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Ecclestone eyeing 6bn sale of CVC's F1 stake

NEWS STORY
27/03/2016

As the tenth anniversary (28th March) of CVC's controversial purchase of a controlling stake in Formula One fast approaches, Bernie Ecclestone claims that he has two potential buyers for the private equity giant's remaining 34.6%.

Since first buying into F1 in 2006, when it paid just 1.2bn for its majority stake, the British company has sold off around half of its original holding to American asset management giant Waddell & Reed, another American investment management corporation BlackRock and Norges Bank.

Whilst holding its stake in F1 for far longer than it usually holds on to an investment, CVC has enjoyed the benefits of what is widely seen as one of the most successful private equity deals ever. The company having already reaped (that's reaped) around 3.5bn on its initial investment, it is claimed its remaining 34.6% holding is worth as much as 6bn.

Having already halved its initial stake, talk of CVC selling the remainder of its holding has been in the air for some time. In 2012 the Formula One Group planned an offering on the Singapore Stock Exchange, at which time the company was valued at $10bn. However, the float was put on the back burner due to concerns at the global market.

CVC subsequently sold around half its stake to Waddell & Reed, BlackRock and Norges Bank, and whilst talk of a float resurfaced in 2013 nothing more was heard.

Subsequent discussions with John Malone's Liberty Global and broadcaster Discovery proved fruitless, whilst a deal with a consortium led by Miami Dolphins owner Stephen Ross' RSE Ventures, China Media Capital and Qatar's sovereign wealth fund were said to be heading in the right direction but failed to meet CVC's (6bn) valuation.

Now, Ecclestone claims he has the potential buyers but it all depends on agreeing a price.

"There are people who want to buy," he told the Mail on Sunday. "Actually, two of the people have agreed the price. It's just a question of whether CVC wants to sell or not. I think CVC will make a decision on the sale sooner or later."

Curiously, talk of the potential buy-out comes at a time when the value of the stake must surely be falling.

Following complaints from two teams the European Commission looks likely to investigate the governance of the sport and in particular how the prize money is divided.

Unhappy with the direction the sport is heading in, the drivers' union - the Grand Prix Drivers' Association - has publicly called on the sport's powers-that-be for an overhaul of its governance and rule making processes.

As those same powers-that-be dither over the rules, including qualifying for this year, there is increasing doubt as to whether agreement will be reached in time for a radical overhaul of the rules in time for next season.

Furthermore, as the sport, continues to lose fans and sponsors, mostly due to the predictability of the 'racing' and the endless tinkering with the rules, the move away from free-to-air TV coverage is likely to further impact the sport's fan base.

Indeed, whilst Ecclestone claims there are two potential buyers for CVC's stake, and the investment giant seems determined to stick to its guns in demanding 6bn, one cannot help but feel that all the negativity surrounding the sport at present - from within and without - must be seriously impacting its true value.

Then again, maybe that's the point.

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READERS COMMENTS

 

1. Posted by KoosOos, 02/04/2016 8:09

"The big problem with this pace is that it does not take in to account the income of the F1 when it comes to the value of F1. F1 value is not calculate on how mush fans it has but on the amount of money F1 will generate in the future. Year on year F1 profits has risen. Bernie has steer F1 income away from sponsors to more profitable sources of income (Pay TV). What this means for F1 is that even tho there are less sponsors in the sport the income of the sport will still stay the same or even go up. A good example of this is the Sky sport elusive deal Bernie has done with they. With this deal F1 profits will rise again even tho there will be less fans watching the sport. "

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2. Posted by Yeyox02, 27/03/2016 22:58

"Is F1 Worth 6bn??? I do not think so.

"

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3. Posted by Agrajag, 27/03/2016 21:55

"Tempus fugit Mr Ecclestone, I hope they bury your money with you rather than OUR sport."

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4. Posted by CL, 27/03/2016 19:09

"Bernie did so well, building a product that was massively attractive to customers, something they could use as a debt raising instrument so they could suck as much money out as possible, funded by governments and rich people with huge egos that needed massaging. Oh, for a second there you thought I meant the fans as the customers...no, bernies customers are those he wants to sell bits of F1 to, they are the real money. The rest of us are the product, treated with the same respect as the mass-produced livestock that spend their lives being milked."

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5. Posted by TokyoAussie, 27/03/2016 13:48

"Crompo would be proud of that theory. Achingly, there are kernels of truth starting to appear. "

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