Formula one is about to go under massive change and by the time cars get on the tracks in Singapore we might very well have new owners of Formula 1 as CVC (majority stake holders) are about to sell their 35.5% stake to american company “Liberty Media”. The negotiations has been going on for quite a while but during the Italian Grand Prix it was widely expected that the deal will be concluded within a week and new ownership will be announced.
The question is how will this sale effect the sport ? will Bernie Ecclestone stay as chief executive who is currently appointed by majority stake holders CVC ? What do we know about the new owners ? how different they will be from CVC ? Lets get the discussion going.
First of all, Formula 1 is one of the most profitable sport in the world. Both in terms of money and competitive nature it holds a significant important in world of sport. Widely regarded as a glamour sport dominated by fast cars, money, parties, women and full fledged glamour its in the league of its own. Before we discuss what changes might occur after the sale we take a look at current financial model of F1 where CVC being the majority shareholders of 35.5% owns and operate Formula 1 under the banner of CVC.
|1||CVC Capital Partners||35.5% (CVC bought the majority stock back in 2006|
|2||Waddell & Reed||20.9% (US fund manager)|
|3||Family Bambino Trust||8.5%|
Now lets take a look at how the F1 financial structure work every year. Below diagram gives a rough idea about F1’s revenue and expensive flow. Every year the total revenue is distributed among F1 teams and the formula one group owned by CVC and other shareholders.
in 2014 Formula 1 generated around $1.8 billion and it is distributed among teams and shareholders with a Concorde agreement breakdown.
Now CVC are poised to sell their entire 35.5% shares to american company Liberty Media for around £6.5 billion ($8.5bn). Which is a huge investment for the company and we are likely to see Bernie Ecclestone making way out of the management. If the deal does go through Liberty Media owned by John C. Malone has a big task on his hand to revive the sport which has suffered alot in last few years as CVC were accused of taking too much profit away from the sport year after year.
First thing first, Bernie Ecclestone (turning 86 soon) is likely to stay for a couple of years atleast to guide some one like Horner who is widely expected to take the reigns from Ecclestone.
Update: Apparently, the deal with Liberty Media is far from done as two new potential buyers including Qatar Investment has made their way into the negotiations. We will be keeping you on track with all the updates and we can predict the sale to go though before the Singapore grand prix in couple of weeks time.