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CVC and F1


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#151 One

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Posted 22 June 2009 - 08:04

I am always amazed when CVC gets dragged into this kind of dispute because they are a venture capitalist and that they funded their purchase with a loan from RBS.


What the teams should have done was to hold the commerical rights themselves but of course up until possibly now they have never united and be organised enough to do anything as one body - which is why they have been exploited for years by Bernie and Max.



Bernie took step by step more risk on runing the Formula One. He started by negotiatingthe cirquits and air cago flight etc. Teams were lazy enough NOT to do thatand NOT interested in taking ANY commcercial risks of their own race events. Bernie had a great ball to take the chance.

Now, Bernie knows that he got much more than he ever can spend, Teams think that running the champonship is NOT an risky deal. Here we go.

We beter see if Ross in FOTA can set up the championship better than Bernie, and the consequence cold be that FOTA as well as FIA-F1 both of the goes completely bust. The otehr chances are that FOTA suvives big time. I bet on FOTA. over 92% of fans agrees.

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#152 Rinehart

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Posted 22 June 2009 - 08:52

I think you guys are in for a hell of a wake-up call if you ever do business at this sort of level.


For somebody whose had time to post over 33 thousand times, its really quite impressive that you've managed to fit such experiences in yourself!

All in all I think this thread started off interesting but has decended into something quite forum-amaturish.

Its all very well pondering IF Bernie should have or was even entitled to sell F1. But the fact is he did and the teams didn't object at the time - and they either could not or did not bid for it themselves. Several years later its clear that their remains an awful lot of trust between Bernie and the teams. So now we need to move forward on the basis of what did happen, rather than pondering what should have happened.

For me the most important question is WHAT can and are CVC going to do? Clearly a breakway will be disasterous for them, unless they can stop it. Serious question - can they? If not they need to strike a deal with the teams, quickly.

#153 HP

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Posted 22 June 2009 - 09:21

No, governments have always been subsidising races, it has nothing to do with CVC.

Governments have been subsidising races, because they believe it stimulates the local economy. But in recent years I don't think that's true anymore, with less folks attending the races in many locations.

If current F1 doesn't adjust, they might find themselves out of race tracks that are willing to put up the fees.

#154 HP

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Posted 22 June 2009 - 09:51

For me the most important question is WHAT can and are CVC going to do? Clearly a breakway will be disasterous for them, unless they can stop it. Serious question - can they? If not they need to strike a deal with the teams, quickly.

File for insolvency will be always an option and probably even needed if they can cut a deal.

Part of the financial situation has started before CVC got invovled. It started with the trend to float everything on the stock market. Kirch went down because they thought they had golden goose deal, some banks lost a lot too.

We had Sept. 2001 and the recent economic downturn that battered F1. Some countries dropped F1 coverage, because the deal was too expensive.

All in all it seems to me that Bernie and CVC took a high risk approach, the money lenders agreed to take the risk.

To me one of the issues that need to be considered carefully is one of the premises of capitalism, that most things can be made more valuable. If it's real value then it's no problem, but if it's virtual value, then trouble starts. Right now F1 is sold over it's market value. So the CVC has to take the hit.

And I think that's why teams didn't took up the offer earlier given to them to become shareholders. Had they done that, then I doubt we've had F1 running this year, as teams had to carry the losses too. Add to that, if teams are invited to take part in sharing the financial risks, they would have been fools not to demand more share in how the sport is run. Also the EU demand that the commercial side of F1 be separated from it's governing body also doesn't help it.

IMO the CVC sit out on a limb that is being cut off anyway. I don't think it's anybody's particualr fault, except missing the sign of the time. Teams would be foolish to strike a deal with CVC at this time. Mosley was hitting out at FOTA wanting to take over commercial side and run the sport. But realistically that's the only way forward, for either side, be that FOTA or FIA/FOM. Any compromise seems to me a good recipe to bring the sport down even faster.

#155 Racer Joe

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Posted 22 June 2009 - 10:44

No one is blaming CVC for being greedy, cynical capitalists. People just understand that such capitalists do not make decisions for the long term good. They make decisions purely on maximising their investment as quickly as possible.

And as fans of the sport, not of pinstriped tools making money, many of us feel we and the sport would be better off if CVC were excised from this picture, and the commercial rights administered by people directly invested in seeing the long term health of the sport.


Well who are those people and what have they been doing in the last few years?

CVC now owns those rights. The FIA approved the transaction. They don't have to sell if they don't want to. I don't know where that and any discussion about what should happen and how the commercial side should be is taking us really.


Edited by Racer Joe, 22 June 2009 - 10:45.


#156 kar

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Posted 22 June 2009 - 10:47

Well who are those people and what have they been doing in the last few years?


Fans and Families with young, future fans. Families who can no longer regularly attend races because of the punitive costs and ncreasingly stay at home and watch on tv and / or just lose interest in the sport.

CVC now owns those rights. The FIA approved the transaction. They don't have to sell if they don't want to. I don't know where that and any discussion about what should happen and how the commercial side should be is taking us really.


CVC own those rights and in their exploitation of them are damaging the long term health of the sport. The manifestation of this exploitation is now becoming apparent, with fewer races where fans care about the sport and poor attendance, and overall declining spectator figures.

CVC do own those rights, they acquired them to their cost, but if they choose to exploit the sport in the way they are doing the participants, the ones who provide the value CVC exploit, ought to be free to go away and race under different commercial arrangements.

Arrangements that better meet their goals of brand awareness and greater positive fan engagement.

That's where discussion about the commercial side should take us. And thankfully, with FOTAs initiatives, is indeed where we seem to be heading.

Edited by kar, 22 June 2009 - 10:51.


#157 Racer Joe

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Posted 22 June 2009 - 10:51

Bernie took step by step more risk on runing the Formula One. He started by negotiatingthe cirquits and air cago flight etc. Teams were lazy enough NOT to do thatand NOT interested in taking ANY commcercial risks of their own race events. Bernie had a great ball to take the chance.

Now, Bernie knows that he got much more than he ever can spend, Teams think that running the champonship is NOT an risky deal. Here we go.


I don't think that was how things happened. In the early days Bernie had the mandate from the other teams (he owned Brabham of course) to make deals on their behalf that benefitted all the teams. Sure he took on some risks and the teams just wanted to race and not worry about the commercial side of things. But to have things ended up where the teams took only 23% of the revenue over a great number of years while Bernie and his lieutenants (Paddy McNally being one) is taking things a bit too far.

We beter see if Ross in FOTA can set up the championship better than Bernie, and the consequence cold be that FOTA as well as FIA-F1 both of the goes completely bust. The otehr chances are that FOTA suvives big time. I bet on FOTA. over 92% of fans agrees.


Fans don't know much about running a commerically sound sport, despite the best of intentions.


#158 kar

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Posted 22 June 2009 - 10:52

Fans don't know much about running a commerically sound sport, despite the best of intentions.


Neither do investors it seems either. As F1s precarious state of health in both interest and finances are concerned.

#159 One

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Posted 22 June 2009 - 11:01

I don't think that was how things happened. In the early days Bernie had the mandate from the other teams (he owned Brabham of course) to make deals on their behalf that benefitted all the teams. Sure he took on some risks and the teams just wanted to race and not worry about the commercial side of things. But to have things ended up where the teams took only 23% of the revenue over a great number of years while Bernie and his lieutenants (Paddy McNally being one) is taking things a bit too far.



Fans don't know much about running a commerically sound sport, despite the best of intentions.


Thanx for notes. :D


Even before Brabham days, with Steely bike team on Formula One back then teams did wat I noted...?



In anycase the sport business is now more institutionalised than those days, hence the risk beingmanaged by divers parties are more conventional style. Bernie's F1 style got obsolete? There was a godo side of him making decisions. Thinsg went wrong IMHO at the Indy Gate.

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#160 MattPete

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Posted 22 June 2009 - 11:45

ESPN/ABC used to cover F1 for America


Which reminds me: I turned ot Fox to watch F1, from watching the Indycar race on another channel, and F1 looked like shit. In fact, everytime Fox switched between commercials (in beautiful HD) back to F1, the F1 broadcast looked bad.

It's 2009 fer crissakes! Why can't we get F1 in HD?

Edited by MattPete, 22 June 2009 - 11:46.


#161 B.Burl

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Posted 22 June 2009 - 11:48

The talk of business ethics is sadly misinformed. Acting ethically in business is good business. Act like a quasi-legal scumbucket to squeeze every last penny, and your potential future business and good will dries up. Then there is the fact that most people have working consciences and do not want to lie, cheat, and steal to make money. Business ethics do exist.

I also like how 'it's just business' is used to defend anything by some people. Again, people who say stuff like this don't know how the real world works. Being in business is not a justification for evil.

Although, I must say that business is an attractive arena for malignant narcissists and other conscienceless people, so a lot of bad shit happens in that world. But they are the exception not the rule.

#162 wapcaplit

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Posted 22 June 2009 - 11:49

The talk of business ethics is sadly misinformed. Acting ethically in business is good business. Act like a quasi-legal scumbucket to squeeze every last penny, and your potential future business and good will dries up. Then there is the fact that most people have working consciences and do not want to lie, cheat, and steal to make money. Business ethics do exist.

I also like how 'it's just business' is used to defend anything by some people. Again, people who say stuff like this don't know how the real world works. Being in business is not a justification for evil.

Although, I must say that business is an attractive arena for malignant narcissists and other conscienceless people, so a lot of bad shit happens in that world. But they are the exception not the rule.


I hear what you say - and my heart agrees with you. My head, however, is well aware of the psychological studies conducted which indicate that sociopaths make the highest profits :|

#163 Boing 2

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Posted 22 June 2009 - 12:16

Bernie created an unsustainable business model for his own gain. He and max shaped the sport to squeeze out the privateers and fill the grid with manufacturers. Once the hype was cranked up he raised the circuit fees to a level only governments could afford (based on the premise of increased tourist revenue returning a long term profit) then when he had rivers of cash flowing in he packaged the whole thing up and sold it for billions.

Unfortunatley the river has dried up now leaving an asset that was probably massivley overvalued and CVC is having to drain every drop out of the sport to service it's own requirements.

#164 Ross Stonefeld

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Posted 22 June 2009 - 12:38

That is wrong because as people have pointed out the revenue distribution has remained the same as before CVC came in.

#165 mattorgen

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Posted 22 June 2009 - 13:00

That is wrong because as people have pointed out the revenue distribution has remained the same as before CVC came in.

That's not quite right - it has actually improved since CVC came on board. The common denominator is Bernie and he is actually far more of an impediment to the teams making F1 financially viable than CVC is. He walked CVC in through the open door - their acquisition, debt and all was 100% agreed by him before they put it into action...

#166 Boing 2

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Posted 22 June 2009 - 13:34

That is wrong because as people have pointed out the revenue distribution has remained the same as before CVC came in.


the point of the comment was that CVC's desperation to wring out every drop isn't giving it any room to negotiate. If the deal was in a healtheir shape they could simply give more income to the teams and reduce the risk of breakaway.


#167 Rinehart

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Posted 22 June 2009 - 13:35

The talk of business ethics is sadly misinformed. Acting ethically in business is good business. Act like a quasi-legal scumbucket to squeeze every last penny, and your potential future business and good will dries up.


That's what I was saying before - every wannabe CEO on here reckons its all guns a dawn in the business world. Smart above-board strategic play is one thing, ruthlessly killing your clients and competiton would be quite another. Sure there are examples of it, but they tend to be rare and usually result in certain big cheeses carrying round decidedly iffy reputatons. I'm not sure Bernie has ever been in the later category. Sure he's single-minded in his goals, but generally those who deal with him only have positive things to say about him.

#168 Ross Stonefeld

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Posted 22 June 2009 - 13:39

That was somewhat my point, what everyone else is calling ruthless or shafting from behind their computer screens is pretty much normal business activity.

#169 metz

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Posted 22 June 2009 - 14:11

After reading every post on this thread, I'm astonished how many don't know the history of the "ownership" battle.
Way back, controll was actually with the race organizers, the track owners. They are the ones that invited the teams to participate.
Many race organizers however were financial disasters and often did not pay the teams the prize and appearanc money they were owed.
Then Bernie as a team owner, organized all the teams and wrestled the power away and gave the teams the clout.
Then in a sneeky way BE manipulated the power away from the teams and gave it to the governing body.
Then he replaced the head of FIA with his buddy Max who then sold the rights to Bernie for 100 years.
Bernie then did a good job of maximizing the TV potential of the sport during the 80's and 90's
The teams were happy with these financial results and were thus willing to forgive him for the many transgressions and dubious deals.
A few years later, Bernie sold the rights to Kirsch, the German media giant, who shortly after went bankrupt. Bernie kept all the money.
The banks then ended up with an organization they did not want and spent 2 years trying to find a buyer.
Bernie then convinced CVC to buy it, with the understanding that he would run it for them, for a hefty fee and part ownership.
We are now seeing history repeat itself as the teams realize that they are the ones developing the product and putting on the show.
If the teams (FOTA) can get the organizers (track owners) back on side, they will have wrestled the power back from CVC and the FIA.
To me, the teams have every right to own the sport they participate in. If not F1, then a similar circus with proper governance.
If we look at total commitment and investment in the sport, we see that they, not Bernie or any owner or governing body have built this business.
As the manufacturers have a closer look at the way F1 is run, they expect it to be accountable, just like their boards are accountable.
If they do not take advantage of the current situation at this point in time, the opportunity to get control back will be lost forever.
The teams want transparency (their owners demand it) but Max and Bernie have never operated that way. I'm not sure they know how.
The FIA should only be the police of the sport, and the police don't make the laws nor do they own the product. The participants do.
Time to clean house or start over.

#170 whitewaterMkII

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Posted 22 June 2009 - 14:40

That was somewhat my point, what everyone else is calling ruthless or shafting from behind their computer screens is pretty much normal business activity.

Really?
I can't re call shafting anyone on business deals. I do million dollar + contracts as a lead contractor, where I collate multiple bids and submit them to the general contractor. I have never screwed one of our subs or suppliers, ever, and have no intention to do so. Therefore when there are large projects floating around I get the call from the generals, not the guy down the road who is a shadier sub contractor than I am. In addition to the benefit of getting hard look at my proposals, I also have the reputation that enables me to bid projects far from our base and although I tell the customer our bid will be high because we house and feed our employees when they are out of town, I usually get the job on reputation alone.
Amazingly all this is done without resorting to hiring attorneys to write up a bunch of gobbletygook, our business is done on handshakes and trust, which is not something gained overnight or with any degree of ruthlessness. Business for us in this horrific financial downturn is still pretty stout as a result, in fact if I land another big contract I have out this week, we'll probably start hiring again and I'll probably have to hire an assitant for myself as well.


#171 Ross Stonefeld

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Posted 22 June 2009 - 15:40

I wouldn't do deals for hundreds of millions without a handshake and a contract because it's too much to risk on trust alone.

#172 whitewaterMkII

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Posted 22 June 2009 - 16:42

I wouldn't do deals for hundreds of millions without a handshake and a contract because it's too much to risk on trust alone.

Neither would I, but 99% of deals are not nade at that level.
Right now BE has zero enforcible contracts with any of the teams AFAIK.
The Concorde agreement is no longer in effect.
The FOM deal is no longer in effect.
If the FOTA teams believe that BE did not complete the contracts that they previously had with him, they are not now obligated to re-new those agreements with him in any way shape or form.
Call it a perfect storm if you would like, but the fact that FOTA is under no obligation to either BE or MM at the moment makes this a once in a life time chance for them to get contracts and rules management to their liking.
In addition, MM is changing the ground rules day to day, which again, shows bad faith and in my case, would make him someone that I would not be returning phonecalls to, especially after bad mouthing me in public.

#173 Ross Stonefeld

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Posted 22 June 2009 - 16:52

That's the amusing bit of all of this, there is no agreement currently so Bernie is giving the teams money out of courtesy.

#174 ForeverF1

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Posted 22 June 2009 - 17:00

MoU anyone?

#175 whitewaterMkII

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Posted 22 June 2009 - 17:03

That's the amusing bit of all of this, there is no agreement currently so Bernie is giving the teams money out of courtesy.

Maybe he stop paying them and see how that works out.
:rolleyes:


#176 dnbn

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Posted 22 June 2009 - 17:14

After reading every post on this thread, I'm astonished how many don't know the history of the "ownership" battle.
Way back, controll was actually with the race organizers, the track owners. They are the ones that invited the teams to participate.
Many race organizers however were financial disasters and often did not pay the teams the prize and appearanc money they were owed.
Then Bernie as a team owner, organized all the teams and wrestled the power away and gave the teams the clout.
Then in a sneeky way BE manipulated the power away from the teams and gave it to the governing body.
Then he replaced the head of FIA with his buddy Max who then sold the rights to Bernie for 100 years.
Bernie then did a good job of maximizing the TV potential of the sport during the 80's and 90's
The teams were happy with these financial results and were thus willing to forgive him for the many transgressions and dubious deals.
A few years later, Bernie sold the rights to Kirsch, the German media giant, who shortly after went bankrupt. Bernie kept all the money.
The banks then ended up with an organization they did not want and spent 2 years trying to find a buyer.
Bernie then convinced CVC to buy it, with the understanding that he would run it for them, for a hefty fee and part ownership.
We are now seeing history repeat itself as the teams realize that they are the ones developing the product and putting on the show.
If the teams (FOTA) can get the organizers (track owners) back on side, they will have wrestled the power back from CVC and the FIA.
To me, the teams have every right to own the sport they participate in. If not F1, then a similar circus with proper governance.
If we look at total commitment and investment in the sport, we see that they, not Bernie or any owner or governing body have built this business.
As the manufacturers have a closer look at the way F1 is run, they expect it to be accountable, just like their boards are accountable.
If they do not take advantage of the current situation at this point in time, the opportunity to get control back will be lost forever.
The teams want transparency (their owners demand it) but Max and Bernie have never operated that way. I'm not sure they know how.
The FIA should only be the police of the sport, and the police don't make the laws nor do they own the product. The participants do.
Time to clean house or start over.


Exactly. :up:


#177 ridgemount2008

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Posted 22 June 2009 - 17:18

Did anyone else think Bernie seemed quite depressed yesterday when he was interviewed? A good sign I think. Eddie Jordan seems to love him though.


Eddie Jordan has every good reason to love him.

#178 Jodum5

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Posted 22 June 2009 - 17:25

I don't know if it has been mentioned elsewhere on this thread, but a great way to at least solve one major issue in the sport (commercial) is for FOTA to buy CVC's stake in F1. Then they can reorganize and manage the commercial portions of the sport as they see fit. If they like (and I figure they probably wouldn't) they could keep Bernie as CEO.

When buying it each FOTA member (whether they remain as 8 teams or expand in the future) owns an equal stake in F1. If one team wants to leave, they sell their stake to the remaining teams. If a new team wants in the sport they buy a stake.

#179 David M. Kane

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Posted 22 June 2009 - 17:36

I would be depressed too if some "loonie" threw my life's work under the bus to satisfy his ego.

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#180 metz

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Posted 22 June 2009 - 17:41

Two problems with this Jodum5.
1...CVC paid WAY too much for the F1 rights and they would need to charge billions to break even.
2...Why would the teams pay someone for a business where the teams ARE the major part of the assets?

#181 David M. Kane

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Posted 22 June 2009 - 17:47

Metz:

Excellent observation!

#182 pspidey

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Posted 22 June 2009 - 17:57

UEFA owns the commercial rights to Champions League. As far as I know, FIA were forced to separate themselves from the commercial rights. So they did. The teams had a chance to buy them along the way but chose not to and someone else was willing to take the risk. You don't see a problem with the risk taker having to pay those who were unwilling to take it?
.


Complete and utter balderdash. Let's say Manchester United etc. were not currently shareholders but that FIFA held the rights to the name 'premier league'...

If FIFA (or whatever the actual UK organisation is) were then to attempt to sell the rights to the 'premier league' to the highest bidder what do you think would happen?

It's obvious what would quickly happen - the teams would refuse to get into a bidding war for a name when the real property was based on them - the teams, players and stadiums. They would then form their equivalent of FOTA and a breakaway championship.

And of course, this is the situation we now have here. And, you talk about CVC's 'investment' - they haven't invested sod-all. They've made Bernie a very rich man is all they've done, on the basis that they could afford to do so via a leveraged buy out based on raking in a big percentage of the future revenues.

Sure, you can just look at it from the business perspective, but then for you to attach moral superiority to CVC's position is laughable and frankly kind of stomach turning.

At least when the manufacturers are spending huge sums of money, there is some beneficial impact - the employment of large numbers of employees, and the raising of the media visibility of F1. Something which could not be said of CVC.

I'm hoping that they do breakaway from Max, Bernie and CVC. You can then watch your beloved carcass of F1. I and everyone else will be watching the teams.

Edited by pspidey, 22 June 2009 - 18:01.


#183 pspidey

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Posted 22 June 2009 - 18:10

I think you guys are in for a hell of a wake-up call if you ever do business at this sort of level.


It's not the fact that we don't understand how business works - and that you in your infinite wisdom do.

It's that you ascribe moral superiority to Bernie, CVC etc.

The truth is everyone is acting in their self interest.

Tell us, in your great business wisdom, why exactly given that the teams CAN form their own championship, that they should not do so, given that in doing so they can cut down the 'administration' costs from 50% to something much more reasonable.

Also tell me, why fans such as myself who are sick and tired of the way Max pisses around with rules and regulations, and Bernie pisses around with selections of circuits, we should NOT cheer on the teams and hope for a breakaway which can be more amenable to what the fans want.


#184 pspidey

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Posted 22 June 2009 - 18:23

You are castigated because you are fundamentally incorrect. The revenue distribution was like this pre-CVC, they are relatively new to the party and aren't responsible for the revenue %s. What they have done is created a situation where you all but *have* to drop low paying races like Montreal in favour of Abu Dhabi, but that was going to happen eventually even without CVC.


Not necessarily - the manufacturers have other interests than only the amount of money paid out by circuits. Particularly they have an interest in the exposure of their brands in territories which are good markets or potential markets for them.

The obvious example is north america, where they would love to have races.

I see little to back up your claim that manufacturers have been 'happy' to lose some of the best traditional circuits in return for a grand prix in e.g. Abu Dhabi. This is basically nothing but a blind assertion. Are you basing this on team principals complementing new circuits... in which case what do you expect them to say - 'This play sucks. I hate this country and this circuit'.

Of course there are some where there are some new ones that they are happy to see - China for example is obviously a great emerging market for the auto industry.


#185 pspidey

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Posted 22 June 2009 - 18:33

No, governments have always been subsidising races, it has nothing to do with CVC.


CVC isn't someone who comes to dinner with nothing, they bought the restaurant.


Struth! Yet another bogus analogy.

I'm wondering which restaurant on the planet has the cooks investing more in the restaurant than the supposed owner. Where the cooks own more of the physical inventory. And, the 'owner' supplies the restaurant banner and a lick of paint maybe.

Just because they paid the previous 'owner' a ton of money, does not mean that they have invested in any more than the banner and lick of paint. It only means that the previous owner has got a big fat smile on his face.

Edited by pspidey, 22 June 2009 - 18:43.


#186 Ross Stonefeld

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Posted 22 June 2009 - 18:55

Ownership isn't based on merit but finances. You can go on and on about how CVC shouldn't have that much control, haven't earned it, etc etc but the fact is they do own it.

#187 Madras

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Posted 22 June 2009 - 19:00

Ownership isn't based on merit but finances. You can go on and on about how CVC shouldn't have that much control, haven't earned it, etc etc but the fact is they do own it.


But they dont own the breakaway, thank god.

#188 aditya-now

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Posted 22 June 2009 - 19:10

Basically a rival series will kill F1's commercial value. A good idea would be to buy the commercial rights on the cheap from cvc's firesale, then go back to the FIA for 2011 from a position of strength.

The FIA should be the arbitrator, not the rule maker + abitrator. And CVC should in no way whatsoever be the profiteer.


:up:

That would be the right way to go. Destroy the FIA-CVC-F1 series in 2010, then buy the rights cheap from CVC. Meanwhile, things and personel at FIA will most likely have changed, there is no way the split will not have ramifications.

2011 will see FOTA reunited with the FIA F1, but it will be a new F1 in many ways. In the history books, which records of course F1 from 1950 onwards 2010 will be a strange one-off year, with possibly a no-name WDC. By 2011 the historical record will start looking "normal" again.

It will be interesting if FOTA will strike deals with the circuits for one race (2010) with an option for further races in the years thereafter, or if they will right away go for, say, five-year-deals. In the latter case, above scenario (reunification in 2011) would seem less likely.


#189 pspidey

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Posted 22 June 2009 - 19:19

Ownership isn't based on merit but finances. You can go on and on about how CVC shouldn't have that much control, haven't earned it, etc etc but the fact is they do own it.


You're right it isn't based on merit. So, stop going on about it as if it is.

So, you're telling us that they own it. Well, thanks for telling us nothing we didn't already know.

To reciprocate - they don't own the teams, and the teams have the finances to go and start their own series. At which point CVC's finances ain't going to be worth squat.

If I was CVC, I'd be looking into negotiating between the teams and the banks which originated the loans, a payoff settlement on a percentage of the investment, with the teams taking ownership for an agreeably small %. Acknowledging the fact that without them they're going to lose their entire investment - F1 will go broke. Of course, the question then is just how much would the teams be willing to pay. Nowhere near what CVC would want I'm sure, but then the teams hold all the cards - it is they who have the position of strength.

If you don't like that - well see your own comment - it's not based on 'merit'.

#190 Ross Stonefeld

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Posted 22 June 2009 - 19:21

You could just skip all that nonsense and simply renogiate the current deal so everyone's happy. But ultimtaely that is a very small part of why the teams want to break away.

#191 DOHC

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Posted 22 June 2009 - 19:28

metz :up:

#192 Anders Torp

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Posted 22 June 2009 - 19:35

Ownership isn't based on merit but finances. You can go on and on about how CVC shouldn't have that much control, haven't earned it, etc etc but the fact is they do own it.

True. They bought it and now they own it. Nothing strange about that.

But how FIA sold the rights to Bernie is an interesting story. Mark Hughes in the Times:

Ecclestone was contentiously awarded F1’s commercial rights by the FIA in 2001 for a 100-year period for a sum of money that equated to three years of the rights of the American NASCAR racing series. In 2006 Ecclestone sold the F1 rights to CVC.


Now, why did FIA set the price so low? And why was Bernie the only one invited to bid?


#193 Muz Bee

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Posted 22 June 2009 - 19:39

That's the amusing bit of all of this, there is no agreement currently so Bernie is giving the teams money out of courtesy.

And your real point here Ross is????
That unethical business is fine as long as it is legal and therefor defendable in court?

I think you are arguing throughout this thread along lines of "harden the F$&&* up! This is big business and you need to take care of business". And I would agree to a large extent. I hope the past in this respect serves as a great lesson for FOTA and their racing business.

Bernie and Max have become the problem. You can't take one out without the other.

Bernie didn't only exploit the situation (fragmented bunch of team operators) two or more decades ago. He created the business wealth for the teams. Of this part I am very happy with and it is true to say F1 would likely not be of the size it is today without the great deals of BE.

Where I have a problem is the series of manoeuvres where Bernie, using Max as his "good cop" :drunk: cashed up his futures. The fragmented teams continued to struggle with a pair of power brokers who filled their pockets according to the fantastic deal they had done with the suckers. (Forget about Max being an "unpaid" FIA President.)

Today that is coming to a stop because the teams have got themselves together to outbluff their old paymasters.

As much as I hate he financial users typified by CVC hating CVC isn't very useful. They are simply doing what slippery financial suits do - earn inordinate rewards for no other reason than because they can and they have access to money. I imagine if FOTA want to take BE along the road to a brave new world to be their TV negotiator then the lawyers will have to sort put his entanglement with CVC. It may be possible, I doubt it, but do they want him? He has earned a crazy commission for his efforts - because he can. I imagine the teams will be looking to divide up around 85 - 90% of the income in future, not 50%. And if the gross goes down in the short term while GP2010 gets on it's feet, the nett profits returned should still be greater.

#194 peroa

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Posted 22 June 2009 - 19:43

And your real point here Ross is????
That unethical business is fine as long as it is legal and therefor defendable in court?


Yep, and then after some years of fake/virtual milk&honey they go into recession and take half of the world with them...

Howdy, yeehaaa!

Them bubble bursts!

Edited by peroa, 22 June 2009 - 19:44.


#195 rye&ginger

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Posted 22 June 2009 - 19:47

I wonder why some of you think FOTA would need to go back to the FIA? Other people can make rules and what not also. FIA provides a service that is not unique. FOTA does not need FIA. FIA can keep F1 and do what it likes with it, Im sure they will do great things like they have with WRC.

FIA can even be contracted by FOTA to provide services to inspect their series, but not be goverened by the FIA.

FIA has been a large part of the massive costs in F1. Changing the rules to favour aerodynamics has been an expensive waste. The process to design a tiny winglet on the side pod must have cost a few millions each time. What great racing that is!

The new 2009 regulations did not go far enough to shave costs and improve the racing but it was a start.

Edited by rye&ginger, 22 June 2009 - 19:47.


#196 JPW

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Posted 22 June 2009 - 19:48

Now, why did FIA set the price so low? And why was Bernie the only one invited to bid?

Now please get your facts straight Anders, the FIA didn't "set the price" and Bernie wasn't the only one invited to bid.
Hell the GPWC even informed about buying the rights but they couldn't agree on or manage a bid.

Read for yourself

#197 JPW

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Posted 22 June 2009 - 19:57

I imagine the teams will be looking to divide up around 85 - 90% of the income in future, not 50%. And if the gross goes down in the short term while GP2010 gets on it's feet, the nett profits returned should still be greater.

Nope 50% of the big pie that Bernie has created will be a lot more than 85 - 90% FOTA can hope for with their imaginary series in an economic climate like this.

And on top of that they will ask less money from the promoters and the public and will get less from the TV companies.

Good luck guys :rolleyes:

#198 Ligier26

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Posted 22 June 2009 - 19:57

Ownership isn't based on merit but finances. You can go on and on about how CVC shouldn't have that much control, haven't earned it, etc etc but the fact is they do own it.

Indeed they do. They own the commercial rights to the FIA Formula One World Championship. No-one disputes that at all. They will still own those rights, to exploit as they see fit.

The problem is that they don't own the things that made those rights valuable in the first place. The teams do. And the teams are out of contract, because the oh-so-clever CRH couldn't find a way to keep them contented and on-side. That's the CRH's fault, however it happened. The CRH does not own the 'property' of Ferrari or the 'property' of Lewis Hamilton, to use just two high-profile examples, so to build a business model based on, at best, a 'proxy-ownership', is deeply flawed.

And please, before you or anyone else accuses me of being a 'wannabe CEO' or not 'understanding basic business', let me assure you that my CV (resume) would suggest otherwise. I know that sounds arrogant, but it doesn't make it untrue. Funnily enough, a few years ago I led a 'carve out' of my 'high-value team' because the people I was working for at that time wanted the cash-cow, but not to share the profit of that cash-cow with those who had created it and upon whom they utterly relied to sustain it (not banking or finance, before you jump to that conclusion). Despite some initial sabre-rattling, there was no legal action, because eminent barristers agreed that no judge would have upheld either an injunction or damages in those circumstances over Joe Public's right to earn a crust. EU law, don't you just love it? Besides, as 'the players', we were all indemnified by the new 'ring-master' who was happy to take the risk of uncertain litigation in exchange for a more-or-less guaranteed ongoing income... which was shared more equitably with 'the players', of course.

The moral of this story is that, based on personal experience, if you rely on the income from an 'asset' that you don't own, you really ought to make sure that said 'asset' doesn't upsticks and leave you with nothing but a bit of paper.

Edited by Ligier26, 22 June 2009 - 20:03.


#199 whitewaterMkII

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Posted 22 June 2009 - 19:58

Ownership isn't based on merit but finances. You can go on and on about how CVC shouldn't have that much control, haven't earned it, etc etc but the fact is they do own it.

Own what again?
What do they own?
Some expired contracts that BE sold them?
A 100 year agreement with the FIA to sell the racing branded as the World Championship the FIA puts on?
Both the FOM and Concorde agreements are expired.
They definitely don't own the FOTA teams.
The FOTA teams can race wherever and whenever they want.


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#200 Ross Stonefeld

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Posted 22 June 2009 - 19:58

No one is disputing that.