Chinese in $1.5bn F1 bid

You’ll recall that Formula 1 boss Bernie Ecclestone suggested that F1 could be sold or at least a significant portion of it before the end of the year but now Sky News is reporting that this could be a major investment totaling $8.5bn:

“Sky News can reveal that China Media Capital (CMC) is leading a group of Chinese firms who want to invest roughly $1.5bn (£970m) in an offer being assembled by Stephen Ross, owner of the Miami Dolphins American football team.”

CMC is apparently teaming with other investors, including the German media giant, Dieter Hahn, who sued Ecclestone over CVC’s acquistion, and Mr. Ross investing. The article says that both Ross and Hahn plan on investing $500m each.

The investment move is banking of the notion they can double the profits of F1 and if so, that would mean more money for teams as well as investors. The big question is, how to you double profits?

Certainly F1 is going through serious difficulties at the moment and perhaps this puts as asterisk on the recent interview that former FIA president, Max Mosley, and Ecclestone did urging sitting FIA president, Jean Todt, to make drastic changes now. The thought here is conjecture but it could be that the commercial rights owners are worried that the FIA’s ardent position on remaining a hybrid series and not radically changing the regulations to improve the show is a real issue.

As I say, that’s just my conjecture but it seems logical to me if I were wanting to get the series back on track and alluring to potential investors. I’d hate to have the series heading down a rabbit trail fans weren’t happy with out of pride over regulatory control and seeking harmony rather make big changes to the the ship righted.

The article says that CMC will ask for a exclusivity period so they can engage in due diligence:

“Mr Ross’s consortium is understood to be planning to write in the coming days to CVC Capital Partners, F1’s controlling shareholder, to seek a 90-day period of exclusivity during which it would hold detailed talks with Bernie Ecclestone, F1’s chief executive, and undertake due diligence.”

At this point, you’d have to recognize the dollar figures being thrown about here. This isn’t chump change, it’s huge business and I would guess that Ecclestone is interested in making this deal which may just be the biggest deal he’s ever made. You think the Chinese Grand Prix would get back on the calendar?

Hat Tip: Sky News

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The Captain

Just like the IPO idea this deal has disaster written all over it. How the bloody hell do they think they are going to “double the profits” on an already mature business? And by what time frame, 10-years, 20? Usually in a traditional business a fast turnaround is done by layoffs and restructuring, but that’s not an option to F1 owners. Does Ross really think the NFL revenue model will work in F1? The NFL raked in cash and doubled the worth of many of it’s teams, but the fundamentals are so different I hate to imagine Ross is this… Read more »

Paul KieferJr

Well, I’m waiting to hear what your idea is.