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#201 Dragonfly

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Posted 22 June 2009 - 20:02

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

And why was Bernie allowed to resell?


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#202 Anders Torp

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Posted 22 June 2009 - 20:07

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

Sure, that's the Max'n'Bernie version.

Since you know the facts: Apart from Bernie - and maybe GPWC - who else was invited to bid? And how come the price was so low?

#203 ray b

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Posted 22 June 2009 - 20:35

exactly what does CVC own and what does B E own apart from a bit of CVC
and what does the FIA own and or rent to the CVC or B E
tv rights is CVC
rights to new races and fees for the existing races is that CVC owned BE owned or FIA owned or is it split
tracks does CVC own any?
does B E own any tracks now?
ads at tracks
sales at tracks food drink and stuff
sales apart from the track sites on the web mail order or in shops ie caps t shirts ect
film or tapes of events I guess that CVC under tv rights?
books?

is there any other income going to FIA CVC or B E control CORPS from f-1
one thing that comes to mind is the new very high points based FIA super licence fees
but there must be other stuff

and how is the income split
CVC and B E do pay some % of the TV rights to the teams [ around 40%]
but what about the track fees ?
income from track ads
income from track sales
and the ticket sales
do the teams get a % of any of that income
does the FIA
does B E get income apart from thru the bit of CVC he owns

Edited by ray b, 22 June 2009 - 20:44.


#204 pspidey

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Posted 22 June 2009 - 20:43

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.


:up: :up: :up: :up: :up:

Exactly, he doesn't really have a point other than to insult those people who want to have a breakaway, as supposedly not understanding business. While he does. I wonder if he spends all day just patting himself on the back.

The rest of us apparently are just naive dummies. This in spite of the fact that he has added absolutely nothing that we didn't know already.


#205 JPW

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Posted 22 June 2009 - 20:50

Sure, that's the Max'n'Bernie version.

Of course but I haven't seen it disputed yet and I haven't seen anybody providing quotes to the contrary.

Since you know the facts: Apart from Bernie - and maybe GPWC - who else was invited to bid? And how come the price was so low?

Nobody was invited explicitly afaik but it was no secret the rights were for sale, it was upto people/companies/GPWC to offer and Bernie did, GPWC informed about it but didn't offer.
Now $300M isn't exactly the jackpot I agree but you know hindsight is 20/20, the FIA/WMSC/FIA-senate agreed on the deal and that was it.

#206 Clatter

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Posted 22 June 2009 - 20:55

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


Where in that article does it say anyone else was invited to bid?

#207 Clatter

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Posted 22 June 2009 - 20:59

Nobody was invited explicitly afaik but it was no secret the rights were for sale, it was upto people/companies/GPWC to offer and Bernie did, GPWC informed about it but didn't offer.
Now $300M isn't exactly the jackpot I agree but you know hindsight is 20/20, the FIA/WMSC/FIA-senate agreed on the deal and that was it.


Secret or not, the correct thing to have done would have been to ask for tenders.

#208 Anders Torp

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Posted 22 June 2009 - 21:07

Nobody was invited explicitly afaik but it was no secret the rights were for sale, it was upto people/companies/GPWC to offer and Bernie did, GPWC informed about it but didn't offer.
Now $300M isn't exactly the jackpot I agree but you know hindsight is 20/20, the FIA/WMSC/FIA-senate agreed on the deal and that was it.

So you don't find it strange that FIA didn't try to get more bidders? Or that FIA didn't make sure that they would get some of the money if/when Bernie sold the rights?

If you want to do an auction properly "no secret" isn't good enough. The whole process seems strangely amateurish.




#209 JPW

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Posted 22 June 2009 - 21:18

If you want to do an auction properly "no secret" isn't good enough. The whole process seems strangely amateurish.


Secret or not, the correct thing to have done would have been to ask for tenders.


LOL you guys really think I'm gonna argue about a deal done so many years ago? :lol:

Hindsight is 20/20 boys if you could've done better you should have been there, the GPWC guys were there and they had the opportunity but alas they couldn't agree on an offer and missed out on a good deal.

Sure $300M isn't great by today's standards and you've a good point Anders about the FIA failing to get a piece of the resale profits but it's all too easy critiqueing now from behing the PC years after the fact.

#210 Clatter

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Posted 22 June 2009 - 21:29

LOL you guys really think I'm gonna argue about a deal done so many years ago? :lol:

Hindsight is 20/20 boys if you could've done better you should have been there, the GPWC guys were there and they had the opportunity but alas they couldn't agree on an offer and missed out on a good deal.

Sure $300M isn't great by today's standards and you've a good point Anders about the FIA failing to get a piece of the resale profits but it's all too easy critiqueing now from behing the PC years after the fact.


Doing business in the correct manner is not 20/20 hindsight. If the rights were too be sold then a competive tender should have been issued.

#211 Anders Torp

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Posted 22 June 2009 - 21:36

Hindsight is 20/20 boys if you could've done better you should have been there, the GPWC guys were there and they had the opportunity but alas they couldn't agree on an offer and missed out on a good deal.

Sure $300M isn't great by today's standards and you've a good point Anders about the FIA failing to get a piece of the resale profits but it's all too easy critiqueing now from behing the PC years after the fact.


Maybe you needed the hindsight but it was obvious already when the deal was announced that 300 million USD was indeed a bargain. Which is why there's probably more to this story than your "facts".

Maybe GPWC could have made an offer but since the conditions were not clear FIA could easily have modified them to suit Bernie anyway.

LOL you guys really think I'm gonna argue about a deal done so many years ago? :lol:

So why do you? :p






#212 Muz Bee

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Posted 22 June 2009 - 21:41

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:

That's really your opinion? Or just the wishful thinking of someone who seems to hate "the teams"?

The entertainment value of XYZ GP Series is dependent on a whole lot of things. If we assume, and it's now a fair assumption that
FOTA group of 8 remain intact,
that their contracted drivers stay with them,
that many of their sponsorship deals are renegotiated for new series,
That the vast majority of fans stay true to the "real racing"

THEN the TV deals done will be no great amount worse than current. IMG are not known to be mugs when it comes to this sort of thing so the main deflationary component is world economic timing. I work in TV sport and the early signs for television motorsport deals is - tight market but holding firm. Everyone is committed to TV because it oils the corporate machine with growth potential.

It disappoints me that someone here seems so gleeful of a pessimistic forecast. I can hear your smug predictions of doom for FOTA, well I look back over the past 2 weeks and I see a pendulum which has swung from the balance to very, very one-sided. There is one thing which is definite - Max is GONE. He still hasn't realised it yet but he is GONE. And yes, I am pleased because despite his chance to broker a better thing he put himself and his overinflated ego above the sport. :clap:

That Bernie is probably also gone is slightly sadder for me because I recognise a lot he did wrong until he became ridiculously greedy. He had the chance to be a very rich AND satisfied man looking back on his life. Now that is unlikely.

#213 JPW

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Posted 22 June 2009 - 21:56

That's really your opinion? Or just the wishful thinking of someone who seems to hate "the teams"?

It's called reality dude, I don't hate "the teams" at all, even better some of my fav teams have joined FOTA.
But FOTA don't stand a chance, they'll have to find a compromise with Bernie/Max/CVC or there will be no racing at all next year.

There will be less money from the TV contracts, less from the promoters, less from the public and so on.
The thing is doomed from the start that's why they'll compromise in the end.

#214 whitewaterMkII

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Posted 22 June 2009 - 22:11

But FOTA don't stand a chance, they'll have to find a compromise with Bernie/Max/CVC or there will be no racing at all next year.

At this point they would probably be better off if they didn't.
If they bend to Max's ego at this point they will be beat like red headed step children for the rest of careers under his thumb.


#215 pspidey

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Posted 22 June 2009 - 23:54

It's called reality dude, I don't hate "the teams" at all, even better some of my fav teams have joined FOTA.
But FOTA don't stand a chance, they'll have to find a compromise with Bernie/Max/CVC or there will be no racing at all next year.

There will be less money from the TV contracts, less from the promoters, less from the public and so on.
The thing is doomed from the start that's why they'll compromise in the end.


No, it's your frickin opinion. Nothing more. You have access to no more facts than anyone else here. And talking about the future when you're talking about 'reality'!! That's pretty amazing - you got a time machine?

We simply have different *opinions*.

Now my _opinion_ is that the only way FOTA will agree not to create a breakaway at this point is if they get significant concessions - much more than would originally have been the case if Max hadn't pushed them to this point. And, I'd be very surprise to see Max still around. If he still is, it will be because he has been effectively neutered, with nothing like the political influence or control he once had.


#216 mattorgen

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Posted 23 June 2009 - 00:06

my _opinion_ is that the only way FOTA will agree not to create a breakaway at this point is if they get significant concessions - much more than would originally have been the case if Max hadn't pushed them to this point.

I'm not even sure if the departure of Mosley is enough for FOTA. It will take two months to replace him and the teams cannot sign to new regulations in the meantime because they are the two-tier ones. By the time the new president starts to write the regulations it will be September and the teams will know that if the new president writes regulations they do not like then they have no time to start a rival series by then.

#217 royalblue0

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Posted 23 June 2009 - 01:52

And why was Bernie allowed to resell?


According to Wiki most of his F1 stake went into his Family Trust - Bambino Holdings. Around the time of the sale there was a possibility that Bernie might need a heart operation. The family trust, over which he allegedly has no control, decided to sell its stake in F1 to secure the family inheritance should anything happen to him.

#218 Muz Bee

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Posted 23 June 2009 - 02:08

Until about 10 days ago I was in two minds whether a compromise would be found. Now it is clear that any compromise won't include Mosley.

I don't think Flav Briatore would have issued the serious dismissal of Max yesterday if he and his FOTA members felt they may still have to live with Max. With Max still holding sway Flav and Renault would be in for some, shall I put it this way, unfavourable interpretations. I was so impressed Briatore left us (and Max) in no doubt that he isn't going to eat Max's shite any longer. Very neat :up: and they have homed in on another of Max's weaknesses, his foul temper. Every time he opens his mouth Max either is; putting more evidence on record of his unfitness to govern,
he's trying to paint the picture how it isn't,
or he's retracting in a small-mindedly unrepentant way.

I actually enjoy the opinions of those here who disagree with the majority viewpoint. I know what being in the minority opinion is like so I don't perceive minority as "wrong". I simply have seen so little evidence that the Mosleyites have it right - in the past it turned out that way because Max ruled by fear, as well as divide and rule, plus distort the facts for those who can't think for themselves. Now that Max is not feared and is an object of ridicule nobody fears him - he is on his way out. Shut the door behind you Max. :wave:


#219 kar

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Posted 23 June 2009 - 05:45

To be honest the focus on Max is wrong. Ecclestone and CVC are just as big a sticking point. Although Max was right on the weekend when he said when they / if they got rid of him they would come after Bernie and CVC.

It remains to be seen what CVC could do about it in such a case, facing a unified FIA and Team Association.

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#220 Racer Joe

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Posted 23 June 2009 - 06:30

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.


I suggest you go back and re-read where I have quoted you and asked the question. You were saying the commerical interest of the sport should rest with people who care about the long term health of the sport, and I agree with you on that, but I was thinking you meant the teams.

My point is that the teams have been screwing around for years and relied on Bernie because of a combination laziness, stupidity, myopia and lack of cohesion. They have made that bed and are now sleeping in it until they either get the commercial rights back or go race in another series.

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.


You mean Bernie has been doing most of that and CVC merely purchased the same business and carries on in the same manner?

The exploitation has been going on for at least 10 years.

#221 Racer Joe

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Posted 23 June 2009 - 06:34

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


Investors don't run the sport.

#222 kar

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Posted 23 June 2009 - 07:03

Investors don't run the sport.


CVC, through their agent Ecclestone, most certainly do. At least in terms of determining where we go, when, and for how much. Indeed the paddock itself is controlled by FOM as is media access and so on.

Investors most certainly run a lot of things surrounding this sport.

#223 Clatter

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Posted 23 June 2009 - 07:13

I'm not even sure if the departure of Mosley is enough for FOTA. It will take two months to replace him and the teams cannot sign to new regulations in the meantime because they are the two-tier ones. By the time the new president starts to write the regulations it will be September and the teams will know that if the new president writes regulations they do not like then they have no time to start a rival series by then.


Disagree there.

If the FIA sack Moseley then they could easily dump all the 2010 stuff and state that 2010 will be run under the same rules as 2009. Whether that would be enough for FOTA at this time I don't know. They can then go through their due process to elect a new president without any need to rush that process. Negotiations for future rule changes can then start anew.

#224 cmgoodman

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Posted 23 June 2009 - 07:41

I appreciate all the discussion above about CVC and its control of F1, but would clarify a few things. It is worthwhile to read the article at Wikipedia about the Formula One Group -
http://en.wikipedia...._Administration, since the corporate structure of Formula One Group is byzantine to say the least. One should also read http://www.nablopomo...BlogPost:162561 and http://www.grandprix...ns/ns16720.html to understand the who nomenclature - from alpha to omega.
At the top CVC And Bernie have controlling interest of Delta TopCo, among other companies, which owns controlling interest of Alpha Prema, which owns the Formula One Group of companies, which mostly control the commercial rights of Formula One racing. Note the F1 is really a trademark, and the pertinent companies of interest is FOA, which hold the rights from FIA of Formula One, and FOM, which controls the media distribution of Formula One Races. Note there are separate companies for control of GP2.

While CVC and Bernie E. control Alpha Prema UK Limited now, the impending divorce of Bernie Ecclestone from Slava Ecclestone may result some of the controlling interest of Alpha Prema going into her hands, which will introduce a joker into the mix. Right now, CVC and Bernie through Alpha Prema have to pay loan payments on notes, when CVC took control of SLEC (the previous holding company for Formula One Group) back in 2005-2006. They took out these loans during the corporate acquisition, with amounts totaling over $2 billions. They have to make payments of $260 millions per year to avoid default. They collect various money from race fees, media companies and concessions carrying the Formula One trademarks. The accounting of these companies can show individual profit and losses, so to say one is losing money, yet overall, there is profit going someplace.
If FOTA / ACEA form their own series, the commercial value of Formula One may fluctuate, and the crux of the issue will be payment of the notes for the loans by Alpha Prema. If "anyone" becomes insolvent, it will be probably Alpha Prema, allowing some protection for CVC and Bernie E. To obtain the commercial rights for Formula One, one has to purchase either Delta TopCo or Alpha Prema UK Limited.

The byzantine corporate structure has evolved over time with various acquisitions of the right of Formula One, since Bernie started selling the rights of Formula One, when he initially set up SLEC and Bambino Holdings - please look at the Wikipedia article the history. Right now, the old three banks - Bayerische Landesbank, J.P. Morgan, and Lehman Brothers are out of the picture since 2006. Bernie E. is the CEO of Alpha Prema, and hence the head honcho. If the money going into Formula One Group plateaus, the corporate structure may become financially unstable, and may need to be restructured. FOTA cannot easily access the money going into Formula One, because of the byzantine nature.

In breaking away, FOTA with a new series, can gain direct access to the money generated by the new series, control the regulations of the new series more easily, and probably promote the financial instability of the current Formula One Series through Alpha Prema, et al. Once insolvency results, FOTA has de facto control of the new series, and how the commercial and intellectual properties rights of Formula One will be determined by the courts and creditors. BTW the magic address for Alpha Prema UK Limited and Formula One Group is 6 Princes Gate, London, UK. However, I doubt you would find Bernie or CVC visiting there frequently, and would not find anyone of much authority at the address. So, it is much like a good Marx Brothers comedy, where the audience does not know what to expect next.

As for Max, while he is titular head of FIA, I find him to be figure, who through the various actions and regulations have had the constructor teams jumping through various hoops, increasing their costs, siphoning off their revenues with the occasional fine, and affecting the strategic direction. He has no direct financial involvement with Alpha Prema, that I can discern, but has the controlling influence at FIA. The most recent problems with budget caps and efforts to resign the Concord Agreement, have been efforts to limit the legal and financial options for the constructor teams. I don't think he really knows much about the finances directly, but he is a rather smart guy, and certainly enjoys the power he holds now.

I think the big unknown quantity here will be the divorce proceedings of Bernie, and whether Slava receive a lump sum money payment, or more ominously a equity interest in Alpha Prema and as a result of the Formula One Group. She might attempt to force Bernie out of power, or complicate matters by insisting on more money. That may results in less money going to the teams. If overall revenues for Formula One Group drop off with FOTA splitting off, and if Alpha Prema becomes insolvent or delinquent in loan payments, then the accountants, lawyers and judges get involved, and the teams would little input into where the money goes. I can't blame the teams for walking away, and in general, I think the sporting public, i.e. the fans will probably enjoy the new series more.

#225 taran

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Posted 23 June 2009 - 12:39

I find it funny that so many people think this is easy to do, or that screwing over CVC is a simple proposition - the sale of the rights was legal - as soon as FOTA announces the new series, given they have openly stated that they want to get rid of CVC - the lawsuits begin.

At issue - FOTA deliberately setting up a rival series to destroy a valid venture capital deal. Once the big capital firms enter the fray - game over. Their lawyers will eat FOTA for lunch.


I don't think it works that way. Anyone is entitled to start a business (or sport). CVC doesn't own the right to all top level monoposte racing. There are no binding contracts between the teams and CVC linking them to a CVC series (not since the concorde agreement lapsed) so CVC has no grounds to sue them, especially if they have not been paying (all) teams.

So if CVC tried to sue they would find numerous anti-cartel/anti-competition agencies baying for their blood....
And then it really would be game over....for CVC. If its a matter of Fota against CVC lawyers, my money would be on Fota. They have extensive lobby organizations and "represent" real jobs, not cushy bankers or vampire funds.

You don't need Nelie Kroes' private phone number to know how that confrontation will end.





#226 Ross Stonefeld

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Posted 23 June 2009 - 12:43

You don't think CVC and the rest of that industy don't have legal teams either? They're in a much more precarious position to begin with so they are very careful that they are within the rules.

#227 dabrasco

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Posted 23 June 2009 - 12:52

CVC or FIA cant force the teams to remain in F1. The best they can hope for is some sort of monetary compensation for breach of contract.



#228 eff1fan

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Posted 23 June 2009 - 12:56


I wonder how much money Mosley and his cohorts made by giving Bernie the commercial rights for 100 years.


#229 JPW

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Posted 23 June 2009 - 13:02

CVC or FIA cant force the teams to remain in F1. The best they can hope for is some sort of monetary compensation for breach of contract.

Yes that's going to be a fun discussion in some boardroom:

Yes Gov we need $100M extra budget because we have to compensate old F1 for not running in their $45M budget series, so now we'll just run in the new unlimited budget FOTA series and even receive less income from it too.

 ;)



#230 mattorgen

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Posted 23 June 2009 - 13:04

I don't think it works that way. Anyone is entitled to start a business (or sport). CVC doesn't own the right to all top level monoposte racing.

Very true and even an understatement. As I posted in another thread, formula one is just a discipline and there is a legal right for competing series within this discipline to be possible.

Edited by mattorgen, 23 June 2009 - 13:10.


#231 Orin

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Posted 23 June 2009 - 13:11

I wonder how much money Mosley and his cohorts made by giving Bernie the commercial rights for 100 years.


The rumour is $300M. Rather neat if true, Mosley hands Ecclestone the rights for $300M, Ecclestone sells them on for $2BN and passes $300M to Mosley. Ecclestone nett income $1.4BN, Mosley income $300M, FIA income $300M. After which, Mosley thought it prudent to relocate to Monaco...

#232 whitewaterMkII

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Posted 23 June 2009 - 13:16

CVC or FIA cant force the teams to remain in F1. The best they can hope for is some sort of monetary compensation for breach of contract.

I suppose they could, but seeing as they have no contract with the FOTA teams, the FOTA have breached no contracts.


#233 whitewaterMkII

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Posted 23 June 2009 - 13:18

You don't think CVC and the rest of that industy don't have legal teams either?

Apparently not.
If they had legal representation they would have been advised of the scenario that could happen if they didn't get the Concorde agreement renewed.
Too late now.



#234 metz

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Posted 23 June 2009 - 13:34

The rumour is $300M. Rather neat if true, Mosley hands Ecclestone the rights for $300M, Ecclestone sells them on for $2BN and passes $300M to Mosley. Ecclestone nett income $1.4BN, Mosley income $300M, FIA income $300M. After which, Mosley thought it prudent to relocate to Monaco...

....and take no salary.

#235 pspidey

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Posted 23 June 2009 - 15:08

Yes that's going to be a fun discussion in some boardroom:

Yes Gov we need $100M extra budget because we have to compensate old F1 for not running in their $45M budget series, so now we'll just run in the new unlimited budget FOTA series and even receive less income from it too.

;)


Most of them have no contracts, but don't let the facts get in the way of you spouting bollocks.


#236 Gareth

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Posted 23 June 2009 - 15:17

Or that FIA didn't make sure that they would get some of the money if/when Bernie sold the rights?

Doing this would have breached the EU competition requirements. So that was a no go.

#237 Anders Torp

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Posted 23 June 2009 - 15:24

Doing this would have breached the EU competition requirements. So that was a no go.

OK. All the more reason to get as much as possible out of the original sale.


#238 David M. Kane

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Posted 23 June 2009 - 15:28

It is what the US Marines call a cluster fcuk. I think CVC is sitting on shakey ground; and I can't believe Bernie and Max have any real legal grunt in the legal issues.

#239 David M. Kane

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Posted 23 June 2009 - 15:29

It is what the US Marines call a cluster fcuk. I think CVC is sitting on shakey ground; and I can't believe Bernie and Max have any real legal grunt in the legal issues.

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#240 Gareth

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Posted 23 June 2009 - 15:50

The rumour is $300M. Rather neat if true, Mosley hands Ecclestone the rights for $300M, Ecclestone sells them on for $2BN and passes $300M to Mosley. Ecclestone nett income $1.4BN, Mosley income $300M, FIA income $300M. After which, Mosley thought it prudent to relocate to Monaco...

Ecclestone sold 75% of FOM to Kirch for $1bn - valuing the whole lot at $1.35bn. At that time, the revenue was being generated by the 15 year deal that was entered into in 95 and the revenue would continue to be generated by that deal for the next 9 years. So of that $1.35bn valuation, a good proportion of the value would come from the 15 year deal and not the 100 year deal. On a discounted cashflow method of valuation (value an asset based on the income you project to receive, discounted as a result of the time it will take to receive that money) using a discount rate of 10% (ie for a guarantee of obtaining £110 in one year's time, you would pay £100 today) a year's income in 2010 would have been worth less than half that of a year's income in 2001. And that's without taking into account the (obviously, now) possibility of a breakaway series! I think the Kirch purchase actually bolsters the case that the $300m deal wasn't the daylight robbery everyone thinks it was.

Just to bring this even more into focus: had Bernie stuck the $300m in a bank account in 2000 and made a mere 5% pa for the 10 years to the start of the 2010 season, he would now be sitting on just shy of $500m. Instead of that $500m he has an agreement with the FIA from which he has yet to see one penny. If the breakaway series goes ahead and F1 dies, he will have given up a certain $500m for absolutely nothing. If that happens, can the mantra of "the FIA was robbed by a bribed Mosley trying to make his pal rich" be changed to "Bernie was robbed"?

Edited by Gareth, 23 June 2009 - 16:00.


#241 kar

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Posted 23 June 2009 - 15:58

Dieter's grapevine is mandatory reading (well it is anyway) this week.

http://www.autosport...cle.php/id/2247

#242 wj_gibson

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Posted 23 June 2009 - 16:01

Dieter's grapevine is mandatory reading (well it is anyway) this week.

http://www.autosport...cle.php/id/2247


Excellent.

Hopefully, articles such as this (and Dodgins' piece on Mosley) can put a stop to much of the infantile nonsense that surrounds threads such as this - e.g. the idea that Max simply thinks for the good of the sport, and the mythical truism that manufacturer teams simply shut their teams down when they feel like it.

Edited by wj_gibson, 23 June 2009 - 16:02.


#243 mattorgen

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Posted 23 June 2009 - 16:03

Ecclestone sold 75% of FOM to Kirch for $1bn - valuing the whole lot at $1.35bn. At that time, the revenue was being generated by the 15 year deal that was entered into in 95 and the revenue would continue to be generated by that deal for the next 9 years. So of that $1.35bn valuation, a good proportion of the value would come from the 15 year deal and not the 100 year deal. On a discounted cashflow method of valuation (value an asset based on the income you project to receive, discounted as a result of the time it will take to receive that money) using a discount rate of 10% (ie for a guarantee of obtaining £110 in one year's time, you would pay £100 today) a year's income in 2010 would have been worth less than half that of a year's income in 2001. And that's without taking into account the (obviously, now) possibility of a breakaway series! I think the Kirch purchase actually bolsters the case that the $300m deal wasn't the daylight robbery everyone thinks it was.

Except for the fact that this detail is not accurate...Here is the true version of events:
Ecclestone (in fact Bambino Holdings) never sold 75% of FOM to Kirch. Bambino sold 50% of SLEC (which ultimately owns FOM) to EM.TV for $987.5m in February 2001. EM.TV then sold 36.75% to Kirch (to be precise, it sold directly to Kirch's subsidiary Taurus Holdings which in turn owned Formel Eins Beteiligungs which in turn owned Speed Investments - the Kirch vehicle for SLEC ownership) for $619m in March 2001 leaving EM.TV with 38.25%. In October 2001 EM.TV then transferred a further 21.55% to Kirch leaving EM.TV with 16.7% and Kirch with 58.3% which is in fact the highest its stake in SLEC ever reached. In April 2002 this stake moved over to Kirch's creditor banks and then in May the following year the 16.7% held by EM.TV was transferred to them.

#244 JPW

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Posted 23 June 2009 - 16:08

Doing this would have breached the EU competition requirements. So that was a no go.

I'm not so sure about that one Gareth, they could have dressed it up like some form of deferred payment and with the FIA not having a say in the resale or the amount the rights were sold for that might have flown with the EU.

Would have been a good question to ask the ex-European Competition Commissioner Karel Van Miert but he was found dead in his garden this morning. RIP

#245 Dragonfly

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Posted 23 June 2009 - 16:16

...........................
If that happens, can the mantra of "the FIA was robbed by a bribed Mosley trying to make his pal rich" be changed to "Bernie was robbed"?

Poor Bernie :cry:


#246 Gareth

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Posted 23 June 2009 - 17:03

Except for the fact that this detail is not accurate...Here is the true version of events:
Ecclestone (in fact Bambino Holdings) never sold 75% of FOM to Kirch. Bambino sold 50% of SLEC (which ultimately owns FOM) to EM.TV for $987.5m in February 2001. EM.TV then sold 36.75% to Kirch (to be precise, it sold directly to Kirch's subsidiary Taurus Holdings which in turn owned Formel Eins Beteiligungs which in turn owned Speed Investments - the Kirch vehicle for SLEC ownership) for $619m in March 2001 leaving EM.TV with 38.25%. In October 2001 EM.TV then transferred a further 21.55% to Kirch leaving EM.TV with 16.7% and Kirch with 58.3% which is in fact the highest its stake in SLEC ever reached. In April 2002 this stake moved over to Kirch's creditor banks and then in May the following year the 16.7% held by EM.TV was transferred to them.

Thanks for some of the detail behind it. One question on this bit:

"Bambino sold 50% of SLEC (which ultimately owns FOM) to EM.TV [...] EM.TV then sold 36.75% to Kirch [...] leaving EM.TV with 38.25%"

Where did EM.TV's extra 25% come from?

#247 mattorgen

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Posted 23 June 2009 - 17:12

Thanks for some of the detail behind it. One question on this bit:

"Bambino sold 50% of SLEC (which ultimately owns FOM) to EM.TV [...] EM.TV then sold 36.75% to Kirch [...] leaving EM.TV with 38.25%"

Where did EM.TV's extra 25% come from?

Sorry, my error - Bambino sold 25% to EM.TV for $987.5m in February 2001 and previously EM.TV had bought 50% of SLEC for $1.8bn in March 2000 from Morgan Grenfell and H&F. I'll add this detail into the chronology so it is all accurate in one place:

Ecclestone (in fact Bambino Holdings) never sold 75% of FOM to Kirch. Bambino sold 25% of SLEC (which ultimately owns FOM) to EM.TV for $987.5m in February 2001. EM.TV already had a 50% stake in SLEC which it bought for $1.8bn from Morgan Grenfell and H&F in March 2000. EM.TV then sold 36.75% to Kirch (to be precise, it sold directly to Kirch's subsidiary Taurus Holdings which in turn owned Formel Eins Beteiligungs which in turn owned Speed Investments - the Kirch vehicle for SLEC ownership) for $619m in March 2001 leaving EM.TV with 38.25%. In October 2001 EM.TV then transferred a further 21.55% to Kirch leaving EM.TV with 16.7% and Kirch with 58.3% which is in fact the highest its stake in SLEC ever reached. In April 2002 this stake moved over to Kirch's creditor banks and then in May the following year the 16.7% held by EM.TV was transferred to them.

Edited by mattorgen, 23 June 2009 - 17:12.


#248 Gareth

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Posted 23 June 2009 - 17:17

Thanks for the clarification :up:

#249 mattorgen

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Posted 23 June 2009 - 17:26

Thanks for the clarification :up:

No problem. Given the chronology, I would say that the best markers for valuing the 100 year deal would be the $987.5m for 25% (which is three times more than the $1bn for 75% in the original working out) or the $487m (I think - would need to check the Bloomberg terminal for this) for 25% sold to CVC in 2006. If we take the latter of course we need to adjust the length of time left on the FIA/FOA contract accordingly.

#250 Orin

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Posted 23 June 2009 - 22:23

If the breakaway series goes ahead and F1 dies, he will have given up a certain $500m for absolutely nothing. If that happens, can the mantra of "the FIA was robbed by a bribed Mosley trying to make his pal rich" be changed to "Bernie was robbed"?


I suspect not. The Tony Dodgins article reckons Ecclestone has siphoned off £6BN from F1.