There are reports that the Formula One group is to pay its owner CVC Capital Partners a dividend of around $1 billion in cash, as part of a loan refinancing. This is no surprise as CVC Capital Partners has been looking for ways to release some of the value in the F1 business at a time when there are uncertainties about the future of the sport, in terms of the financial model, the succession planning and the willingness of the teams to accept continued exploitation of the business by financiers. The teams have failed to stick together and have only themselves to blame for having allowed themselves to be divided and conquered. As long as the Formula One group and Ferrari work together this is unlikely to change.
The refinancing plan includes not only a tranche of profit for CVC, but also a maturity extension of the loans, which were due to mature in 2013. It is believed that a sizeable chunk of the debts have already been paid, hence a new loan is not easing the burden for the sport, but rather extending it. This has now been pushed out to 2017, which is believed to coincide with the end of the latest Concorde Agreement, which is currently being cobbled together by Formula One.
The intention is to offer investors a guaranteed return of five percent over the London Interbank Offered Rate (LIBOR) of interest. This will make the sport a cash cow for financiers for another five years, while at the same time as leaving CVC in a position to float or sell the business as and when the current problems are sorted out and the business has more value. That is likely to be two to three years at least.