Liberty wading into the piranha pool

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The sale of Formula 1 is and will be the talk of the paddock for some time as Liberty Media begin wading into the deep end of the F1 pool—where the piranhas swim. The sale, however, has multiple components to it that make it more complex than a simple cash for stock purchase and that’s going to be an interesting element going forward if the FIA rubber stamps the sale.

As Christian Sylt points out at Forbes, the deal is a component of cash and stock and while the value was placed at over $8 billion, the actual amount of cash the CVC Capital investment group might receive is not as much as one may have guessed.

While $340+ million isn’t exactly chump change, it is significantly less that $4 billion and it is the amount referenced in the piece at Forbes as the take-home cash component for CVC. Chris’s final statement in the story is of interest to me, however, as I am also unclear on what Liberty Media’s ultimate goal here is. Changing the name of Liberty Media to Formula One Group and going all in is an interesting move and using a large portion of stocks as payment to CVC puts them on your board as well as a continuing and long-term player in F1:

“Given that the majority of CVC’s payment comes in the form of Liberty shares it’s little surprise that it will remain the second-biggest shareholder in F1. Liberty itself will be renamed the Formula One Group and CVC is due to have a 24.7% stake in it with Liberty’s parent company and executives owning 35.3%. So if CVC sees financial growth still to come from F1 then it will get nearly a quarter of the proceeds through its shareholding. It makes sense but is still perhaps not the whole story”.

It’s interesting to me but then I find this kind of thing interesting. I would imagine Sky Sports F1’s Ted Kravitz does to but he was mildly snubbed by the new boss of F1, Chase Carey, in his qualifying notebook segment and that clearly didn’t go down well with Ted and I understand why.

Regardless, the investment does seem to have hair on it and there is a lot of name changing, stock shuffling and cash flying around so it will be interesting to see how this all comes out in the wash. There were even initial rumors that Liberty’s John Malone has already had clashes with the F1 CEO, Bernie Ecclestone but I can’t verify if those rumors are true. Two men very much in control of their empires bucking heads doesn’t seem like a stretch though.

We’ll keep in touch with Christian as he ferrets out the details but look for some interesting power plays in the coming months.

Hat Tip: Forbes

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3 Comments on "Liberty wading into the piranha pool"

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MIE
Editor
I am hoping that the sport’s new owners will reinvest some of the profits rather than just taking the cash. Reducing circuit hosting fees or increasing the share of prize money available to the back of the grid teams. Actually getting fans to attend a race in person (by being able to afford the tickets for their families) will help grow their audience. Ensuring that the smaller teams can afford to develop their cars through the year, and hire drivers based on ability rather than just the size of their sponsors cheque book, would help improve the competitiveness of the… Read more »
geeyore
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geeyore
I believe LM had discussed making ticket prices more reasonable for exactly the reasons you stated above. So there’s that. But I also have to go with Bernie and Max’s interview last year (at least partially, as they’re both professional mis-directionists). They both asserted that the hybrid formula is responsible for the extreme piles of cash needed by teams, and that reverting to a more accessible formula would in essence have a trickle-down effect all the way through to ticket prices. They didn’t point the finger at CVC’s cash-extraction exercises, so take it with a grain of salt. Bernie’s interest… Read more »
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I’ve read a few articles from Christian Sylt at Forbes and, unless you have a MBA from a good business school or experience corporately from the top corner office, it’s hard to make sense of this business arrangement. At times, it sounds like a giant shell game between Liberty, FOM, CVC and Delta Topco.