Ferrari could receive share in F1 through CVC sale

F1 Fanatic round-up

Felipe Massa, Ferrari, Melbourne, 2012In the round-up: Plans by F1 owners CVC to sell part of its stake in the sport could give Ferrari a share in the sport.

Links

Top F1 links from the past 24 hours:

Ferrari Poised For F1 Share As CVC Plots $10bn Float (Sky)

“Ferrari would be eligible to apply for a share in F1?s holding company by virtue of its status as the team which has competed in the highest number of seasons since 1950. Although it?s unclear from the document whether this share would have anything other than a symbolic value, it is conceivable that as F1?s most important team, Ferrari would be handed an interest worth tens of millions of pounds in the event of a sale or stock market listing of F1.”

Update: Sky appear to have taken their article down. You can read more about the story here.

Ecclestone on full throttle (The Telegraph)

“He remains utterly scornful of FOTA. ‘I mean you know full well those people will never agree on anything. They keep coming up and saying they?re going to get together and help F1, help the promoters, rubbish. Ferrari would never go do a deal with those clowns.'”

And So It Begins (Speed)

Mark Webber: “It?s the tyres a bit, but I started to get a handle on those at the back end of last year. I think the blown diffuser… The cars were very different, all cars not just ours, in terms of how the blown diffuser worked on the way into the corners, and it was very sensitive to RPM, and that changed the car balance quite a lot. These cars are a little bit more traditional. The blown diffusers were quite an extreme bit of kit, and I probably never got my teeth right into those.”

Rivals question Mercedes legality (BBC)

“Red Bull chief technical officer Adrian Newey, head of race engineering Paul Monaghan, and Lotus team boss Eric Boullier and technical director James Allison argued that the Mercedes system contravenes article 3.18 of the technical regulations.”

Mercedes F1 W03 – rear diffuser (F1)

“The exhaust blows towards the central section of the rear diffuser, which also has a second element in the central 15 cm area which is free from restrictions. It’s quite a different solution, not totally dissimilar to Sauber’s, with airflow coming from the engine cover and going through to the the beam wing and the deformable rear crash structure.”

Maldonado: Williams has race pace too (Autosport)

“When the gaps are very close like this, with high fuel it gets even more compact. The car has looked consistent even on high fuel so it’s all about strategy and everything.”

Australian GP Conference 3 (FIA)

Romain Grosjean: “Today, I?m very happy to be here, very proud as well to be here. A few people believed in me at the toughest time and today I think they were with me in the car.”

F1 Fanatic via Twitter

“Those whingeing about HRT being “too slow” should watch Sebring at the moment. Much higher differences in speeds and narrower track. Are we to suppose that F1 drivers are less capable of negotiating traffic than those in WEC? I don’t think so.

“Anyway, it’s a sermon I’ve given before so I won’t bore you with it further!

“One final point on the 107% rule: had they had it in 1992, the British Grand Prix would have had 12 starters instead of 26.”

Lewis Hamilton’s brother inspires champ (Herald Sun)

“I’m massively proud. He’s an incredibly inspirational young lad. He is now living the dream for so many young, disabled individuals, but not just disabled individuals: young people. He is doing them real proud.”

Comment of the day

AndrewTanner reflects on an exciting qualifying session:

A brilliant qualifying session, I really enjoyed it!

It had drama everywhere. Raikkonen failing to get out of Q1, Ferrari making a disaster of Q2 and RBR being slower than we thought, even with the knowledge that McLaren probably had the better car this weekend.

I?m happy for Grosjean, Rosberg, Schumacher, Ricciardo, Vergne, Maldonado and Senna the most. A marked improvement from Williams, I really hope they keep it up and bring some success back to the team. A double points finish for them tomorrow would be a world away from last year.

Great debut from both Ricciardo and Vergne. So far it looks like ditching Buemi and Alguersuari has paid off. Of course the real test comes in the race tomorrow.

A shame that Raikkonen couldn?t challenge more than he did but there?s no one else to blame for that. Grosjean did a stunning job of showing what both he and the E20 are capable of thus far. I expected it to be a good car but third was a surprise.

Disappointed for Mercedes but I?m confident they do have a great car. A shame Rosberg locked-up on his flying lap, you could see he was really throwing it around.

Honourable mention to Marussia for making it within the 107% of the fastest lap. That?s a great achievment considering one of the drivers is a complete rookie and the car never touched testing.

And of course congratulations to McLaren. They were on it all weekend. When I saw Hamilton?s onboard I could tell easily that he was comfortable with this car where others were struggling. A comfortable driver can push the most.

Looking forward to tomorrow morning!
AndrewTanner

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37 comments on Ferrari could receive share in F1 through CVC sale

  1. The Sky post has been taken down…

    • People can still read about it on Adam Cooper’s blog, though:

      http://adamcooperf1.com/2012/03/17/what-is-bernie-ecclestone-up-to-with-f1-structure/

      • Prisoner Monkeys (@prisoner-monkeys) said on 18th March 2012, 0:10

        I find this part the most interesting:

        There is also mention of single car customer teams for new entrants.

        I wonder how that’s going to work.

        • HoHum (@hohum) said on 18th March 2012, 4:10

          You used a lot of space last week telling us that it could not work, give it some more thought.

          • Prisoner Monkeys (@prisoner-monkeys) said on 18th March 2012, 4:15

            @hohum – No, I said that it would fail if it was not done properly. And if you re-read my comment, you will see that I did not say it was suddenly going to work. I said that I wondered how it was going to work. The idea of allowing customer chassis, but only limiting customer teams to a single car is an interesting one.

          • BasCB (@bascb) said on 18th March 2012, 5:21

            In effect this will be Ferrari’s 3rd car, I guess. Just run by an “independent” team

      • Chris Yu Rhee (@chris-yu-rhee) said on 20th March 2012, 5:16

        I have posted the entire article below this comment. It was still up, you just had to know where to look… ;^)

    • Keith Collantine (@keithcollantine) said on 18th March 2012, 5:11

      @aka_robyn Curioser and curioser…

    • Chris Yu Rhee (@chris-yu-rhee) said on 20th March 2012, 5:11

      Here is the article in its entirety;

      (http://blogs.news.sky.com/kleinman/Post:043abc2d-8548-48a9-bd7b-4f9a1681a96a)

      Ferrari Poised For F1 Stake As CVC Plots $10bn Float
      Mark Kleinman
      March 19, 2012 3:07 PM

      I have learned that the owners of Formula One (F1) motor racing are preparing a radical shake-up of the sport’s commercial structure that could hand Ferrari a direct shareholding in the sport and further entrench the power-base of F1’s leading teams for the next decade.
      The negotiations over a new Concorde Agreement, which governs the distribution of F1’s commercial revenues and which would run between 2013 and 2020, come as F1’s owner – the private equity firm CVC Capital Partners – begins preparing to sell part of its shareholding in the sport for the first time since its 2005 takeover.
      I can reveal exclusively that Goldman Sachs, the Wall Street bank, has been asked by CVC to examine plans for a placement of part of its stake in F1 potentially as soon as the next few months, which would form part of a process leading to an initial public offering of the business. A number of prospective investors, likely to include sovereign wealth funds, are expected to be sounded out about a deal ahead of a stock market listing.
      Any agreement to sell part of CVC’s interest would be likely to value F1 at well over $10bn, according to people close to the firm.
      News of the commercial overhaul comes as the F1 season got underway in Melbourne, Australia, with Britain’s Jenson Button having won yesterday’s Grand Prix.
      A confidential document circulated last week among some of F1’s leading constructors outline a series of measures proposed by CVC and Bernie Ecclestone, F1’s chief executive, aimed at strengthening the sport’s global appeal.
      According to the papers, parts of which I’ve seen a copy of, Ferrari would be eligible to apply for a share in F1’s holding company by virtue of its status as the team which has competed in the highest number of seasons since 1950. Although it’s unclear from the document whether this share would have anything other than a symbolic value, it is conceivable that as F1’s most important team, Ferrari would be handed an interest worth tens of millions of pounds in the event of a sale or stock market listing of F1.
      The document also outlines the rights of F1’s longest-standing team – Ferrari – to nominate a director to the board of the holding company and for that director to sit on its audit and nominations committees.
      I’ve learned that the Ferrari representative likely to be appointed to the F1 board (I would assume of a company called Delta Topco) is Luca di Montezemolo, the company’s chairman. Either Dieter Mateschitz, the Red Bull founder, or Christian Horner, the Red Bull Racing team principal, will also be invited to join the F1 board as part of the new Concorde Agreement, F1 insiders tell me, although these directors would not be deemed to be independent for corporate governance purposes.
      As the longest-standing team, Ferrari would also benefit from a minimum additional payment of $1.244m each year, according to the proposals.
      Crucially, the document also pledges to guarantee similar rights to Ferrari after any listing of F1’s commercial rights company, including a board seat.
      I understand that Ferrari and Red Bull have already agreed in principle to sign up to the new commercial framework (which is unsurprising since they get by far the best financial deal from it). Both teams withdrew their membership of the Formula One Teams’ Association last autumn in a move widely interpreted as positioning themselves to secure an advantageous new Concorde deal with CVC and Ecclestone.
      That also has broader significance, because by cementing the support of Ferrari and Red Bull (for whom Sebastian Vettel, the reigning world champion, drives), CVC and Ecclestone are diminishing the prospect of an outright takeover of the sport by another party. Last year, News Corporation and Exor, an Italian investment firm linked to Ferrari, said they were examining an offer to buy F1, although that statement was made before News Corp became engulfed by the phone-hacking scandal in the UK.
      I should also point out that Sky News is owned by BSkyB, whose sports channels this weekend began broadcasting live F1 coverage for the first time. Just under 40 per cent of BSkyB is owned by News Corp.
      Among the other proposals contained in the documents detailing the potential next deal between the teams and the commercial rights-holder are:
      1. Overhauling the governance structure of the sport to create a formal process for appointing and removing a chief executive. People close to the situation told me this weekend that Ecclestone continued to retain the “unanimous support” of F1’s main shareholder but that formalising a governance process was an essential step towards a stock market listing.
      In relation to Ecclestone, the F1 ringmaster who has had to testify in an ongoing corruption case in Germany relating to CVC’s takeover of the sport just over six years ago, the new Concorde deal suggests that Ecclestone’s position as CEO would not be terminated if the Ferrari representative on the board and at least one of Delta Topco’s independent directors voted against a proposal to do so.
      The document also sets out a specific process for hiring the sport’s CEO, saying that a new boss can only be appointed in accordance with conventional governance procedures, and that no candidate for the post will be recommended as CEO if board directors representing either the major shareholder or Ferrari object to the candidate.
      I should say that it’s possible that this clause was contained in previous iterations of the Concorde Agreement, although that’s unclear to me.
      2. The document is peppered with references to a flotation of F1, which Ecclestone has previously said would make sense in Singapore given the sport’s growing appeal in Asia. While no formal plan to secure a listing is underway and other options such as a share placement are being explored, a flotation is seen as being likely within 12 months.
      I’m also told that CVC would in any case seek to retain a controlling stake in F1 even after a listing on the stock market.
      3. A further expansion of the prize funds available to teams (which has already grown more than threefold since CVC’s takeover). Under the new proposals, each team which signs up to the deal and which has won the constructors’ title, competed continuously in F1 since doing so and has not changed its chassis name since doing so will be paid $10m.
      In addition, each team which has won the constructors’ championship since 2000 will earn an additional $5m per title; and each team which has competed every year since 2000 without changing its name without the commercial rights-holder’s approval will also earn $5m.
      There is also a so-called annual Double Champions payment of $35m for which – if my knowledge of recent F1 history is correct – only Red Bull Racing would currently be eligible, since the sole criterion is the first constructor to win the manufacturers’ title in two or more consecutive seasons since 2008.
      These multimillion dollar signing-on fees (which are required to be signed before 15 February 2012) are aimed at coalescing support for the new Concorde deal and giving financial certainty to the teams. Insiders say that coupled with F1’s Resource Restriction Agreement, which imposes a ceiling on costs, the new incentive structure is likely to offer the most compelling commercial deal for the teams in the sport’s history.
      What these prize funds add up to, I’m told, is 47.5 per cent of the adjusted earnings before interest, tax, depreciation and amortisation in each calendar year between 2013 and 2020, although the Longest Standing Team payment and any Double Champion payment would be made on top of this guaranteed prize fund. This would work out, sources tell me, as a marginal increase on the distribution of F1’s commercial revenues paid to the teams under the current Concorde deal.
      4. A proposal for the introduction of Single Car Customer Teams which would allow new entrants to use cars deployed by other constructors during the previous season.
      5. Being appointed to the F1 board could add significantly to di Montezemolo’s wealth. According to the documents, the LST director would be paid $50,000 a year until a listing of F1, as well as a stake of 0.25 per cent of F1’s equity (which would be worth $25m assuming a $10bn valuation of the sport).
      I should point out that none of the negotiations over the new Concorde agreement have yet been finalised, and that the ultimate terms may yet differ from those outlined in the document. Discussions led by CVC have, though, been taking place for several months, and I’m told that the current majority shareholder is confident that its current proposals will avert any lingering suggestion that F1’s teams could revive their threat of a breakaway motor racing series.
      That said, it seems likely that some of the smaller constructors will be nervous about the prospect of customer teams which are allowed to acquire the previous year’s car from a leading outfit such as Red Bull. Indeed, one team official raised the prospect with me this weekend that technical changes introduced between seasons could have the perverse effect of making a new customer team racing an old car quicker than one of its rivals which is racing two new cars.
      Ecclestone’s ability to divide and conquer the warring factions in the F1 paddock has been demonstrated many times before. The latest version of the Concorde deal will show whether he has managed to repeat the trick: those close to the sport tell me that such a conclusion is all-but-inevitable.
      The F1 teams met yesterday in Melbourne to discuss various issues including the latest Concorde deal outlined in the documents I’ve seen.
      CVC declined to comment today.

  2. Prisoner Monkeys (@prisoner-monkeys) said on 18th March 2012, 0:09

    “Ferrari would be eligible to apply for a share in F1’s holding company by virtue of its status as the team which has competed in the highest number of seasons since 1950. Although it’s unclear from the document whether this share would have anything other than a symbolic value, it is conceivable that as F1’s most important team, Ferrari would be handed an interest worth tens of millions of pounds in the event of a sale or stock market listing of F1.”

    If Ferrari gets a share of Formula 1, then all of the teams should. The last thing we need is a team like Ferrari dictating too much of the future of the sport. The last time they did that, they had a technical veto, and maanged to influence the rules enough to keep themselves in front. One team owning a stake in Formula 1 might be worse than no teams owning a stake.

  3. sw6569 (@sw6569) said on 18th March 2012, 0:35

    Afraid to say I disagree with your tweet about Sebring.

    Lapping drivers in endurance racing is an art and is as important a skill as consistent race pace. They require patience as the faster cars do not have the luxury of blue flags. An endurance racer therefore has a different skill set to an F1 driver – and, in my view, constantly lapping cars is not something we should be seeing in ‘sprint’ format races.

    That said, the main reason that I believe HRT should not be racing is their lack of professionalism/order. I’m not actually that fussed about them being on the track if they showed signs of being organised. Using qualifying as a test is not fair on the other drivers and it is not professional. Further, its not safe. Same goes for Marussia too – though they at least have a better history than HRT in this regard.

    Comparison to seasons past isn’t fair. F1 was a vastly different sport in the early 90’s. In terms of car performance as well as what was considered the ‘norm’ in terms of professionalism.

    • Fer no.65 (@fer-no65) said on 18th March 2012, 3:29

      So you’d just kill the team that’s doing everything to recover? Since their debut they have only gone up… and while being professional enough, they beated a much better team twice now.

      I think HRT shows the essence of motorsport. Doing everything to compete and doing everything to do it well, even if it costs them dearly. Not letting them race is as bad as it gets…

      Drawing parralelism, I bet you any money people would love to watch Barcelona lose against the smallest team in Segunda Division, even if they might be unorganized and probably most of them amateur. But passion moves them, it’s the will to survive and race.

      If that’s not motorsports, then nothing is. That’s why we ALL loved Minardi… and they had a much easier time than HRT.

    • HoHum (@hohum) said on 18th March 2012, 4:20

      I agree, I was more tolerant of Minardi and other tail-end teams as their drivers tried not to baulk the faster cars, yesterdays qualifying by HRT was appalling in their refusal to move out of the way of much faster cars.

      • Prisoner Monkeys (@prisoner-monkeys) said on 18th March 2012, 4:26

        I think that there should be two addendums to the blocking rule:

        1) A driver should only be expected to move over at the earliest possible opportunity that is safe to do so. If a slow car is encountered in the middle of a fast corner, that slow driver can hardly be expected to jump out of the way straight away (though the team could warn the driver that a faster car is approaching, and the driver could slow down before the fast corner).

        2) A driver attempting to set a lap time in qualifying should not be expected to move over until he has completed his lap. A slow driver should not be expected to compromised his own laptime simply for the sake of a faster car.

    • hawkii (@hawkii) said on 18th March 2012, 5:31

      HRT were screwed as soon as they failed the first crash test and missed all the winter testing. It could have saved everyone a lot of bother if they’d been given their own private test weekend somewhere this weekend, rather than being forced to try and do it during a race.

      They obviously don’t have the money or personnel to be able to cope with missing all the testing – as proved by someone stating Sky have more people in Melbourne than HRT do!

      I think if you’re gonna take their entry money off them and let them enter as a team, you have to give them at least a chance to sort their car out, and I think if they’d missed the race and been given a weekend at Barcelona etc then no-one would have been too upset to see that.

      It will take HRT about 4 race weekends now to get to a similar point to where most teams were at the start of FP1 on Friday. By this point, all the other teams have improved and they’re playing catchup all year. At the end of last season they were finally starting to look a little bit competitive (relatively speaking), but then the rules get changed and they have to start the whole process over again. You could argue they’re wasting their time and money with the current situation and might as well not bother, but teams should be encouraged.

      On the same point, congratulations have to be given to Marussia for being in a similar situation and managing to pull through, so it apparently can be done.

      • Fer no.65 (@fer-no65) said on 18th March 2012, 15:54

        Common sense wins once again.

        If they want to keep the teams alive, they should do everything to help them. Letting them fly around the world only to find themselves out of the race isn’t fair.

        But heck, they don’t want small teams anyway… it’s a massive contradiction: you want them, then you don’t.

  4. sato113 (@sato113) said on 18th March 2012, 0:55

    nice quote from grosjean. glad he’s doing well

  5. Dave (@davea86) said on 18th March 2012, 3:58

    The teams should own the commercial rights to the sport but all of them equally. Even if Ferrari didn’t abuse the power that came with this they’d be endlessly accused of cheating.

    If each team bought 1/12 of CVC and split the profits evenly that’d be much more financially viable. When a team decides to drop out they can either sell their share to a new team to replace them or the remaining 11 teams buy out their share. It would also be a bit of a means test if a new team wants to come in. If they can afford to run a team and have the cash available to buy their share of the commercial rights then they’d have to be a serious bid.

    The only potential problem is who runs the whole thing. If FOTA is anything to go by it could get messy.

    • Prisoner Monkeys (@prisoner-monkeys) said on 18th March 2012, 4:07

      @davea86

      The only potential problem is who runs the whole thing. If FOTA is anything to go by it could get messy.

      That’s why the teams as a whole should not own any more than 49.9% of the sport. Team ownership is good, but the power within the sport is separated for a reason – if you start giving too much power to one entity, it would be a bit like a football match where the players also referee the game.

  6. AndrewTanner (@andrewtanner) said on 18th March 2012, 5:06

    COTD :) Thanks @keithcollantine

    Reading it back, the English is a little dodgy, but I was just excited :D

  7. VettelS (@vettels) said on 18th March 2012, 5:06

    No team, no matter how prestigious, should have a financial stake in F1. F1’s management is supposed to be an impartial constant whereas teams are free to come and go.

    What happens when Ferrari and Red Bull buy shares? Surely other teams, McLaren, Williams, etc., will want to do the same. I would just turn into a competition of who can afford to buy up the biggest share of the sport. Very dangerous and I can’t believe anyone would even consider it.

  8. alexf1man (@alexf1man) said on 18th March 2012, 7:42

    Looks like I got 48 prediction points!

  9. Trenthamfolk (@trenthamfolk) said on 18th March 2012, 9:05

    That headline just sounds like ‘Ferrari to buy the right to cheat’. At least it’ll be blatant cheating, unlike in the past… oh, wait a moment…

    • Prisoner Monkeys (@prisoner-monkeys) said on 18th March 2012, 9:50

      @trenthamfolk – I’ll be the first to criticise Ferrari, but that’s not what they’re doing here. They’re believed to be buying a stake in the sport, a part of what Bernie Ecclestone controls. They will have no additional ability to influence the rules.

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