The Formula 1 world is busy racing in Singapore, but outside the paddock walls there are changes going on that could have an important effect on the future of the sport. The firm lost $1.8 billion in an investment in Australia’s Channel Nine and that has led to the resignation of the head of CVC’s Australian unit Adrian MacKenzie. He should not be confused with Donald MacKenzie, the man who oversees the F1 investment. However the company has cashed in a lot of its stake in F1, selling shares to various new investors in recent months. Now it is also selling off stakes in the firm with word that Singapore’s sovereign wealth fund GIC and the Kuwait Investment Authority (KIA) have taken a combined stake in the business. There is also talk of a private investor, based in Singapore. CVC is not commenting on the reports.
Are CVC genuinely passionate about F1?
No. Of course not.
Thus making it almost impossible for F1 to get the complete organisational shake-up which it badly needs and removal of the commercial exploiters using it as a cash cow. A single entity can be influenced but sovereign funds are not so easily shifted.
Only if CVC did something catastrophically bad in public or a worse sin, ceased to make a profit, would they look to move their money elsewhere. BUT like so many “Bernie things” it all depends on what they have actually bought. ie CVC or Delta Topco or Delta Prefco or FOM or ……
Maybe I have grown a tad cynical, but if profits fall, I am sure it will not affect the bits that Bernie owns. I can only equate it to private pension funds, there is an awakening when you find there are thousands of funds, but your contributions all went into the “with profits” fund, the one that bears the brunt of the market. Then at retirement one learns of COD which is HMRC’s revenge for contracting out. (no one told you about that did they?)
Nothing to do with F1 but anyone reading rpaco re pensions (last line) – HMRC will give you a pension forecast in case you’re worried (just put more money in basically, if they is a shortfall, and if the is time).
I’d love to see a current pie chart detailing the ownership stake in F1 as of this news. I don’t why, but I get the feeling this is good for Bernie.
Sounds like a good project for Joe during the closed season.
I think that it is becoming evident that we are now at the turning-point for maximising income (growth potential) for F1 and hense CVC.
They have their stake-money back, so they should gift their remaining holding to the teams and circuit owners – whoops, there goes another flying pig.
Joe do you know if the teams are generally comfortable with where the ownership of the sport is heading?
No, but it is beyond their control
It’s not really beyond their control is it though? Without big names teams there is no F1 (not one that’s worth anything anyway). The issue the teams have is that they are almost all too self-interested to be able to come to a consensus.
That, in itself, is due to the amount of money involved of course. The teams could all move out of F1 but F1 is where the money is. Unfortunately I think a lot of the passion is gone from F1 and there are too many business men involved compared to the number of enthusiasts and I don’t see that changing.
Well if they could work together they could take control hmmm never happen
CVC Asia-Pacific has to come up with a lot of money in Feb.2013 & again in April or May, I think.
Joe – given your motorsport business newletter, have you written about Archer Capital’s purchase of Australia’s touring car series? They have bet the farm on international expansion and a new TV rights deal. A new expensive TV rights deal looks shaky as the Australian TV channels are either broke or have spent their funds on other sports rights. Could end badly.
Buy it and find out.
LOL
Hi Joe,
Just related to CVC in today’s Sydney Morning Herald they reported:
James Packer severed his father’s long-standing links to the broadcaster in 2007 when he sold most of Nine, and its related assets, to private equity fund CVC Asia Pacific, which paid him $1.46 billion cash and took on $3.6 billion in debt.
The private equity firm has since lost the $2 billion it injected into Nine and is attempting to push out its debt repayments among its financiers, who are mostly made up of hedge funds.
Nine’s board will be obliged to call in the receivers if it believes there is no prospect of a balance sheet overhaul, and a deal needs to be agreed next month to be in place by February.
The change in ownership of Nine coincided with a savage downturn in advertising, at the same time as free-to-air networks are battling the higher costs of running multiple digital channels. Traditional broadcasters are steadily seeing their audience eroded by pay television and newer forms of internet television, where high-rating shows are being downloaded direct from US studios. Meanwhile, the cost of debt has skyrocketed, putting pressure on Nine’s interest payments.
CVC must repay $2.8 billion of debt by February and a further $1 billion a year later, but a breach of its quarterly debt covenants could trigger immediate payment of all the debt, according to Nine’s financial accounts.
The german “Süddeutsche” writes today that Bernie could be charged by the Munich prosecution in the course of autumn, because as revealed now during his summerly interrogation Gribkowsky stated he was mocked by Ecclestone as a “civil servant”. The joke is, as head of the BayernLB, he WAS a civil servant, an official, in fact and this could lead to Bernie be sentenced because of bribery against public officials.
Would be a staircase wit imo.
http://www.sueddeutsche.de/wirtschaft/schmiergeldaffaere-bei-der-formel-frueherer-bayernlb-vorstand-belastet-ecclestone-schwer-1.1478786