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Ecclestone flotation talk puts potential F1 buyers on alert
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Darren Heath
Posted By: James Allen  |  20 Nov 2011   |  3:17 pm GMT  |  35 comments

Bernie Ecclestone has raised the possibility of the commercial arm of F1 being floated on the stock market in Asia.

The 81 year old billionaire has told the Telegraph that he thinks a floation in Asia, either in Singapore or possibly Hong Kong would be a good step for the business and allow private equity form CVC to make a complete or partial exit.

“If I wanted to dispose of the company today I would float it in Singapore or Hong Kong,” Ecclestone said, adding that if CVC wants an exit, “it would be better to float the company in Singapore than sell it”.

But that does not mean its going to happen or is even likely to happen. It’s just standard practice when looking to create a market for a sale. There are a few parties interested in acquiring the company which holds the rights to F1, from NewsCorp, which still has an open dossier on it through to Middle East sovereign wealth funds. Even some teams have suggested that them owning a stake in the sport would be desirable and would bind them in.

Today’s message will put interested parties on alert and focus minds.

A colleague who works with private equity firms on this kind of transaction told JA on F1, “It’s a usual way of doing things – you run an auction with buyers at the same time as preparing for an IPO. It keeps competitive tension between both the private buyers and the public markets.”

Ecclestone has looked at flotations before but it didn’t work out due to EU competition issues.

CVC owns the majority of F1′s commercial rights holder and any exit is likely to give them a massive profit on their initial investment of $1.7 billion in 2005. They have maintained publicly that they do not want to sell.

That acquisition is the subject of a trial currently running in Munich, looking into the part played in it by Gerhard Gribkowsky, who was in charge of selling the business on behalf of the state run bank Bayern LB which he worked for and which had acquired the rights when the previous owners, Kirsch media empire went bust.

Ecclestone testified that the $44 million paid by himself and the family Bambino trust was not a bribe but a payment to ensure that Gribkowsky did not bring false allegations to the UK tax authorities that Ecclestone was in charge of the running of Bambino, which would prompt a long and expensive investigation.

In London the Serious Fraud Office has indicated in the last week that it is in contact with the German authorities and may want to look into the matter.

“The SFO is aware of the allegations against Mr Ecclestone and is liaising with the authorities in Germany to ascertain if there is a case in the UK to answer,” a spokesman for the SFO told the Financial Times.

If the SFO were to launch an investigation it would be interesting to see if it had any effect on a flotation. As vendor, CVC would be required in any case to offer indemnities, which might be more straight forward in a private sale than a public one.

There also remains the issue of the 2013 Concorde Agreement. It is hard to see how any sale, either public or private, could take place until a new one is agreed and put in place, binding in the governing body, commercial rights holder and teams for a fixed period of five years or more.

The JA on F1 2011 limited edition collectors’ review of the year “Vettel steals the show” is now ready to pre-order. A large format 240 page paperback, it comes out on December 12th, costs £9-99 plus postage and can be sent anywhere in the world. All copies bought through this site are personally signed by James Allen.

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35 Comments
  1. Joanna says:

    So much of the financial side of f1 now looks to fit under the heading of slightly dodgy. Could be all really big financial transactions of the last decade or two probably belongs under the same heading.
    i’m slightly worried that the venezuelan parliament are to scrutinise the deal between their oil corporation and williams. If that turns out to be dodgy too, can it mean trouble for sir F, and more to the point, can it mean sir F won’t be able to make a deal with Raikkonen, James?

    1. thomas says:

      I congratulate on getting something relating to Kimi out of the article. You really got it bad!! Get well soon.

  2. David Hawkins says:

    Will this make any difference to the poor F1 supporter No. Will it bring F1 back to free view No will Bernie make loads of money YES.

  3. BillC says:

    I would love to read the prospectus for the IPO

    Under “Risks & uncertainties” – there is a possibility that a new concorde agreement will not be signed and new break away series will result which means these shares would have zero value.

    No this is Bernie being Bernie and playing his version of “find the lady” (ie Bernie uses the whole deck rather than just 3 cards) to, as you say, spice up interest in the sale that CVC claim they do not want !

    Priceless

  4. Werewolf says:

    Ecclestone has made it clear before that Asia-Pacific is the future and Europe the budding Third World.

    In addition to stirring potential buyers, assuming CVC are interested in parting with all or some of their equity, he is possibly also saying to Europe that F1 would be happy to move out of the continent wholesale if it does not match Asian investment (which is, of course, unaffordable).

    1. wayne says:

      It is certainly unjustifiable. I have loved F1 for 20 years but I would be furious if my Government invested a hundred million dollars a year on a sport with a public image of excess that is better suited to the 80′s. But the good thing is I have a genuine say as I have a genuine vote. Some of the latest additions to the F1 calendar feel like the sport is exploiting those countries where the populous does not have a real voice and so cannot protest against the gross excesses. It’s cold, cynical and very obvious. Quite often these circuits are nothing more than monuments to one man’s horrendous ego.

      I’ve said before that the great tide of protest against social injustice that is sweeping the globe has bigger fish to fry at the moment but F1 will have it’s day under the spotlight. When that day comes I hope it’s recent legacy is not one of unemployment, bad feeling and disused tracks all over the world.

  5. franed says:

    Could we not reach a stage where the original deal was declared illegal?
    According to German press reports, the evidence Bernie gave was “Unbelievable”. “I thought he might make trouble so I paid him just in case, of course he also paid me and my family fund but that’s ok because I say so.” “No I didn’t try to make the payments untraceable, all my business deals are like that!” “Bambino is not involved, apart from the payments, it’s nothing to do with me.”
    My new aim is to sell the whole mess before CVC fire me (the Bernie perpetual immunity clause was deleted with the sale to CVC.

  6. Rob Newman says:

    Bernie transformed F1 from just a sport to a business empire. Like him or hate him, he is a shrewd strategist and an opportunist. In the end, everyone is a winner (Bernie, the teams, the promoters etc.). F1 would have been ‘different’ without him.

    As for the future … In Bernie we trust!

    1. wayne says:

      ‘In Bernie we TRUST’, I bet even he would have a laugh at that.

      1. Prisoner Monkeys says:

        The saying “better the devil you know than the devil you don’t” springs to mind.

        Sure, a lot of fans would celebrate Bernie leaving the sport … but there is no clear candidate to succeed him, and even if there was, we know virtually nothing about their business practices. Bernie’s departure isn’t going to guarantee the future of races like Spa – not unless his success can somehow magically save the Euro overnight.

      2. wayne says:

        Yes, there is something to be said for that old saying definitely. At least BE is a known quantity…or is he? He has contradicted himself and backtracked that many times over the years that it’s not entirely sure that BE actually is a ‘devil’ we know!

      3. Scott says:

        Flav is the man to succeed.

      4. BillC says:

        Their is some chap called Flavio that we know ………..

      5. Rob Newman says:

        He will have the last laugh anyway.

      6. eeyore says:

        Unlikely – I think it’s inevitable that eventually he’ll be pushed out, which anyone with his ego will find difficult to accept.

        And then he’ll have to sit and watch his ex-wife and daughters spend his money……

    2. Andrew Carter says:

      The race promoters, particularly in Europe, arent winners, they’re struggling badly.

      1. Rob Newman says:

        That is their choice. If the promoters can’t do a better job, then they should give it to someone who can.

      2. wayne says:

        Rob, this is all getting a bit fanatical now. How exactly is it ‘their fault’? They are all played off against one another to artifically hike the fees they pay. Great tracks are struggling while dull desert dust-bowls are flourishing. I assume you are an F1 fan, as in a fan of the actual sport and not just a BE fan? If so I would have thought you’d be a bit more interested in whatever generates powerful and compelling racing between equals, not just whther CVC makes its billions.

      3. Treaded Lurgy says:

        ”In the end, everyone is a winner (Bernie, the teams, the promoters etc.)”

        Everyone but not the fans that is…………
        :-(

      4. Bec says:

        Silverstone is the only European race that is not supported by Regional or National governments.

        Governments do this to promote their country and/or region on a scale which isn’t possible with any other annual sport, Hungary for example generate US$65m in positive economic impact from its US$14.8m investment in the race.

        No one is forced to have a race, they do it for unprecedented publicity, for example if for the average race just 0.2% of people that watch it on TV visit the country/region/city etc, at any time over a 10 year period, a government would more than double the return on its investment.

    3. chris finlayson says:

      Ah! I get it. April Fools Day has been moved to Nov. 20th this year.

      Cheers,
      Chris Finlayson
      Existential Motorcycles
      Alexander, North Carolina
      Excitable States

      1. wayne says:

        I smiled at that.

  7. Keith says:

    This is Bernie been Bernie, he is priceless, as that famous credit card advertisement said.

    I would love to be in on the IPO, nice fee’s, but would need extremely large balls to be the underwriter side of the deal. I am sure it will get away OK, with or without the new agreement.
    So Bernie is on for another wedge of cash with his last bit of equity in the business. That should keep his daughter’s in a few more houses.
    Love or hate the guy, he has taken the risk’s and brought us F1, and will be no matter what happens or doesn’t happen with a sale or float.

    I would expect Bernie to still be making deals, as they drop him 6 feet down. He is just that type of guy.

  8. Brandon says:

    Remember people, if its $200,00 it’s a bribe but if it’s $44m it’s totally legit and business as usual

  9. Lindsay says:

    If he floats, does that mean he’s a witch?

    1. Werewolf says:

      He turned me into a newt … but I got better!

  10. eeyore says:

    Ecclestone talking about a flotation is just a distraction from the debacle of the Austin GP.

    Ecclestone’s failure to bring to fruition the Austin GP has deprived his fellow-shareholders of a very substantial profit. I doubt that the prospect of a GP with a Manhattan skyline will do much to overcome the disappointment of losing $23Mill income for an outfit like CVC!

  11. eric weinraub says:

    F1 feels like a Wall St. scandal waiting to break. I have a hard time believing that BE is ready to open the books for a flotation. Feels like posturing.

    1. TomJ says:

      Which set of books would he choose?

    2. Andy H says:

      Not his call

  12. Richard says:

    I wish F1 could just be a motorsport formula and not a business enterprise to be manipulated by financiers with no interest in actual motor racing.

  13. TomJ says:

    Bernie’s having a bad week, Austin goes with NJ likely to follow, Room 101 in Germany, HMRC, SFO on his tail and all because he missed one bloody payment!

    Don’t think he realises just how much trouble he’s in or quantifies how much of his debatably honest fortune even his liberty is at stake. But like most here, agree this is more smoke from his rectum on a topic only CVC can determine.

    But I’m wondering just how long CVC will put up with the little fella or why the connection hadn’t been severed long before this?

    1. Andy H says:

      The chickens are belting back home to roost.
      Cant wait for it all to collapse around him. Do the words Al Capone mean anything to him?

  14. ROBERTO MARQUEZ says:

    I have been a Formula 1 fan for more than 40 years and never the tv covering has been as superb as it is right now. I can wacht and record the practices, the qualifyng, the race , the interviews,etc.To me a lot of people have a lot of envy of Bernie, but I hope for us in countries far away from the action nothing changes if he is out.Valencia,Venezuela.

  15. Andy H says:

    If he thinks investors would by shares in F1 he’s barking mad. Too much instability, too much risk. What happens if the teams say “stuff this for a game of soldiers”?
    Absolutely mad.

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