New F1 owners: Teams must give up their power in 12 days time

Liberty Media has bought the second tranche of F1 shares. After completion Liberty will own 35.3 percent of the shares and all voting rights. This deal costs around 4.1 billion USD, and it is expected Liberty will finance by issuing stock.

F1 currently is valued around 8 billion USD, but carries a 4 billion USD loan, which explains the difference in value for the rest of the shares.

FIA needed to approve of this take-over, and have already done so during an extraordinary meeting of its World Motor Sport Council (WMSC) in Switzerland yesterday. Only the EU’s competition authorities could stop this sale, and there are few reasons why they should. However, this final red tape needs to be cut, and this will need to be done so before the end of March.

Liberty is reported to have different ideas about F1 leadership: will they replace F1 icon Ecclestone? Sources point to Chase Carey as a possible replacement. Carey is a long time TV boss with strong links to Liberty’s owner, Topco Delta and 21st Century Fox, Rupert Murdoch’s mass media corporation. Carey is quoted to be more a sports-, than an entertainment person, so could that make him a person that we collectively love-and-hate, just like eccentric Ecclestone?

F1 teams are offered to buy F1 stock at a price 30% below market value. Interesting surely? Teams not taken Liberty up on their offer, and have shown little interest. It seems the devil is in the detail:
  • The percentage of team ownership could have been as high as 20%, but no team could own more then 5%.
  • Teams have to hold on to their shares for 10 years.
  • Only the 2 largest shareholding teams would get a seat on the board
  • Voting rights stay at Liberty

In racing, 10 years is a long time, and teams would only have observers in the board. Teams would have little to no impact on the direction F1 will be taking. The lack of influence is painstakingly obvious. This deal seems geared to lessen the financial impact the take-over will have on Liberty. They would still be in full control, but pay 15% less: a financial move.

Liberty has set a deadline for the teams to make a final decision before the end of January.
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2 responses to “New F1 owners: Teams must give up their power in 12 days time

  1. Teams either:
    – Don’t have money for the shares
    – Don’t want to direct money which can be used to build a faster car to shares
    – Think the ROI on the shares is lower than the ROI of price money (with the possibility that the shares are seen as way overpriced)

    And 10 years is too long. If Liberty manages to make a better business model, you want to sell as soon as the stock goes up enough and also have enough room sell off and run away when they take the series to the gutter.

    • The teams probably did the simple 2 question test
      a) Will we get more money?
      b) Will we get a competitive advantage?

      If you answer Yes to either a or b, buy shares, otherwise retire to agreeable restaurant and order a nice meal.

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