APRIL 20, 2011
Analysis: Is Newscorp serious about F1?
Bernie Ecclestone has dismissed stories about a rumoured F1 buy-out by Rupert Murdoch's News Corp in collaboration with the world's richest man, Carlos Slim -- the owner of Telmex - and, possibly, a car manufacturer, which speculation suggests is Ferrari.
"It's rubbish," Ecclestone said. "The sport is not for sale." Ecclestone, who still effectively controls F1 in his chief executive role for commercial rights holders CVC Capital Partners, who bought F1 in 2006, told the Bloomberg news agency that CVC is not looking to sell. ‘‚ œ‘‚ œ"A lot of people approach them but they are there for the long term," he said. "If they (Murdoch and Slim) were interested, for sure they would have called me, and they haven't."
Unnamed sources within News Corp have been quoted saying that F1 has an ageing fan base and needs to work harder at attracting younger people and that it is well-placed to attract such a new audience.
No matter what Ecclestone may say, CVC is a private equity firm and if the price is right, they would likely sell, a point Bernie seemed to acknowledge when he qualified his remarks about the sport not being for sale with the rider "unless the offer was ridiculous."
Any 'purchase' would not be a simple matter either, given F1's historical tripartite structure involving a delicate balance between the FIA, the sport's governing body, the competing teams and the commercial rights holders - initially Ecclestone on behalf of the teams, then Ecclestone through his own companies and now, after a number of recent sales in the past 15 years, CVC.
Before anyone bought F1, they would need to know what they were buying and with both F1's teams and FIA president Jean Todt likely to push for a bigger share of F1's pie when the current Concorde Agreement expires at the end of 2012, there is likely to be considerable negotiation ahead before definitive due diligence would be possible.
Key issues are the 100-year commercial rights lease which Ecclestone purchased for $386m in 2001 - surely the best bit of business in sport's history, and the so-called 'Don King clause' which gives the FIA right of veto over the sale of the sport to any party they do not approve.
Murdoch transformed the UK Sky TV's finances with his investment in British premier league soccer but F1's teams have always made it clear that sponsorship income is dependent on the sport being covered live worldwide on terrestrial TV. A significant proportion of the sport's income is also generated through those worldwide TV deals. Ecclestone has also said that F1 would not be sold to a media group, although the Kirch Group would have taken control had it not hit insurmountable financial problems after gaining control when previous buyer EMTV hit trouble.
The fact that Formula 1 is a highly profitable business is beyond dispute. One only needs to look at Ecclestone's net worth to appreciate that, not to mention the fact that a private equity firm like CVC thought it worth taking out and servicing a multi-billion dollar loan to buy in. What is harder to understand is why the car manufacturers themselves, a strong group at the time, did not table a bigger bid than Ecclestone's $386m when the commercial rights, ostensibly at least, were available.
Wealthy business moguls wanting a slice of F1 is no surprise, but the detail is not going to be the work of a moment and the machinations going on in the background are anyone's guess.