Teams still considering buy-in with Liberty amidst complex F1 structure

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Reading an article over at Forbes about the complex nature of the Formula 1 acquisition and the related tracking stocks and companies that Liberty Media own as well as how they have invested in F1 and are managing the assets they own, I can now get a better appreciation as to why the current teams may not have immediately jumped a the chance to own a portion of F1 when it was initially offered.

According to the report, “thousands” of pages were filed with the SEC here in the US as to how the new tracking stocks were to function. The actual assets and ownership is a bit more complex as the article states:

“Company filings have revealed that shareholders in the Formula One Group have no direct claim to the lucrative commercial rights of the auto racing series as the Nasdaq-listed stock is not a separate legal entity and therefore cannot own any assets.

Instead, the stock, which has the ticker FWONK, merely reflects the economic performance of F1’s commercial rights and its other assets which are actually owned by Liberty Media Corporation (LMC).”

Interestingly the ownership structure may have a very relevant impact on the way in which teams would be willing to invest. The key here is if the teams have any right to the assets as partial owners and what I am considering here is the right to sell the assets to anyone for any amount. Teams may not be as comfortable with the kind of investment opportunity offered to them. The article states:

“Company filings have revealed that shareholders in the Formula One Group have no direct claim to the lucrative commercial rights of the auto racing series as the Nasdaq-listed stock is not a separate legal entity and therefore cannot own any assets.

Instead, the stock, which has the ticker FWONK, merely reflects the economic performance of F1’s commercial rights and its other assets which are actually owned by Liberty Media Corporation (LMC).”

Over at Motorsport.com, there is an equally interesting piece quoting new McLaren man and Motorsport.com board member, Zak Brown, with regards to the initial offer for teams:

“I don’t think it was a case of this is a good deal or a bad deal, it was more we want more time to talk about it, get to know you, and understand where we’re going. Because it’s a potentially substantial investment, and we just wanted to know more and have more time to talk about this.

“Certainly it was great that they did it, because they said that they would, so they followed through with their promise, and it was great when the feedback they got was we want more time, and they reciprocated by saying they’ll give us that time.

“So they are doing all the right things to show that they are going to take a collaborative approach to their relationships with key stake holders.”

I can’t blame Mr. Brown for feeling that the time window to invest was very short and with the complexities of how Liberty Media have split their companies, creating tracking stocks and other investment vehicles that may or may not have any the kinds of control or advisory mechanisms attached that teams may be looking for, it would present a situation where legal work on the team’s behalf would absolutely be needed. That takes time.

As the Forbes article offers, the complexity of this current structure is, perhaps, as complex as former owners CVC Capital or even prior to that, Bernie Ecclestone, had even configured it. You can imagine the teams trying to determine what they are getting with their investment and what controls or assurances they receive for doing so—not to mention what financial benefits they may receive.

Hat Tip: Forbes and Motorsport

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4 Comments on "Teams still considering buy-in with Liberty amidst complex F1 structure"

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The Captain
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The Captain
This stood out. “However, although stockholders in FWONK are subject to all of the risks and liabilities of LMC’s other assets, they don’t benefit from any boosts in their business performance as the tracking stocks only reflect the relevant assets.” So it sounds like LMC is stetting up a ‘betting stock’. The teams would be able to ‘buy in’ but LMC would have no obligation to invest that money into F1. The stock would be tried to all LMC assets (Braves, SiriusXM) not just F1 and pay dividends off that. Then if they decide to sell, LMC can pretty much… Read more »
Negative Camber
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It’s an interesting situation and now, I just posted it, Ferrari have weighed in.

Salvu Borg
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Salvu Borg
All the top teams (5) will be interested, but the scope will not be that of making a profit. The situation as is: CVC swapped their ownership with part ownership of LM. according to Forbes LM didn’t had the money to buy, as they still need to find $1.1bn in cash, which is 25% of the purchase price, they are selling “debentures” and raising funds through loans, and that’s where F1 comes in. LM offered teams to own from 1 to 5% for $40m to $200m, but LM says teams will have no say, which means LM wants only silent… Read more »
Salvu Borg
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Salvu Borg

What I was never able to understand is people which I regard as (should know better) saying “Ecclestone owned F1” “CVC owned F1” “LM now owns F1”, as I understand things what the first two and now LM owned were the commercial rights to F1 and not F1 ITSELF.
In realty teams could back than and still can now leave LM with 100% of nothing by taking ownership of their own destiny.