F1's future owner
17/01/2010 Pitpass' business editor Chris Sylt had his regular pre-season lunch with Bernie Ecclestone earlier this week and amongst the many pointers that the F1 boss gave was the comment that the current owner of F1's commercial rights, the finance firm CVC, is not planning on selling its investment. However, Ecclestone added that there are many interested parties out there and so Pitpass thought it was time to look at who might be in the chase when CVC eventually decides to sell F1 in the years ahead. Sovereign Wealth fund (for example: Qatari Diar) Why it might buy F1: Prestige: Ownership of the sport's rightsholder would save a loss of face from not hosting an F1 race like Bahrain and Abu Dhabi. Qatar has a circuit which could host the sport with only a few modifications.Funding: Qatari Diar's resources are holding up well despite the financial crisis with all of its overseas real estate projects on track and developing on schedule.Connections: Ecclestone and CVC have made it their business to wine and dine the world's wealthiest sovereign wealth funds so they are sure to be the first to know if F1 gets put on the market.Status quo: Given Ecclestone's impeccable reputation in the Middle East it is unlikely that a sovereign wealth fund would implement any changes to the way F1 is run. This would surely go down well with F1's current owners and the FIA.Why the deal won't happen: The price: It is all very well and good for a wealth fund to have enough money to buy F1 but CVC would be aware of this and could raise the price accordingly. The wealth funds may be wealthy but their resources still aren't limited.Entertainment companies (for example: Disney) Why it might buy F1: Kids: F1 may be seen as fitting with corporate strategy of attracting young boys - the reason behind Disney's recent £2.4bn acquisition of Marvel Comics.Movies: F1 could be integrated with existing franchises such as the Cars film which featured the voices of Michael Schumacher and Fernando Alonso. Cars 2, due for release in 2011, is expected to focus more on European racing.Broadcasting: Disney owns the ESPN sports channel which could broadcast F1 as it already does in Asia through ESPN Star Sports.Potential: Disney owns brands and franchises which have been built up over decades. With a 60-year history F1 fits into this category nicely and without a comic, merchandise and movie there is a lot of development potential.Ready funds: With £1.8bn cash in the bank and £2.4bn in free cashflow Disney has more than enough resources to buy F1 and would not need to take out a loan to do so.Why the deal won't happen: Kids: From an outsider looking in, F1 may seem to appeal to young boys but in fact the sport's youth fan-base is weak to say the very least. It is not even in the game when compared to football's youth appeal and F1's restrictively high ticket prices are one of the big reasons for this.Low exposure: With no US Grand Prix and no US driver F1's exposure in the US is at rock bottom. The debacle of US F1 has not helped matters at all. Bearing this in mind, it is as good as impossible that the board of a company which is as American as apple pie would agree to buying the sport. The first hurdle would be actually explaining to board members what F1 is.Bad reputation: If Disney's board ever does look into buying F1 they may well not like what they find. A quick search would bring up reports of scandals regarding Flavio Briatore fixing races, McLaren spying on Ferrari and then lying to officials and Ecclestone's infamous comments in support of Hitler. And these are just three examples from the past three years. Being scandal-free is close to Disney's heart as Lawrence Aldridge, the company's senior vice president of corporate alliances, told Sylt a few years ago: "with sports or celebrity sponsorships you have got issues. In China you had the Tibetan issue. Mickey doesn't do that and we protect the Disney brand so you're not going to get those issues."The environment: F1's environmental credentials leave a lot to be desired and this would fly in the face of Disney's own corporate strategy which focuses on making the company greener.The regulator: The chance of the European Commission approving a deal with Disney would be slim. Disney owns ESPN and could accordingly make F1 exclusive to its own channel in certain countries. Likewise, it could pull F1 from ESPN's rivals in other markets (such as Sky Italia in Italy). True, F1 was once owned by German media company Kirch, which ran the Premiere pay-TV station, however, the Concorde Agreement prevented it from broadcasting F1 on its own channel exclusively. The Concorde still mandates that F1 be broadcast on free-to-air TV but whereas the contract was in force for another seven years when Kirch bought F1, the current Concorde will expire in two years time.Bernie: Given Disney's reputation for being highly corporate, it's hard to imagine that it would retain Ecclestone as the sport's boss if it acquired F1. Instead, one would imagine that Disney would favour an established suit like Etienne de Villiers who has been chairman of BBC Worldwide, run tennis' ATP tour and was president of Walt Disney International Europe. In years gone by de Villiers was also on the board of F1's rightsholder and is now chairman of Virgin Racing. Replacing Bernie may seem like a good idea to some but in reality it is far from it given his firm grip on F1's keys. The reality is that if any owner tried to get rid of Bernie, this would do one thing and that is annoy him. In turn a rival series run by him would be sure to appear leaving F1 in its dust.The FIA: The governing body can veto any change of ownership of F1's commercial rightsholder and it's easy to imagine that the FIA may take a disliking to an American giant literally taking over F1.The price: Perhaps the most important factor. CVC paid £1.2bn for F1 and would most probably want more than double that to give it the return on investment it expects. A deal could cost Disney more than it paid for Marvel and that is a company which makes movies and prints comics - both elements core to Disney's business, unlike a sports series.Media companies (for example: News Corporation) Why it might buy F1: Broadcasting: News Corp owns Fox Sports and Sky Sports which would make ideal homes for F1 coverage and would be a natural progression as it is already broadcasting the sport on Sky Italia.Print media: With numerous newspapers in its stable, including the Times and the Sun, News Corp could give its print outlets a welcome boost with exclusive news from F1 which its rivals couldn't match.A movie: News Corp also owns 20th Century Fox so a big budget blockbuster movie about F1 would be a no-brainer. This alone could bring in several hundred million dollars with mitigated overheads due to not needing to pay a film studio.Why the deal won't happen: The price: As a listed company it is hard to see how News Corp's board could justify spending several billions of dollars on buying an asset which is far from its core business.The regulator: In the late 1990s the UK's competition commission blocked News Corp's subsidiary BskyB from buying football team Manchester United due to the power it would give the firm when it came to negotiating broadcast contracts. If the acquisition of one team was too much for the authorities then it's not likely they would approve the purchase of a sports series.The FIA Why it might buy F1: Funding: With over 100 years of history, and most probably another 100 to come, the mind boggles at how large a loan the FIA could get to buy F1 and then pay it off over the sport's lifetime.Stability: It would give longterm stability to the sport which few other owners could match.Why the deal won't happen: The regulator: The European Commission could spoil this one since when it investigated F1 a decade ago the FIA committed that it would not make any commercial gain from F1.The fans: At Pitpass we are always hopeful that people power can make a difference. Given some of the wild decisions (too many to list here) that the FIA has been responsible for over the years, one would imagine that F1's millions of fans might not take too kindly to the governing body taking over the running of the sport as well as making its rules. |
