The first installment of a multi-billion-pound deal that would see new owners take control of Formula One is expected to be announced on Wednesday.
American media conglomerate Liberty Media has been in talks to buy CVC Partners’ controlling stake in the world’s most famous motor sport series for several months and staff at F1’s head office have been told the deal is effectively done.
Liberty Media, which is owned by American entrepreneur John Malone, will initially buy about a third of the British private equity firm’s 35 per cent holding in F1’s parent company Delta Topco.
The rest of CVC Partners’ stake will then be purchased at a later date, subject to the approval of motor sport’s governing body the FIA, which also owns 1 per cent of Delta Topco.
Neither CVC Partners or Liberty Media would confirm or deny any of these details when asked, but Press Association Sport understands that F1 staff have been providing data for the American group’s due diligence checks since April.
Press Association Sport also understands that Liberty Media’s purchase of the CVC Partners’ shares, which have majority rights under the company’s voting rules, will be examined by the European Commission and UK regulators for possible competition-law issues.
Brussels is already investigating complaints from some F1 teams that the sport’s huge revenues are not fairly distributed around the paddock, while Malone’s stakes in Discovery Communications, ITV and Virgin Media – not to mention his control of F1’s more environmentally-friendly alternative Formula E – might raise concerns about conflicts of interest.
CVC Partners have controlled F1 ever since they bought two large chunks of the business for about £1.5billion in 2006. Since then, however, they have earned almost £6billion by diluting their stake – while retaining control thanks to their preferential shares – and taking their share of F1’s large dividends.
Those dividends are based on the huge sums F1 obtains from the various hosts of its races, national broadcasters who pay handsomely for a piece of F1’s 400 million-strong global TV audience and other commercial revenues, all of which add up to annual profits of almost £400milliom.
The man who built this model and has run it for the last 40 years is Bernie Ecclestone, the indefatigable 85-year-old who continues to be a very hands-on chief executive.
Whether CVC Partners, which has been trying to sell its stake to a role call of increasingly exotic suitors in recent years, does hand over the keys to the business to Liberty Media is largely out of the Englishman’s hands, but he remains central to the company’s fortunes, not least because he controls almost 14 per cent of the parent company’s shares.
Reports suggest he is not overly enamoured with the prospect of working for the notoriously hard negotiator Malone, who is only 75, but then he has also sounded pretty unimpressed with the state of the sport in recent seasons, as the championship has been monopolised by dominant teams and audiences have dipped.
Speaking to The Times on Tuesday, Ecclestone said: “I guess the new man will want to come in and make some noises.
“If I don’t like those noises, I will say adios.”
And while Malone will be thinking how he can move F1 away from the traditional TV-led business model – which has been propped up by lucrative fees from host cities in far-flung and often less-than-democratic corners of the globe – to a more digital-led future, and a much larger presence in North America, most F1 fans will just want to know their sport is in good hands.
Malone, who also owns baseball’s Atlanta Braves, is clearly a formidable businessman, but he lacks Ecclestone’s pedigree in motor sport and knowledge of what is under F1’s bonnet.
That is why most observers, particularly those close to the business, have told Press Association Sport that Ecclestone must stay, probably in exactly the same role, for a decent transition period, particularly as re-negotiations with the teams about how the whole competition is run are not too far off.
Press Association Sport