Last week Pitpass revealed why the Exor investment fund, which ultimately owns a stake in Ferrari, is likely to want the world to believe that it may bid for F1 with Rupert Murdoch's News Corp media empire.
We won't go over it all again but in a nutshell, it is down to the Concorde Agreement negotiations and, in specific, clauses 4.5 a) and b) of the current draft which currently prevent the teams from publicising or developing that mythical beast of a rival series which they use as a threat to get more money from F1. Of course since Exor is sufficiently distanced from Ferrari it could get stuck in with this kind of rival series (or even F1 takeover) talk and if anyone thought we were on the wrong track, just one day after our report, Ferrari team principal Stefano Domenicali had a thing or two to say.
Speaking to Gazzetta dello Sport, Domenicali said "at the moment everything is calm, but soon something will happen...From the commercial point of view we need to clarify the following points: who will be involved in the talks? I mean which teams and constructors want to stay and which want to enter F1? And who is responsible for the show? A marketing partner is needed. It can be [F1's majority owner] CVC once more, but it must invest in F1 and develop." It sounded just like veiled support for Exor's phantom bid.
It is clear what Exor (specifically through its investment in Ferrari) would have to gain by being publicly linked to a bid with F1 but what about News Corp? Pitpass' promised to tell readers and the details come courtesy of an article written by our business editor Chris Sylt in today's Guardian.
First a tiny bit of a chronology. Late on Tuesday last week Exor and News Corp released a very tenuous statement saying that they are planning a bid for F1 which may never become a bid. A few hours later CVC announced that News Corp had informally approached it about buying F1 and it had been told that is not for sale. Clearly the approach from News Corp was not made in the evening after it released its statement with Exor. CVC itself would not have had time to release its own statement if that had been the case.
So, to summarise, News Corp approached CVC and was told that "Formula 1 is privately owned by CVC and not currently for sale." News Corp and Exor then released a statement saying that regardless, "over the coming weeks and months, Exor and News Corporation will approach potential minority partners and key stakeholders in the sport."
Stakeholders in F1 generally refers to the teams and circuits. With a few exceptions, the latter carry little sway when it comes to takeover talk so presumably Exor and News Corp were not referring to circuits. Accordingly, it looks like News Corp and Exor were referring to the teams when they said that they will approach "key stakeholders in the sport" over the coming weeks. Let's not forget that this comment (the entire statement indeed) from Exor and News Corp followed CVC telling it that F1 is not for sale. News Corp and Exor may think that it sounds like a good bit of sabre rattling to say that they will approach "minority partners and key stakeholders in the sport" anyway but in fact it is futile.
The biggest threat that the teams can make to CVC is that they will leave the sport if they do not get their way (whatever that might be). So how could this benefit News Corp who, it seems from its statement, plans to approach them? Well, News Corp could guarantee the teams that if it owned F1 they would get more money from the sport than they currently receive. Perhaps News Corp might say it would even offer the teams shares in the sport if it bought it. But what could this really achieve?
If the teams, unified through FOTA, then approached CVC and threatened to leave F1 unless they sell to News Corp, CVC could easily dig its heels in and refuse knowing full well that News Corp is not going to invest in the creation of a rival series for them. Owning a sports series is already far removed from News Corp's core media business and its purpose certainly isn't to act as a venture capital firm for new sports series. It could offer to screen the rival series on its pay per view channels but, as many of the teams have already said, this is not what they want.
In a nutshell, the pressure on CVC from a possible bid from News Corp/Exor is just as phantom as the bid itself. It doesn't even stand up to scrutiny for Ferrari. If Exor thinks it is a clever tactic to imply that it will buy the series if Ferrari's prize money is not increased it has got another think coming. The easy way for CVC to deal with this would be to say to Exor that it will sell it F1 for example for 28 billion dollars (if it is only worth 7 billion) so that way Exor would lose far more money than it would gain through an increase in Ferrari's share of prize money.
The sabre rattling statement also may imply that the duo will approach minority shareholders in F1 when it says "Exor and News Corporation will approach potential minority partners." These comprise banks such as Lehman Brothers and JP Morgan, which has been reported to be an adviser to Exor and News Corp. However, as Sylt writes in today's Guardian, if News Corp and Exor were to try and buy out the minority shareholders in F1 they would be met with a roadblock.