The sale of F1 is great news for fans
with CVC about acquiring a raft of shares, including those held by investment funds Waddell & Reed, Blackstone and Norges (Norway’s sovereign wealth fund). The latter is understood to be under pressure to exit F1 owing to conict over alcohol sponsorship.
Liberty is majority-owned by John Malone, who worked his way up from the electrical engineering bench to become the USA’s largest landowner, with 2.1m acres of prime property via his various conglomerates, and seats on boards of blue chip companies.
What set the Liberty rumour apart, though, was that virtually every paddock gure this author spoke to was bullish the deal would be completed. “Within three to four weeks,” said a source au fait with Liberty’s modus operandi. He was equally certain that the deal would benet F1 – more so than the current arrangement, in which the investors have extracted around $3bn over ten years.
It came to pass a fortnight later, with the media giant acquiring a minority stake (18.7 per cent) in FOM’s parent company Delta Topco in a transaction termed ‘First Closing’. This enables Liberty to prepare a ‘Second Closing’ to up their stake to 35 per cent (forecast for the rst quarter of 2017) while attending to EU Commission issues and framing FOM’s future direction, with a New York Stock Exchange listing being the end game. CVC remain a shareholder, while outside shareholders can hold on to their interests, sell to Liberty, or take their chances on any IPO.
The rumoured valuation of F1’s commercial rights proved optimistic at $8.4bn, with the agreed enterprise value being around $8bn although actual transaction value is half that due to debt obligations. Still, $8bn represents around 20 times the sport’s gross annual revenues, so Liberty clearly sees enormous potential in F1.
Initial indications are that F1’s 85-year-old CEO Bernie Ecclestone, who transformed the sport up from a fringe activity followed by petrolheads to one of the world’s top three sporting properties, will retain his position during a three-year transition period. However, insiders see that as a soft retirement option, with handover effected within a year. Malone has wooed experienced media executive Chase Carey from Fox to chair the investment. The impressively moustached Carey is expected to institute a wholesale restructure of FOM ready for a new-look F1 from 2021, when current contracts expire. “I know the way Malone works,” said one source. “There will be no sacred cows. Liberty will look at every aspect, from broadcast deals to weekend format, and the teams are likely to benet the most. They’ll look at it from an American perspective, which means NFL-type treatment of franchises [the teams], and salary [cost] caps. All in, it’s very good news for us.”
Another source ventured that Fiat/Ferrari boss Sergio Marchionne and Mercedes CEO Dieter Zetsche would “stand no chance [against Carey], and Bernie will meet his match when push comes to shove”.
The burning question is, of course, just what do Liberty see in F1 that enticed Malone to part with $1.2billion for the initial purchase? The EU Commission is circling, teams are battling nancially, TV ratings are shaky, and hosting fees have hit a ceiling.
Clearly, though, he sees gold at the end of F1’s rainbow-coloured grid, and, if the deal results in no more than transferring control of F1 from the clutches of venture capitalists to the seasoned hands of media professionals, fans should be grateful. The caveat, though, is: Be careful what you wish for…