempt. They grabbed the rights to MotoGP off the BBC not so long ago. I doubt the BBC will be bidding for F1 again. Discovery through it’s Eurosport subsidiary has nabbed the rights to the Olympics across Europe (The BBC has the Olympics until the 2020 games I think from a previous deal). So the BBC will have to sub license it from Eurosport.
BT streams the subscription channels and on demand content through it’s network (works pretty well on a BT Infinity connection). So theoretically they could broadcast F1 in a neater way than Sky currently does. F1 could learn a few things from how the WWE interacts with fans through social media and how it delivers it’s PPV’s and it’s extensive video library through the WWE Network. Yes pooh pooh it not being a real sport if you want, but they’ve done a far better job of adapting to want fans want than Bernie ever could. Vince McMahon loves a challenge, even if it fails *coughs*XFL*coughs*
Discovery have said for Olympics there will be a minimum FTA portion, I believe they’ve committed to 200 hours in the Summer games, and 100 hours in the Winter games. I would guess they would sublicense a certain amount to BBC as a result of that in UK, and other broadcasters in other countries.
Step 1: Maximize short term profits by doing things that undermine long term profitability
Step 2: Sell for $$$ when profits are at the maximum
Step 3: Watch with glee as the new owners are forced to invest and cut fees that are unsustainable, greatly reducing their profits.
Bernie is such a scoundrel.
“…and F1 CEO Bernie Ecclestone, who still retains a five per cent stake in the business worth £1.2 billion.”
This statement suggests the value of F1 to be at £24 billion. Isn’t that a little optimistic? Perhaps an error?
It’s does seem a little inflated, but saying that, if CVC’s 35% is worth around $5Billion that still values the business at almost $15billion. I thought the estimated value for a flotation was $10billion.
I am aware that all the figures being banded about are just hear-say or guesses, but there is a big difference between $10billon and $24billion, so it would be great to see if there are some more accurate figures out there somewhere. Maybe there are one or 2 journalists that are known for being pretty much on the money when it comes to matters such as these so we can all get a better idea where the actual ball-park is, not which hemisphere it’s in!
There’s a lot of smoke a mirrors going on here. As Joe Seaweed has said, these private equity companies don’t have to discuss their business with anyone. So why are we hearing so much about this takeover?
As for BT. They have bitten off more than they can chew by buying up so much football. Initially they gave their customers free access to their sports programmes. Now they are charging for MotoGP and could be losing customers, because they’re using phone money to spend on sport and not every BT phone user wants to watch some of the matches they’ve signed up.
BT are partly dependent upon Sky for TV transmission, which complicates matters. They may have bought some sports which are not that popular.
Eurosport needs to get their act together if they expect to equal the BBC with their Olympic coverage. Viewers will be really pissed off if they make a mess and chuck in huge amounts of adverts to pay for their contract.
Long term, the Olympics are in decline. Far too expensive for many countries and too many sports. Eurosport only have 2 channels on Sky, golf and tennis will saturate them, pushing ‘proper’ sports off air.