63 replies to this topic

[Fatgadget]

Who are these guys?

[ANF]

http://en.wikipedia....apital_Partners

[DutchQuicksilver]

They run the show.

[pdac]

I'm sure someone will come up with a more accurate picture, but it goes something like this:

 

The FIA sold the commercial rights to a company owned by Bernie Ecclestone for a pittance. He then ran with it, made many very lucrative commercial deals, turned the whole thing into a big money spinner, big'd it up and sold most of it for a vast personal gain. Then it went through a few owners as people found out that they couldn't get as much out of it as the thought until it finally ended up in CVC's hands.

[Fatgadget]

They CVC (whoever they are!) seem pretty adept at keeping under the rader given they are the head honchos of FI!

[Petroltorque]

The problem with Venture Capital is they see investments as high risk and only want to extract as much profit from the vehicle as fast as possible. I can see what thye think is ideal; divide the existing pot between 5 teams and let the rest go to the wall. However how do you sell a 5 team championship to the public. The viewership must have dropped after F1 went behind a pay wall. The race promoters not funded by government backing won't be happy with this scenario. Meanwhile the FIA looks on inactive as Ecclestone CVC deliver the coup de grace.

Edited by Petroltorque, 09 November 2014 - 16:52.

[grahamshevlin]

The FIA is doing nothing, waiting to see if FOM breaches its agreement with them on the management of the sport. If FOM breaches the agreements, then the FIA can claim back the commercial rights. Since those rights were sold for a ludicrously small sum of money, the FIA would love that since it would be able to set up a commercial rights structure giving it a LOT of money per year. 

[KingTiger]

Leaches that are the main reason we have a pitiful grid where half the teams are struggling to make ends meet. 

[payinkind]

CVC is Private Equity, not Venture Capital. Big difference.

 

CVC acquired a majority (?) stake in F1 using a LOT of debt (effectively what we call a leveraged buyout). Therefore, they need to siphon a lot of the income generated to 1) repay debt/interest and 2) pay themselves a dividend to satisfy their hurdle rate (of return).

[Wingcommander]

Leeches. That's what they are. Leeches.

[Kristian]

I think it all started when Bernie sold up to Kirch Media. Then they went bust, and CVC swooped in, seeing it as a good investment for themselves at a cheap price. 

 

I might be completely wrong, I wasn't really interested in the business side of F1 back in the day, so please correct me if so!

[KWSN - DSM]

CVC is Private Equity, not Venture Capital. Big difference.

 

CVC acquired a majority (?) stake in F1 using a LOT of debt (effectively what we call a leveraged buyout). Therefore, they need to siphon a lot of the income generated to 1) repay debt/interest and 2) pay themselves a dividend to satisfy their hurdle rate (of return).

 

When reading like that it really seem as if it should not be legal, I know that it is but still.

 

[F1matt]

CVC have been looking to float the sport for a few years or looking to sell it on and the bottom line is they are looking to make a profit, they need to make the figures look as impressive as possible so they won't be keen on giving the teams extra money or inject any more capital into the sport.

[Petroltorque]

CVC have been looking to float the sport for a few years or looking to sell it on and the bottom line is they are looking to make a profit, they need to make the figures look as impressive as possible so they won't be keen on giving the teams extra money or inject any more capital into the sport.

A Classic Pump and Dump.

[Petroltorque]

CVC is Private Equity, not Venture Capital. Big difference.
 
CVC acquired a majority (?) stake in F1 using a LOT of debt (effectively what we call a leveraged buyout). Therefore, they need to siphon a lot of the income generated to 1) repay debt/interest and 2) pay themselves a dividend to satisfy their hurdle rate (of return).

I stand corrected. IIRC the purchase of Man U was another heavily leveraged buyout. I suppose it works if your investment retains its value but F1 seems built on pretty weak foundations.

[slideways]

After pushing through the sale against anti competition calls outside of the federation, Mosley moved to Monaco and received a personal "gift" of the same amount the rights to 100 years were sold for... $316 mil...

The FIA is the only one to blame. They were too punch drunk on the Lear jets and 'prestige' that Mosley and Ecclestone generated to care about the future.

[Nathan]

F1 is built on a weak foundation? Lol...ohh the things people come up with...

 

The contradictions are impressive "they don't know what they are doing and are killing the sport"..."they are doing whatever they can to make it look more valuable to sell"....errr....

If the teams ran FOM do you think they would be raising as much revenue as Bernie has been?

 

[Petroltorque]

F1 is on a weak foundation because It's being run to suit CVC requirements. Ecclestone paid large disbursements to encourage the top teams to sign bilateral agreements, a strategy group made of said teams to set the regulations, lack of agreement over engine development, no renumeration to smaller independents. You might consider this a bright future but commercial markets do not. People who make living betting against the market end up going bust pdq.

[pdac]

F1 is built on a weak foundation? Lol...ohh the things people come up with...

 

The contradictions are impressive "they don't know what they are doing and are killing the sport"..."they are doing whatever they can to make it look more valuable to sell"....errr....

If the teams ran FOM do you think they would be raising as much revenue as Bernie has been?

 

 

That's the point though, they raise a ton of revenue because of the way it's been founded and developed. But because the foundations are weak it means that, now the worlds finances have changed, they will not make that amout in years to come. Add that to the fact that they now need to make that amount and more (to service CVC's debts) and you end up with something that's starting to look like toppling over.

[Nathan]

CVC requirements are for Formula-1 to be successful.  Stupid businessmen milk cows dry.  I don't think CVC are stupid.

There has been investments made if you look at it, and as smart business folk do they were and are being done in ways that will add value for all involved.

 

Here are Formula-1's foundations...

- 65 years of history

- Near $2 billion in revenues that are not just going to disappear because 4 teams went belly up.

- The image of being the best of everything auto racing 

- Fantastic entertainment (thus media coverage)

- Being a top level B2B platform

- Having a value of many billions.

- Financial security for the 5 most important and valuable teams. 

 

The sport has to be made cheaper.  I will grant you if the bigger teams were given less money then they would have to spend less.

I don't think many stock brokers are going to lose sleep investing in F1 simply because the last place teams are closing their doors.  They probably get extra sleep knowing the sport takes care of the ones the fans (and sponsors...) actually follow and pay money to support.

Edited by Nathan, 11 November 2014 - 16:03.

[Petroltorque]

CVC requirements are for Formula-1 to be successful.  Stupid businessmen milk cows dry.  I don't think CVC are stupid.

There has been investments made if you look at it, and as smart business folk do they were and are being done in ways that will add value for all involved.
 
Here are Formula-1's foundations...
- 65 years of history
- Near $2 billion in revenues that are not just going to disappear because 4 teams went belly up.
- The image of being the best of everything auto racing 
- Fantastic entertainment (thus media coverage)
- Being a top level B2B platform
- Having a value of many billions.
- Financial security for the 5 most important and valuable teams. 
 
The sport has to be made cheaper.  I will grant you if the bigger teams were given less money then they would have to spend less.

I don't think many stock brokers are going to lose sleep investing in F1 simply because the last place teams are closing their doors.  They probably get extra sleep knowing the sport takes care of the ones the fans (and sponsors...) actually follow and pay money to support.

I think some of your surmises require closer scrutiny;
Granted FOM's turnover is close to $2 billions, however much of CVC's revenues are HEAVILY leveraged to service outstanding loans.
All that 'fantastic' racing is not translating into increasing viewership. in fact F1 viewership has been falling for the past 5 years.
Business to business synergy, maybe but that's not being translated into new sponsors for the teams or GP promotors and the global economy is in a financial downturn
F1 has been expanding into politically unstable regions, sic, Aberzaijan, Bahrain, Russia to service its needs for increasing revenues, that is hardly stability.
I would point out that a championship consisting of 5 teams is not F1 and is not what the FIA or the race promotors have signed up to.
Nor is there such a thing as Financial security for the top 5 teams. In an ever increasing expenditure manufacturers are at the mercy of their accountants and shareholders. It's not as though we haven't seen car manufacturers find other ways to spend their marketing dollars.

[Fastcake]

CVC requirements are for Formula-1 to be successful.  Stupid businessmen milk cows dry.  I don't think CVC are stupid.

There has been investments made if you look at it, and as smart business folk do they were and are being done in ways that will add value for all involved.

 

Here are Formula-1's foundations...

- 65 years of history

- Near $2 billion in revenues that are not just going to disappear because 4 teams went belly up.

- The image of being the best of everything auto racing 

- Fantastic entertainment (thus media coverage)

- Being a top level B2B platform

- Having a value of many billions.

- Financial security for the 5 most important and valuable teams. 

 

The sport has to be made cheaper.  I will grant you if the bigger teams were given less money then they would have to spend less.

I don't think many stock brokers are going to lose sleep investing in F1 simply because the last place teams are closing their doors.  They probably get extra sleep knowing the sport takes care of the ones the fans (and sponsors...) actually follow and pay money to support.

 

The revenue has been raised in the last few years by pushing out traditional and successful venues in favour of collecting mega-bucks from unstable dictatorships, and raising the broadcast revenue by abandoning free TV in many countries. Neither move is doing anything other than weakening Formula One's foundations for short term profit making.

[EthanM]

The revenue has been raised in the last few years by pushing out traditional and successful venues in favour of collecting mega-bucks from unstable dictatorships, and raising the broadcast revenue by abandoning free TV in many countries. Neither move is doing anything other than weakening Formula One's foundations for short term profit making.

 

yet soccer survives behind paywalls and occasionally says thanks to random "unstable" countries paying millions (bribes aside) to host one of the international tournaments.

 

The only big failure I can see in F1 is that they so far have failed to join the 21st century as far as people's viewing habits go .. ie embracing digital media, other than that, the teams themselves are happy getting 50m from some random venue in God knows where over 0m from "historic european circuit"

[Petroltorque]

The business model for soccer is completely different. The premier league controls its own rights and thus is capable of channelling money down the pyramid in a sustainable manner. That does not happen in F1.

[Fastcake]

yet soccer survives behind paywalls and occasionally says thanks to random "unstable" countries paying millions (bribes aside) to host one of the international tournaments.

 

Football has a far bigger audience, and has an inbuilt advantage of being easy to play and accessible to millions of schoolchildren, creating the next generation of supporters. It can sustain being behind a pay wall.

 

Motorsport is a niche activity, participated in by only a wealthy few, and is being dragged down by a declining interest in cars across western countries. If people cannot watch or participate in the sport, where are the new supporters going to come from?

 

And making any comparison to FIFA and the world cups given to Russia and Qatar hardly strengthens your argument.

 

The only big failure I can see in F1 is that they so far have failed to join the 21st century as far as people's viewing habits go .. ie embracing digital media, other than that, the teams themselves are happy getting 50m from some random venue in God knows where over 0m from "historic european circuit"

 

 

Yes, and that's the problem. The teams are more than happy to accept the money from war zones, tyrants, and countries under sanctions, regardless of the fact it does nothing good for F1's reputation, and it only takes one regime change for the money to be wiped out. The traditional circuits don't pay as much upfront, but they create the audience that actually pays and watches the sport.

 

The business model for soccer is completely different. The premier league controls its own rights and thus is capable of channelling money down the pyramid in a sustainable manner. That does not happen in F1.

 

Well it doesn't, they keep the money for themselves and hand out a pittance. But I suppose at least they don't have teams dropping out the Premier League midseason.

[Murl]

CVC requirements are for Formula-1 to be successful.  Stupid businessmen milk cows dry.  I don't think CVC are stupid.

There has been investments made if you look at it, and as smart business folk do they were and are being done in ways that will add value for all involved.

 

Here are Formula-1's foundations...

- 65 years of history

- Near $2 billion in revenues that are not just going to disappear because 4 teams went belly up.

- The image of being the best of everything auto racing 

- Fantastic entertainment (thus media coverage)

- Being a top level B2B platform

- Having a value of many billions.

- Financial security for the 5 most important and valuable teams. 

 

The sport has to be made cheaper.  I will grant you if the bigger teams were given less money then they would have to spend less.

I don't think many stock brokers are going to lose sleep investing in F1 simply because the last place teams are closing their doors.  They probably get extra sleep knowing the sport takes care of the ones the fans (and sponsors...) actually follow and pay money to support.

 

You would have to ask the question, what does CVC bring TO F1,

they TAKE a lot, yet it seems there is no exchange of value.

 

Remove them from the "sport" and no one would notice the loss.

 

 

Edited by Murl, 12 November 2014 - 02:28.

[pdac]

You would have to ask the question, what does CVC bring TO F1,

they TAKE a lot, yet it seems there is no exchange of value.

 

Remove them from the "sport" and no one would notice the loss.

 

Why would you expect CVC to bring anything to F1? Do you have a savings account? If so, do you put your money in that bank and try to bring something to it? I doubt it. Most people would just want to see their money grow. Same with CVC (except they borrowed the money in the first place)

[KWSN - DSM]

I would expect CVC to be interested in improving the brand, in making the brand more valuable which is contrary to what they do now.

 

[Nathan]

Bernie brought value to F1, in fact he pretty much made F1 valuable.  Bernie's work is what CVC bought.

Remove the "commercial" aspect from F1 and see where it lands.  Who is going to pay the teams $900 million then?

[pdac]

I would expect CVC to be interested in improving the brand, in making the brand more valuable which is contrary to what they do now.

 

 

They employ Bernie to do that.

[KWSN - DSM]

They employ Bernie to do that.

 

Think key word is employ, they and their employee are not adding any value to the sport, on the contrary.

 

[pdac]

Think key word is employ, they and their employee are not adding any value to the sport, on the contrary.

 

 

True, but they (CVC) obviously still feel that he (Bernie) is the one they want to manage it.

[Nathan]

"They and their employee" produce the dollars needed to make the sport run as it does today.  By the looks of it, "they and their employee" write huge cheques to racing teams...

 

$72.6million to Sauber, $81.1 million to Force India,  $89.6 million given to Lotus F1.  Surely CVC and Co. provide half of the annual budgets to those teams. 

 

Maybe my maths are wrong, but CVC & Co. pay F1 teams something over $1.1 billion to put on a TV and media show for them.  I bet that is more than the sponsors, billionaires and car manufactures combined contribute most years.

 

$1.1 billion to chase each other in circles, and the sport is getting ripped off???

 

 

 

FIA makes the rules, folks

Edited by Nathan, 12 November 2014 - 15:09.

[Petroltorque]

I'm no economist but even I can see that the wealth in F1 is not created by CVC. The product is being produced by the teams and the income is derived from TV revenues and track promoters. CVC have not added any value they simply bought the vehicle and take their cut. Ecclestone can only continue to pay large sums to the top teams as long as a revenue stream is maintained. If that's cut the teams suffer. He's taken the circus to more obscure regions in search of larger fees. That strategy is not sustainable. Nor is the multiplier on existing promoters. It's like a Ponzi scheme. He needs to expand the base to feed the top.

[Kraken]

"They and their employee" produce the dollars needed to make the sport run as it does today.  By the looks of it, "they and their employee" write huge cheques to racing teams...

 

 

 

It's £1.5 billion that it costs the teams to go racing and they get a third of that via the the F1 income route. The rest comes from the teams own sponsors and backers so you're wrong with " I bet that is more than the sponsors, billionaires and car manufactures combined contribute most years." 

[KWSN - DSM]

True, but they (CVC) obviously still feel that he (Bernie) is the one they want to manage it.

 

We are going in circles trying to argue the other one to silence..   

 

What I am (trying to) saying is that CVC having bought a cash-cow do nothing to improve the return, on the contrary are employing tactics which will make the brand less appealing thus worth less in the future. Whomever CVC decide to 'run' the business are doing so at their bidding, so any an all poor decision are signed of by CVC. Apart from the actual players in F1, it does seem as if the rest of the world realize that the business model under which they work are broken.

 

Go read Dieter's article from today.

 

[surbjits]

http://lmgtfy.com/?q=cvc+f1

[Nathan]

"they get a third of that via the the F1 income route"

 

Well according to a graph recently published $1.15 billion is paid by FOM to the teams.  1.5 bln P = $2.4 bln USD. (the reason we have broke teams is 11 need to spend $2.4 billion to race cars...)

 

 

CVC owns FOM.  FOM produces the TV production.  TV is where the value is created.  Yes the cars racing around is just as much of it, but the difference between what sponsors will pay those teams to race in front of 150,000 spectators is nothing compared to what they pay for 300,000,000 TV viewers. If you want to talk about financial value, that is where half of it is created.  The financial value cant exist without participants and the outfit bringing the show to the masses.

 

If CVC said "OK, we're just going to shut FOM down', are you going to be watching the next race on TV? Nope. No TV, no hospitality, no sponsors, F1 becomes Indy Car.  No reason for the billionaire tycoons to buy race teams to promote their companies.

Bernie sold his lot to CVC. CVC is profiting off what Bernie put together, and the teams take their 63%.  The teams had the option to buy FOM instead!!

Edited by Nathan, 12 November 2014 - 16:39.

[SanDiegoGo]

Bernie brought value to F1, in fact he pretty much made F1 valuable.  Bernie's work is what CVC bought.

Remove the "commercial" aspect from F1 and see where it lands.  Who is going to pay the teams $900 million then?

 

why are you defending asset strippers? are you an asset stripper, is that your line of work?

[pdac]

We are going in circles trying to argue the other one to silence..   

 

What I am (trying to) saying is that CVC having bought a cash-cow do nothing to improve the return, on the contrary are employing tactics which will make the brand less appealing thus worth less in the future. Whomever CVC decide to 'run' the business are doing so at their bidding, so any an all poor decision are signed of by CVC. Apart from the actual players in F1, it does seem as if the rest of the world realize that the business model under which they work are broken.

 

Go read Dieter's article from today.

 

 

I hear what you say. Let me put it this way ... say someone told me that a company called Acme Roadrunner Seed Inc was really profitable and that the owner was looking for a buyer, I might think that I could make some money there. Now, I don't know the first thing about Roadrunner seed, however I've found out that the current owner, who I know has built the company from nothing, wants to stay on an manage the operation. Well, I just might be temped to buy, leave said manager in place and just collect the profits. I would not dream of interfering with the running, as I don't know the Roadrunner seed market.

[chipmcdonald]

Everyone is quick to blame Bernie, but...

 

..In Eddie Jordan's recent interview, he asked Bernie a number of "hard hitting" questions regarding things that could be done relative to F1's current "situation".

 

Bernie replied to all of them in a very matter of fact, and dismissive manner.  "This is how it is, if they want to do something they can do it" was effectively the parenthetical reply to everything.  Not "we", but "they".  It's up to "them". 

 

 I find this curious, because generally he's always, always coy about everything going on.  Or at least he *was*, pre-CVC.

 

 I submit that post-CVC, Bernie in his "reduced" role has decided to show CVC just how much F1 has been strung together by his behind the scene activity.   I put forward when the CVC thing happened that I don't see how a "corporation" could actually take over "Formula 1" and actually make it work.  We are seeing post-Bernie F1 in "action", or in-action as it were.  He is presenting things as they are, which is effectively a legal conuundrum that can't be solved.

 

 Pre-CVC Bernie would have "solved" it, but it's not exclusively his job anymore.  As Bernie is very literal financially, he is giving CVC his portion of his interest, which is about half or less of what it once was.  Note that his comments have been, since before the season started, of a nature almost like a fellow spectator.  I think something has happened in his relations with CVC, perhaps pertaining to who he wants as successor, or pertaining to his power to get things done, and he's now washing his hands of it.  

[Kraken]

"they get a third of that via the the F1 income route"

 

Well according to a graph recently published $1.15 billion is paid by FOM to the teams.  1.5 bln P = $2.4 bln USD. (the reason we have broke teams is 11 need to spend $2.4 billion to race cars...)

 

 

CVC owns FOM.  FOM produces the TV production.  TV is where the value is created.  Yes the cars racing around is just as much of it, but the difference between what sponsors will pay those teams to race in front of 150,000 spectators is nothing compared to what they pay for 300,000,000 TV viewers. If you want to talk about financial value, that is where half of it is created.  The financial value cant exist without participants and the outfit bringing the show to the masses.

 

If CVC said "OK, we're just going to shut FOM down', are you going to be watching the next race on TV? Nope. No TV, no hospitality, no sponsors, F1 becomes Indy Car.  No reason for the billionaire tycoons to buy race teams to promote their companies.

Bernie sold his lot to CVC. CVC is profiting off what Bernie put together, and the teams take their 63%.  The teams had the option to buy FOM instead!!

You're using two different sets of figures and massaging them to suit your argument.

 

The facts are that the teams, via their sponsors etc, put far more in than they get from FOM. Ferrari get £110m but their budget is £275m, McLaren get £60m but their budget is £180m, Williams get £35m but their budget is £105m, Sauber get £35m but their budget is £85m for examples. All figures from Autosport rather than some bloke down the pub blog.

 

It works both ways. If the teams don't race then it doesn't matter how many TV cameras FOM has.

Edited by Kraken, 12 November 2014 - 17:36.

[KWSN - DSM]

It's debatable - do you have any numbers to go with this?

I ask because I just read two days ago, the following:

 

"F1 draws US$ 69m in extra advertising revenue" [ article can be found in the current edition of "Racecar Engineering"]

bringing the total income from trackside advertising to US$ 241.4m for 2013.

 

All this despite the "gloom and doom", I think they are still doing o.k.

As for the rest, CVC is "the name on many peoples lips", but at the moment they only still own a bit over 30% of the business, so why should "they" be the (only) one bringing something to the business.

Could they do more? Yes, pretty sure they could, but why would they want/have to?

If F1 would fold tomorrow, and they would need to write off the rest of their shares, to zero ( a very unlikely "worst case" scenario), they would still come out of it, with app. US$ 3b net profit on US$ 0.96b invested capital, after app. 8 years, so a R.O.I. of about 38.8% p.a. - I think a lot of people would take this, and considering it a "good" business ( some may say just decent).

In any case, not many people/companies go "out of business" while turning a profit.

 

So, as you can see, and to stay with an analogy made earlier in this thread. The "cow" has allready paid for itself, and milk it gives now, is "profit", Any extra food or comfort you provide is "cost". Yes, in the ideal world, you would try to sell it on, before it dies, and that's probably what CVC just does, but even if it dies before, they have made a pretty decent deal out of it, while it lasted. For them it's a business, first and foremost, they have no sentimental attachment to it (you can "blame" them fofr this if you like), and why would/should they?

The "people" (teams) who do have a "sentimental attachment" and a "stake" in this business ( for some it is their "raison d'être"), couldn't be bothered to "invest" in the business, they just wanted to get the biggest handouts for themself. So while I would agree, that CVC ( and others) may haven't been the "best" owners they could have been, they haven't been the "worse" either, and I'm not confident that the "players" (teams) would have run it ( the business of F1) any better, because they don't tend to see the forrest for the trees, and are far too busy trying to stick a knife into each others back. And B.E. knows that just too well, and uses this to his ( and CVC's and the other shareholders) advantage.

 

Numbers????  It should be obvious to most that the sport is bleeding poor management, can not really see how me posting the numbers in public domain makes a difference. CVC and their appointed henchman have given most of the shop to 5 teams, of which two are fleeting entries who will disappear when the mood fits them, to the detriment of Racing Teams in racing to race.

 

[pdac]

Everyone is quick to blame Bernie, but...

 

..In Eddie Jordan's recent interview, he asked Bernie a number of "hard hitting" questions regarding things that could be done relative to F1's current "situation".

 

Bernie replied to all of them in a very matter of fact, and dismissive manner.  "This is how it is, if they want to do something they can do it" was effectively the parenthetical reply to everything.  Not "we", but "they".  It's up to "them". 

 

 I find this curious, because generally he's always, always coy about everything going on.  Or at least he *was*, pre-CVC.

 

 I submit that post-CVC, Bernie in his "reduced" role has decided to show CVC just how much F1 has been strung together by his behind the scene activity.   I put forward when the CVC thing happened that I don't see how a "corporation" could actually take over "Formula 1" and actually make it work.  We are seeing post-Bernie F1 in "action", or in-action as it were.  He is presenting things as they are, which is effectively a legal conuundrum that can't be solved.

 

 Pre-CVC Bernie would have "solved" it, but it's not exclusively his job anymore.  As Bernie is very literal financially, he is giving CVC his portion of his interest, which is about half or less of what it once was.  Note that his comments have been, since before the season started, of a nature almost like a fellow spectator.  I think something has happened in his relations with CVC, perhaps pertaining to who he wants as successor, or pertaining to his power to get things done, and he's now washing his hands of it.  

 

I think the reason why Bernie says "It's up to them" is because he's talking in the context of a redistribution of the prize fund. What he is eluding to is that, in the absence of a concord agreement, each team has agreed contractual terms with FOM individually. So FOM are bound by the terms of those contracts. If there is to be any movement then each team must agree to cancel their contracts and draw up new ones.

 

Some argue that FOM/CVC should distribute more money from their own portion. I don't think that option is on the table.

 

I'm not sure, but I seem to remember that when the previous concord agreement expired the teams wanted a bigger slice of the pie. My understanding is that agreement could not be made, so there was no concord agreement applicable to all teams and now some teams have a big slice and some a small one.

[Nathan]

"why are you defending asset strippers? are you an asset stripper, is that your line of work?"

 

 

Asset stripping? Do you confuse taking a dividend for asset stripping? No asset stripping has happened.  If anything CVC & Co. consolidated assets when they purchased Allsport.  No reinvestment? Who pushed the HD agenda? And now going into 4K! Do you think investing in 4K TV production for something as vast and complex as F1 is cheap and not a sign of reinvestment?

 

I do prefer CVC & Co. get the money because I think the world is better off having CVC & Co. redistribute $100 million than Formula-1 teams spending $100mln.  Even if it is ever so much.

 

 

 

"You're using two different sets of figures and massaging them to suit your argument."

 

 

The numbers are what came from Joe Saward http://joesaward.wor...four-sentences/ and the poster stating their opinion.  FOM pay the teams $1.15 billion US.  I'm going to use US Dollars because I understand that is how F1 money is paid all around.  Using the posters claim of $2.4 billion US (converted from £1.6bln using a website) we can see 48% of F1 team expenses can be paid via FOM distributions - eg. CVC & Co..  Now I don't think *either* sponsorship *or* corporate marketing make up 49% of the remaining revenue, so I'm going to thus assume FOM is the single largest source (such as prize money, sponsors, merchandising, parent company's, etc.) of revenue for F1 teams. If you look at Sauber, Force India, and to a lesser degree Lotus F1 it is hard to say the FOM again are not the primary revenue source for those teams.

 

According to Joe Saward, Autosport's FOM numbers are wrong.  He states Williams received $94 million US (£59.5mln),  Sauber $72.6 million US(£46mln) and McLaren $120mln (£76mln) .  Those sums are much greater than what Autosport quoted.  If the team budgets you quoted are correct, and we take Saward at his informed word, then CVC & Co. fund 54% of Sauber, 57% of Williams and 42% of McLaren.  Makes sense looking at the liveries of those 3 cars.....

 

Unless Joe Saward is spreading false numbers?? I'm only using the financials provided by folks that seem anti-CVC/Bernie. 

Edited by Nathan, 12 November 2014 - 18:36.

[Imateria]

"why are you defending asset strippers? are you an asset stripper, is that your line of work?"

 

 

Asset stripping? Do you confuse taking a dividend for asset stripping? No asset stripping has happened.  If anything CVC & Co. consolidated assets when they purchased Allsport.  No reinvestment? Who pushed the HD agenda? And now going into 4K! Do you think investing in 4K TV production for something as vast and complex as F1 is cheap and not a sign of reinvestment?

 

I do prefer CVC & Co. get the money because I think the world is better off having CVC & Co. redistribute $100 million than Formula-1 teams spending $100mln.  Even if it is ever so much.

 

 

 

"You're using two different sets of figures and massaging them to suit your argument."

 

 

The numbers are what came from Joe Saward http://joesaward.wor...four-sentences/ and the poster stating their opinion.  FOM pay the teams $1.15 billion US.  I'm going to use US Dollars because I understand that is how F1 money is paid all around.  Using the posters claim of $2.4 billion US (converted from £1.6bln using a website) we can see 48% of F1 team expenses can be paid via FOM distributions - eg. CVC & Co..  Now I don't think *either* sponsorship *or* corporate marketing make up 49% of the remaining revenue, so I'm going to thus assume FOM is the single largest source (such as prize money, sponsors, merchandising, parent company's, etc.) of revenue for F1 teams. If you look at Sauber, Force India, and to a lesser degree Lotus F1 it is hard to say the FOM again are not the primary revenue source for those teams.

 

According to Joe Saward, Autosport's FOM numbers are wrong.  He states Williams received $94 million US (£59.5mln),  Sauber $72.6 million US(£46mln) and McLaren $120mln (£76mln) .  Those sums are much greater than what Autosport quoted.  If the team budgets you quoted are correct, and we take Saward at his informed word, then CVC & Co. fund 54% of Sauber, 57% of Williams and 42% of McLaren.  Makes sense looking at the liveries of those 3 cars.....

 

Unless Joe Saward is spreading false numbers?? I'm only using the financials provided by folks that seem anti-CVC/Bernie. 

 

Dieter Rencken's numbers came from tax details filed with the British Government and from the teams themselves, as such they can be considered relatively accurate, though obviously given that McLaren and Ferrari's race teams are part of a wider group there's some room to maneuver there. It should be pointed out that Tata Communication are in a partnership agreement with FOM and it's them that do the investement and development on things like 4K TV. As for HD, it was the fans that pushed that agenda after years of complaint of being so far behind other sports. I wouldn't say Bernie actually listened to them but that by 2010 it was obvious F1 was going to be loosing out without it. The world of F1 would have been better off if that idiot Moseley hadn't sold on the 113 years TV rights to Bernie for 1% of their value and left it with the FIA, maybe not perfect, but a damn site better than what we've got now.

 

I think the reason why Bernie says "It's up to them" is because he's talking in the context of a redistribution of the prize fund. What he is eluding to is that, in the absence of a concord agreement, each team has agreed contractual terms with FOM individually. So FOM are bound by the terms of those contracts. If there is to be any movement then each team must agree to cancel their contracts and draw up new ones.

 

Some argue that FOM/CVC should distribute more money from their own portion. I don't think that option is on the table.

 

I'm not sure, but I seem to remember that when the previous concord agreement expired the teams wanted a bigger slice of the pie. My understanding is that agreement could not be made, so there was no concord agreement applicable to all teams and now some teams have a big slice and some a small one.

The last concorde agreement actually expired around 2009, but was extended by agreement of all parties to the end of 2012. Rather than FOTA and Bernie/FOM not coming to an agreement, he saw Ferrari and Red Bull falling out and swooped to offer them a huge incentave to stay on in the championship and then worked through the rest of the teams offering them progressively less for each team based on how important he felt they were. He didn't even offer HRT anything, effectively forcing them to close as the team was unsellable having no comercial agreement in place. Yes, overall the teams are getting more money now than they were under the old Concorde, but it's all concentrated to Ferrari, Red Bull and McLaren, whilst Williams and Mercedes get considerably less then the other teams get a small amount based solely on their Constructors Championship position. 

 

In a world where TV and trackside viewing figures are dropping, Bernie flat out refuses to give a damn about the internet and FOM, the promoter, doesn't do anything to promote the sport, it's become increasingly difficult to sell the sport to TV companies (a loss of revenue here directly impacts FOM/CVC) and sponsors which makes it exceptionally difficult for the teams to attract the finances they need to keep going. Add to that that F1 itself has become a competetor for those few sponsors going.

 

Anyone that can't see anything wrong with this is clearly blind.

[Nathan]

"It should be pointed out that Tata Communication are in a partnership agreement with FOM and it's them that do the investement and development on things like 4K TV. As for HD, it was the fans that pushed that agenda after years of complaint of being so far behind other sports."

 

So Tata Communications reaches into their wallet and gifts all this HD/4K technology upon CVC & Co.? How kind!  Or, did FOM contract Tata Communications out of FOM's pocket? Sure the 'fans' pushed HD, but not many are going to be pushing for 4K at the moment, so that is progressive.  The point is, CVC & Co. do reinvest in Formula-1.  From a commercial aspect, where is FOM lacking in infrastructure? Social media...what else?

Who else is going to bring in the FOM money?  Are the teams going to join up and negotiate TV contracts, trackside adverts, hospitality, race promoters etc.? 

[Fastcake]

"It should be pointed out that Tata Communication are in a partnership agreement with FOM and it's them that do the investement and development on things like 4K TV. As for HD, it was the fans that pushed that agenda after years of complaint of being so far behind other sports."

 

So Tata Communications reaches into their wallet and gifts all this HD/4K technology upon CVC & Co.? How kind!  Or, did FOM contract Tata Communications out of FOM's pocket? Sure the 'fans' pushed HD, but not many are going to be pushing for 4K at the moment, so that is progressive.  The point is, CVC & Co. do reinvest in Formula-1.  From a commercial aspect, where is FOM lacking in infrastructure? Social media...what else?

Who else is going to bring in the FOM money?  Are the teams going to join up and negotiate TV contracts, trackside adverts, hospitality, race promoters etc.? 

 

Your reasoning makes no sense. CVC have never invested a penny of their own money into the sport. They and the other institutional investors have done nothing else but purchase the shares from the previous owners, extract as much cash as possible, then prepare to sell on to the next lot. Any investments such as HD coverage have been paid out of FOM's income before the profits have been distributed out, and would still have been made without CVC's involvement.

 

The income will not disappear if CVC left. Most sports have no external entity leeching directly from the overall profits. They have an entity, such as FOM, managing and promoting the sport, then handing on the profits to the participants and governing bodies. And most of them are significantly more healthy.

[mclarensmps]

CVC = Owner + Management

Bernie = Marketing + Management

Teams = Employees

F1 = Product

 

It's an office structure on a larger scale. Regardless of what you may think, they all need each other. Remove any of these from this list, and the show cannot be run. 

[KWSN - DSM]

I would make a slight change

 

FIA = Owner + Management

Bernie = Marketing + Management

Teams = Employees

F1 = Product

 

Then a number of issues could be resolved better.