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CVC F1 shuffle not quite what it seems
Posted By: James Allen  |  05 Sep 2011   |  5:08 pm GMT  |  41 comments

There is a story at large today that Donald Mackenzie, the guiding light behind CVC Investment Partners, has become chairman of Delta Topco, the company which owns the commercial rights to Formula 1. This in effect makes him the Chairman of F1.

The detail behind it is that nothing has actually changed, as Mackenzie was already the acting chairman, which was looking to place a top business name in the role.

Sir Stuart Rose, formerly chairman and chief executive of Marks and Spencer, was tapped up about taking the job, but is believed to have declined unless the role meant some hands-on control over the business, rather than merely a chairman of the board.

The Mackenzie ‘story’ is intended to show that the group is in control of the F1 situation a week before an important meeting of CVC investors, at which the subject of the private equity group’s investment in F1 is likely to be a subject of keen debate, in light of the ongoing Gribkowsky bribery case in Germany.

Some CVC shareholders have been quoted recently in the Financial Times saying that they wanted some answers about the circumstances in which CVC paid $1.7 bilion for a controlling stake in F1 from Gribkowsky’s former employer, Bayern LB.

Gribkowsky is in custody in Germany, where prosecutors allege that he received bribes over the sale of the F1 stake. Ecclestone has admitted paying $44m to Gribkowsky, but had said that it was not a bribe. Ecclestone, who received $41.4 million in commission on the deal, has been investigated but not charged with any wrongdoing.

“Every large investor (in CVC) has this on the radar screen and will want to get answers to two questions: did you know anything about what was going on and, if not, what changes have you made at the company level after you have found out?” one investor told the FT.

Bayern LB’s CFO Stephan Winkelmeier said last week that the bank had carried out internal investigations and found that the sale to CVC was carried out correctly and that the price was “in line with expectations.”

It’s not only CVC’s investors who want this matter to be dealt with so they can move on. F1’s three main stakeholders – the teams, FIA and FOM – need the matter resolved before the process of putting together an agreement binding them all together post-2012 can begin in earnest.

That is the date on which the current Concorde Agreement ends.

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What a great blog where the average F1 fan can get information from well connected sources like Mr Sylt. Thank you both.

Perhaps he could confirm with Mr E whether there is a “management” agreement between companies controlled by a party other than CVC (for example Mr E), that provide greater influence than the shareholding percentage suggests? These days if you pay lawyers enough, articles of association, etc mean nothing.

Similarly, perhaps Mr Sylt could confirm whether the offer received by Bayern was the highest and best offer rather than “the value expected”. Did Bayern miss out on getting a premium to their expected value because of the alleged arrangement with Herr G? Whats not to say that some wealthy Middle Eastern heir would not have paid substantially more if given the chance? Management have the responsibility to their shareholders to maximise the price of any asset sale. Perhaps this was circumvented?


Thanks for the comments and I’m happy to see what I can do. Not quite sure what you mean about the agreement with companies not controlled by CVC since F1 is controlled and owned by them (i.e the control reflects their shareholding). Or have I missed something?

On the other point, there were two other known bidders (see the following article: – one offered 1.5 billion and another 1 billion. CVC paid 1.7 billion so it was certainly the highest known bidder and given BLB’s comments I think we can safely say it was the highest overall bidder. After all, if BLB subsequently found out that another company had been prepared to pay more than CVC but was rejected by GG it would not be appropriate to say “the sale was carried out properly, in accordance with the bank’s regulations” yet this is precisely what BLB’s CFO has said.


Unless they are very, very careful the antics and politics off the circuit will become more interesting than actually seeing who will win the championship

…………oh wait


If Ecclestone informed me that the sun was rising in the east today, I’d be inclined to step outside to confirm


It usually does…


Mmm yes it does over over way too, good old Bernie eh, arranging that!


James, I’ve spotted a few points which I thought you should know about . The first is a minor error which is your comment that “Mackenzie was already the acting chairman.” This is false because Mackenzie has never been acting chairman of Delta Topco (or Alpha Topco before it). He took over as executive chairman of Delta Topco following CVC’s acquisition of SLEC and has been ever since. It is the position of non-executive chairman which has been vacant and Sir Stuart Rose was approached about.

The next comes from your comment “the Mackenzie ‘story’ is intended to show that the group is in control of the F1 situation a week before an important meeting of CVC investors.” This could imply that my article was deliberately timed to run the week before CVC’s upcoming Limited Partner meeting. This is also false. The news came from one of my recent lunches with Bernie which took place on the 23rd August. For the record, Bernie didn’t ask me to write up the news and the only reason I asked him was because the subject of a chairman was talked about earlier in the year. I have been so busy that I have only recently had a chance to write up the news!

Anyway, the most worrying point is also contained in your statement that “the Mackenzie ‘story’ is intended to show that the group is in control of the F1 situation a week before an important meeting of CVC investors.” This could imply that CVC did not have control of F1 prior to the Mackenzie story which is false.

CVC took over majority control of SLEC on 24 March 2006 and on the same day all of the key companies in F1 adopted new articles of association (basically rules which govern the company’s operation). The set for F1’s direct rights holder ‘Formula One World Championship’ can be downloaded by clicking on the link below and ordering ‘Alteration to Memorandum and Articles’ filed on 12 April 2006:

The articles of association introduced what are known as ‘I Directors’ and they are described as “the Director or Directors appointed by the CVC Funds and designated as such pursuant to these Articles.” As I wrote on Pitpass way back in 2008 (, I Directors have the power to out-vote every other director who represents any other shareholder in F1, including Bernie and his family trust. As it states on page 25 of the articles linked to above:

“At any meeting of the Board or a Committee, those I Directors present and voting at such meeting shall, when voting, between them be deemed to exercise one vote more than the total number of votes exercised by the other Directors present and voting at the same meeting so as to ensure that the I Directors will always have sufficient votes to pass any resolution of the board of Directors.”

Accordingly, CVC had control of F1 from the moment that it acquired the business so it would be false to say that it didn’t. This also demonstrates why CVC would not have needed to “ show that the group is in control of the F1 situation” through the Mackenzie story. Any suggestion that CVC did not have control of F1, and was only putting appropriate measures in place one week before its annual meeting, would clearly not just be false but it could be pretty damaging to the company.

Completely separately, the article also appears to raise a contradiction. The very fact fact that BayernLB has admitted that its F1 shares were NOT sold at a value below what they expected proves that a bribe could not have been paid to undervalue them. This is one of the reasons why legal sources in Germany are saying that the bribery charge against Gribkowsky and the bribery allegation against Ecclestone will be dropped. As I recently wrote on Pitpass (, Ecclestone cannot have bribed Gribkowsky to sell BayernLB’s F1 shares at a value below their expectations if BayernLB says the price was “in line with expectations” as the FT reported.

As you may have seen, the FT has also reported that some CVC shareholders have complained about a lack of communication from CVC about F1 so clearly they are not clued up about what is going on in the Gribkowsky case. This explains why one of them wants to ask CVC “did you know anything about what was going on.” Of course if the FT’s quote from BayernLB is accurate then it proves that no bribe was paid to undervalue F1 so there was nothing “going on” for CVC to know about!

If the bribery charges are indeed dropped then I think it could be perfectly understandable if Bernie/CVC take a hardline stance against any publications which have wrongly cast them in a negative light. I’m not saying that is what has gone on here but it wouldn’t surprise me if that is in store for other publications!


How apt that in the age of the iPod, iPad, iPhone, (or iFone for the Blair era educated) we should also have “I” Directors. These apparently with super powers, able to fly over board majorities in a single leap, leaving shareholder’s rights far far down, so far down in fact as to be negligible.

One has to wonder who Mr Sylt works for, is he a PR person or lawyer for Bernie directly or only via one of the many interwoven layers of F1? He very obviously has a vested interest in taking the direst and most negative possible view of James’ blog above.

Having followed the link to his 2008 article and read about Bernie’s fireproof untouchable board seat one has to wonder [mod] Yes I know they can do whatever they like, but more to the point why did the others agree to it in the first place?

I may well have got this wrong but it seems to me that if CVC wanted to dump Bernie they have the I Directors vote guaranteed to accomplish this, however Bernie has a super powered kryptonite-proof guarantee, that any other combination of votes will be less than his, he cannot be outvoted or ever kicked out. (the legal equivalent of matter meeting anti-matter)


But you also think that “Bernie has a super powered kryptonite-proof guarantee, that any other combination of votes will be less than his, he cannot be outvoted or ever kicked out.” That says a great deal about what youthinks or should I say what youdontknows.


OK, thanks for the exchange. Now we move on.


To clarify, no I don’t work for Bernie and no I an not a PR. I wrote the original article in the Telegraph which James’ blog post is about and I have known James for around five years so this wasn’t the first contact before you get the wrong idea about that too. The bottom line is that I was reliably informed that the use of the word “intended” is misleading.

James wrote that “The Mackenzie ‘story’ is intended to show that the group is in control of the F1 situation a week before an important meeting of CVC investors.” Clearly the story does not have a mind of its own so someone must have been behind it intending to show that CVC is in control. It was not me since I got the news from Bernie over lunch weeks ago and it wasn’t Bernie for the same reason (i.e. he only responded about the chairman because I asked, he did not tell me when or where to print the news etc). Likewise, CVC did not need the article to show that it is in control because it already IS in control (this is the really important point) so it is not them either.

In short, no one “intended” the article to show that CVC is in control of F1 a week before its LP meeting. I know James well and, as I mentioned, I would be doing him a disservice if I had not mentioned it to him, particularly given the legal background to this situation.

Since my post and email to James I have been reliably assured that his comments below the blog clear up the confusion so there is nothing to worry about. Misleading it may be but deliberate it clearly was not.


Methinks he doth protest too much!


My concern is accuracy and seeing that reporters I respect don’t land themselves in hot water. It is irrelevant if the news in my Telegraph piece has been reported elsewhere since it was published. I’m not concerning myself with what other reporters write. I am concerning myself with James’ report because someone alerted me to how it could be misread and the errors contained in it. This has now been dealt with so there’s not much more to say on that front.


You don’t work for Bernie you say! Yet you seem to be making a mountain out of a molehill and coming at it as if you are a lawyer on the payroll of CVC or Bernie and have some duty to protect them from any kind of speculation.

This story (or should I say merely, “information”) is available to read from at least two sources other than your Telegraph piece. One of those also makes a speculation regarding CVC too!

Any appointment in a high profile organisation can be a “story” and many appointments are made for political (internal or external) reasons. If you ban any journalistic license to speculate upon the meaning or possible outcome of corporate events then you are on the way to a totalitarian state. (something else that we in the F1 bloggers fraternity write about frequently) However if this is what you advocate please say so.

This “story” has been reported in several places


I see one of the writers from has responded here by repeating this mantra of “there could have been no bribe because BayernLB says the price was “in line with expectations””. Indeed, it seems highly unlikely that the directors of BayernLB would have sold any asset for substantially less than the value that they perceived for that asset – they would be failing in their fiduciary duty if they did so.

This repetition of the term “expectations” makes me highly suspicious! How did BayernLB arrive at a valuation on which to base their “expectations” in the first place? Could Gribkowsky have had a role in influencing those “expectations” prior to the sale? The question therefore is why did BayernLB have “expectations” which were below the value perceived by CVC and associated interests.


Thanks for that.

I take your points on board, however I don’t think there is any way that one can conclude from the statement, ” the Mackenzie ‘story’ is intended to show that the group is in control of the F1 situation a week before an important meeting of CVC investors” could imply that CVC did not have control of F1 prior to the Mackenzie story. It reinforces the point! There is no implication anywhere here that CVC were not in charge of the situation.

As far as I’m concerned he has always been very much the main man when it comes to CVC and F1 and that’s the whole point of my post – nothing has really changed there…

Interesting final para..


Interesting, I could think of other adjectives. I’ll be removing Pitpass from my bookmarks now!


Thanks James. I would be doing you a disservice if I hadn’t pointed this out. As far as I understand it, the problem is that since CVC was already in control of F1 it did not need a newspaper article “intended to show that the group is in control” as your article suggests. However, I suspect that your comments will clear up any of the confusion.

I also suspect that it is only a matter of weeks before the bribery charges are dropped. Then there will at bare minimum be a lot of egg on the faces of certain media outlets (and I most certainly am not talking about you and I!). Speak soon.


Businessmen – Sportsmen

It used to be simple!


Interesting article James, should all of this and the court case in Germany cause the signing of a new concord agreement to be drawn out and get close to the end of the current concord agreement, who’s hand would that play towards in your opinion? FIA, FOM or FOTA?


Facsinating coverage, thanks to you, James. Rather than reading the continuous drivel about Lewis Hamilton it’s nice to see something interesting on an F1 site. Interesting also to see the difficulty of finding someone to fill the top spot at Delta Topco. We Formula One fans tend to forget that it is a business after all, and not only about tire wear, or a driver’s stupidity.


And that’s just the problem now, too many businessmen are involved, all wanting a slice of the cake! It’s the fans that either pay for it or lose out.


Nothing is ever quite what is seems when bernie is involved.


CVC are in F1 for the money and will do whatever it takes to protect their investment and Bernie – nothing will come of it. Sometimes the rich seem to forget they rely on us all to consume the product to keep them wealthy! F1 is just another example of the rich getting richer while we all pay for it with a drop in our standard of living! I hope the teams finally unite under FOM and get the courage to break away.


Teams get the courage? The teams have not even had the courage to stand by their convictions. Their courage has been bought lock, stock and barrel by Murdoch.


What really rankles me is the fact that there are multi millions of dollars involved with F1, and the price of tickets get higher and higher, with the circuits enormous licence fees. Non of this would happen if it was not for the thousands of volunteers who turn out each weekend, come rain, hail or shine, to be marshalls, flag marshalls, scrutineers and the many other jobs that come without pay or reward.These are dedicated motor racing enthusiasts, who do it for the love of the sport.Maybe these people should withdraw their services one week end, and maybe the Bernies of this world would realise that there are people in this world who love “Motor Sport” not motor racing!

Grayzee (Australia)

Got it in one, Martin! Well said.

So, how can the corporate entities justify the millions they make, yet are happy to NOT pay for the “volunteers”?

Oh yeah…..of course…..silly me, THAT’S how they do it……they don’t pay the real people anything! 🙂


Here bloody here!


We all like F1 for the racing, the personalities, the tradition, the upsets of small teams beating large established teams an a myriad of other reasons…

I think everyone else is in it for the money, and if it isn’t CVC & Bernie, it will be Ferrari with Murdoch or some other combination like McLaren and business partners from the middle east.

At least CVC and Bernie have kept things running reasonably well and who is to say the next owners would be as good, much less better!


For the last two years, I have been hoping that the teams will decide to drop out of “F1” and create their own infrastructure to run a new championship without interference from the FIA and the huge drain on the business imposed by payments to CVC and the FIA.

That seems the only way that the fans could ever see a reduction in ticket prices and the teams and circuits see more money from their activities.

It would also enable the teams to keep to their stated intention to keep all their races on free-to-air TV.

However, does the new Sky / BBC deal, which goes on past 2013, make this outcome less likely ? Are the teams now locked into a deal with Sky that stretched beyond the present concorde agreement ?

If not, we can still hope that the interest of the teams, fans and sponsors can become the driving force in the sport.


Agreed, HFEVO2. And I add that teams, fans, sponsors and racetracks are the only genuine (ethically justifiable) owners of Grand Prix Motor Racing/F1. As such, they can and should fully control their sport, operate their own 24/7 online-only TV channel, race under their own mutually agreed, universally applicable rules (valid for all men, times and places) and enforce them via contractual arrangements with insurance, security and arbitration providers. All strictly private, and this means no involvement whatsoever with politicians/corporate government, banksters/financial terrorists etc. (and every true F1 fan should google Hans-Hermann Hoppe)


why people still insist that the teams forming a breakaway series would be a good idea is beyond me.

all it would do is kill the sport & cost the teams a ton of money.

dont forget that its fom which provide the teams which the prize money they get and that comes from the tv revenue & ticket prices, they also get transported to every race for free by fom.

forming a breakaway would increase costs to teams by a substantial ammount & cost them a fair bit in prize money so in reality there woudnt be a lot of benefit in it, especially for the smaller teams.

all this is why they havn’t broken away already, they had opportunities in the past yet always saw the bigger picture. a bigger picture many pro-breakaway fans always fail to consider.


Hello F1_Dave

I agree that there are substantial costs in running a F1-style championship and that these are currently paid by FOM.

However the costs are a mere fraction of the money FOM takes out of the sport, most of which ends up in the coffers of CVC who contribute little or nothing.

CVC needs to take so much to fund the massive debt they took on to buy the sport through their deal with Bernie ( and buying from Bernie, they paid a grossly inflated price, of course ).

FOM takes :

All the TV money

100% of the trackside advertising revenue


A multi-million dollar fee from every race.

That’s why none of the race organisers can make a profit and ticket prices are so high.

Only a small fraction of all this money goes to the teams in prize money – but they do get “free” transport.

In addition, the team’s sponsors pay FOM millions to rent paddock facilities at the races.

Others have calculated that of every ticket sold for the British Grand Prix, at least £100 ends up with CVC.

Then you add the fees taken by the FIA who do little more than interfere by imposing rule changes most don’t want to see. ( Like KERS and 1600cc turbo engines ).

With Jean Todt wanting a much increased slice of the cake for the FIA, the teams would certainly do better from 2013 by setting up their own organisation and funding an independent safety commission to watch over the sport.


GT racer’s comments are interesting. All this nice hardware, and the dedicated and passionate fans, are being given to the Dirty Digger, for free.

It used to be that FOM guaranteed free-to-air coverage (because it was in their interests to do so) and so the chances were that a breakaway series was more likely to get into bed with Uncle Rupert. Now that this is no longer the case FOM has a hard job convincing me (at least) that they offer a good deal for the fans or deserve their support.

For all the difference that makes …


Hi GT_Racer : Very interesting to hear your insider’s knowledge of the TV infrastructure around F1.

Clearly any new championship would have to replicate the whole thing and no doubt, if it happened, Bernie would sell it to the teams – at a grossly inflated price !

I don’t think anyone would argue with FOM being paid a fair price for the services they deliver : that’s not the issue : it’s the huge amount CVC take out that is the problem – it’s what keeps ticket prices so high and the interest of fans firmly in the background.

One wonders what would have happened had FOCA had been in charge when the BBC threw in the towel ?

I suspect that direct pressure on FOCA from team sponsors would have ensured that a reduced cost deal was done to keep UK coverage on the BBC or, at least, insist that it went to another Free To Air UK broadcaster.

As far as FOM is concerned, their only interest was to retain maximum income until 2013 – and to get Murdock involved as part of a long term strategy yet to be revealed.


Don’t forget that a fair chunk of the money which FOM get also goes back into F1 in terms of TV Broadcasting/TV Equipment & other things such as the Timing equipment, GPS stuff & various other bits of data the teams get.

FOM provide all TV broadcasts for everything bar Monaco & Japan, They provide/maintain all In-Car cameras for not just F1 but also GP2/GP3 & the porsche Supercup series as well as all the transmission equipment to recieve the signals & put them into the Tv feed.

They have to take & maintain around 35-40 trackside cameras to each Gp they cover & they take 10 or so to races they don’t cover to get additional footage which often ends up on the end of year DVD.

Its the same with all the timing equipment & GPS stuff.

They employ a great deal of dedicated & passionate F1 fans who have been handling MotorSport broadcast’s for many years.

If the FOM budget was cut or if FOM were not around the TV coverage would be of a far lower quality & you would have less information from timing/telemetry avaliable & proberly not as many In-Car cameras either.

While many dont give them credit for it, FOM do actually put a lot of money back into F1 & many of the innovations (not all of which are apparent or appreciated by viewers) in MotorSport broadcasting over the past 15 years initially started with FOM.

I worked for FOM for 8-9 years untill I left in 2006 & its by far the best, most professional Motorsport broadcaster I’ve ever worked for in my 35 year career in Motorsport broadcasting.


but that money comes from somewhere, right? Bernie isn’t digging into his own pockets to transport the teams around or pay prize money, is he? On the contrary, he’s making a fortune out of F1, basically taking money out of the sport. If F1 was owned and run by the teams, then either they would become profitable – in which case there would be more competition from other teams wanting to take part, and/or ticket prices would come down and TV deals could be made on the basis of promoting the sport, rather than who will pay the most in the short term.

Part of the problem with Bernie is that he’s not exactly getting any younger. I have a feeling that the decisions he makes now must be influenced by short term personal priorities, rather than the long term interests of the sport. F1 owned by the teams could take the opposite view – indeed, that would be in their interests.

On the flip side, somebody does have to run the sport, of course. Bernie’s not perfect for the reasons above and thousands of others, but he does put on a championship that, despite Bahrain this year, and threatening historic tracks, and relentless pursuit of soulless circuits in parts of the world with no interest in motor racing because they pay lots of money to host races, and a general priority for cash rather than good racing – despite all of that, the championship is reasonably well organised. And it’s difficult to do that by committee – you need someone in charge. SO if the teams were to break away and form a new championship, they’d have to find someone to run it. I suspect the difficulty of agreeing that is what has made them decide not to.


“The Mackenzie ‘story’ is intended to show that the group is in control of the F1 situation a week before an important meeting of CVC investors,”

Yes but they are not in control, Bernie is, he has only a 5% stockholding but by some secret agreement he runs it. Ok they (CVC) need someone to do that but Bernie has been upsetting a lot of people recently. He is becoming unwise to be associated with.

If CVC are unable to ditch him as CEO or whatever post it is he actually holds, then it would be in order for the major CVC shareholders to force CVC to sell F1. Of course it will not go down well that Bernie will probably take another slice of commission off the top of any sale deal. He has gone the Colin Chapman route of inventing a new company for each and every conceivable part of the F1 business, and then holding companies in several more layers. Can we envisage Bernie selling one part to someone and another to someone else, if so we could end up with a “Lotus vs Lotus” but with five or six all claiming the same rights.


When is anything in F1 quite what it seems? I see that Bernie has confirmed that the BBC will show extended highlights only.


“Bernie assured me, and I asked him several times, the deferred coverage will not be highlights, it will be a full race.”

“The BBC will show every grand prix in full, half of them live and half of them deferred, so free-to-air is available to everyone.”

I am actually more angry with FOTA, who have decided to keep remarkably quiet now that SKY’s cheque is in the mail.


So who was not telling the truth, Bernie or Whitmarsh?


According to all the “Quotes” in the media, Bernie – who else?

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