Qatar’s sovereign wealth fund is bidding for a controlling stake in Formula One auto racing after getting the red light to host a race according to a senior sports manager who has likened the move to a guest buying a restaurant when it refuses to give him a table.
The sports manager confirmed to Forbes on Monday that Qatar is considering a takeover of F1 and on Tuesday the Financial Times revealed that the country’s sports investments arm has teamed up with RSE Ventures, which owns the Miami Dolphins NFL team, to make a bid.
The deal would reportedly put a $7 billion to $8 billion value on F1 which made underlying profits of around $530.7 million in the year to 31 December 2013 according to a report in October by Britain’s Daily Telegraph newspaper.
RSE was founded by 75-year-old property and sports tycoon Stephen Ross who is also chairman of Related Companies, an international property group with more than $20 billion of assets.
It is teaming up with Qatar Sports Investments, an arm of the $115 billion Qatar Investment Authority (QIA) which also owns the Paris Saint-Germain football club. F1 is an ideal fit for the cash-rich sovereign wealth fund. Qatar has a contract to host the 2022 World Cup of soccer but the project has been beset with problems.
There have been calls to move the event from its traditional summer date due to the searing heat in the country. More recently, the deal with Qatar was brought into the spotlight as a result of the bribery scandal which has engulfed soccer’s governing body FIFA.
F1 is the world’s most-watched annual sports series, and had 425 million television viewers last year, so it would more than make up for the World Cup if Qatar is forced to relinquish the championship. The country also has an even more personal reason for plotting a takeover of F1.
In November last year Britain’s Independent newspaper revealed that Qatar was in talks about hosting an F1 race which could cost the country as much as $800 million. It is understood that the brakes were put on the project by the authorities in nearby Bahrain which also hosts a Grand Prix and has a veto over other F1 races in the region.
Taking over the series itself could clear the way for a race in Qatar. As the sports manager told Forbes on Monday, “it is like buying the restaurant if it won’t give you a table.”
The restaurant in this case is the 35% stake in F1’s parent company Delta Topco which is owned by the private equity firm CVC. Although this is a minority stake, RSE and QIA are understood to be bidding for it because it offers complete control of the company at board level through an ingenious system.
F1 company documents reveal that CVC’s shares entitle it to appoint representatives, known as I Directors, who shall “between them be deemed to exercise one vote more than the total number of votes exercised by the other directors present and voting.”
The documents add that the purpose of this is “to ensure that the I Directors will always have sufficient votes to pass a resolution of the board.” Day to day control of the company is in the hands of F1’s chief executive Bernie Ecclestone who is also a board member and has a 5.3% stake in Delta Topco.
CVC acquired F1 in a leveraged buyout in 2006 using two loans – $965.6 million from its investment Fund IV and $1.1 billion from the Royal Bank of Scotland . Since then it has made $4.4 billion from the investment as Forbes revealed last year.
CVC’s return has been fuelled by dividends and the sale of stakes in Delta Topco to asset managers BlackRock BLK +0.95%, Waddell & Reed and Norway’s Norges sovereign wealth fund.
A plan to list the business on the Singapore stock market in 2012 hit the skids due to the Eurozone crisis and the future ownership of the business has been the subject of great speculation since then.
The cash-generating engine under F1’s hood has brought it to the attention of a number of suitors – most recently last year when media mogul John Malone’s Liberty Global and broadcaster Discovery Communications were in talks about buying a 49% stake in Delta Topco.
However, there have also been a number of rumoured bids which didn’t get going including interest from Rupert Murdoch’s News Corporation and the world’s richest man Carlos Slim in 2011.
Although the talks with RSE and the QIA may still get the red light, the involvement of banks representing both sides gives an air of seriousness to the report.
Goldman Sachs is reportedly working with CVC while JP Morgan is understood to be representing the potential investors. There is still a lot of speculation as few firm details have been confirmed. In fact, Mr Ecclestone told the Financial Times that he was not yet aware of a “deal on the table.”
He added that “my shares will be sold together with theirs,” which may seem like confirmation of a sale but is actually far from it. Indeed, in March last year he said almost the same thing to the Daily Telegraph.
“If I sell I would sell with CVC. If somebody wants to buy CVC’s shares but doesn’t need mine then I will keep them,” Mr Ecclestone told the newspaper.
There is even a cloud of uncertainty over the identity of the potential buyers as Reuters claimed that Dieter Hahn, chairman of the supervisory board of German sports marketing group Constantin Medien, is also involved with the investment consortium.
It remains to be seen whether this is the case but, if it is, one wonders whether the deal could ever get off the grid.
The reason for this is that, according to Mr Ecclestone, Mr Hahn drove a lawsuit against him in London for undervaluing F1 when a 47.2% stake in it was sold by German bank BayernLB to CVC. Constantin had an agreement entitling it to 10% of the proceeds if BayernLB’s F1 stake sold for more than $1.1 billion.
However, Constantin received nothing as CVC paid $765 million for it. Constantin claimed that Mr Ecclestone paid a bribe to smooth the sale to CVC as it had agreed to retain him as F1’s chief executive.
According to Constantin, if Mr Ecclestone had not done this another buyer would have come forward with an offer which would have given BayernLB’s stake a higher valuation.In 2011 Mr Ecclestone told the Independent that Mr Hahn approached him with a settlement barely three months after the lawsuit was filed.
“Dieter Hahn just wants to shake down, to settle before it gets to court. He would like to settle. He would like somebody to pay him,” he said. Mr Ecclestone won the battle when Constantin lost the lawsuit and he also won the war by paying a $100 million settlement which preserved his innocence after being charged with bribery in Germany.
Following his settlement, Mr Ecclestone told the Independent that he was plotting revenge and Mr Hahn was high on his list.
“Now I am in a position where I have got a little bit more time and I shall follow my old idea in life: ‘Don’t get mad, get even.’ I haven’t got mad but I’m going to get even.” Anyone who knows Mr Ecclestone well will be able to confirm that his word is indeed his bond.
forbes.com
The sports manager confirmed to Forbes on Monday that Qatar is considering a takeover of F1 and on Tuesday the Financial Times revealed that the country’s sports investments arm has teamed up with RSE Ventures, which owns the Miami Dolphins NFL team, to make a bid.
The deal would reportedly put a $7 billion to $8 billion value on F1 which made underlying profits of around $530.7 million in the year to 31 December 2013 according to a report in October by Britain’s Daily Telegraph newspaper.
RSE was founded by 75-year-old property and sports tycoon Stephen Ross who is also chairman of Related Companies, an international property group with more than $20 billion of assets.
It is teaming up with Qatar Sports Investments, an arm of the $115 billion Qatar Investment Authority (QIA) which also owns the Paris Saint-Germain football club. F1 is an ideal fit for the cash-rich sovereign wealth fund. Qatar has a contract to host the 2022 World Cup of soccer but the project has been beset with problems.
There have been calls to move the event from its traditional summer date due to the searing heat in the country. More recently, the deal with Qatar was brought into the spotlight as a result of the bribery scandal which has engulfed soccer’s governing body FIFA.
F1 is the world’s most-watched annual sports series, and had 425 million television viewers last year, so it would more than make up for the World Cup if Qatar is forced to relinquish the championship. The country also has an even more personal reason for plotting a takeover of F1.
In November last year Britain’s Independent newspaper revealed that Qatar was in talks about hosting an F1 race which could cost the country as much as $800 million. It is understood that the brakes were put on the project by the authorities in nearby Bahrain which also hosts a Grand Prix and has a veto over other F1 races in the region.
Taking over the series itself could clear the way for a race in Qatar. As the sports manager told Forbes on Monday, “it is like buying the restaurant if it won’t give you a table.”
The restaurant in this case is the 35% stake in F1’s parent company Delta Topco which is owned by the private equity firm CVC. Although this is a minority stake, RSE and QIA are understood to be bidding for it because it offers complete control of the company at board level through an ingenious system.
F1 company documents reveal that CVC’s shares entitle it to appoint representatives, known as I Directors, who shall “between them be deemed to exercise one vote more than the total number of votes exercised by the other directors present and voting.”
The documents add that the purpose of this is “to ensure that the I Directors will always have sufficient votes to pass a resolution of the board.” Day to day control of the company is in the hands of F1’s chief executive Bernie Ecclestone who is also a board member and has a 5.3% stake in Delta Topco.
CVC acquired F1 in a leveraged buyout in 2006 using two loans – $965.6 million from its investment Fund IV and $1.1 billion from the Royal Bank of Scotland . Since then it has made $4.4 billion from the investment as Forbes revealed last year.
CVC’s return has been fuelled by dividends and the sale of stakes in Delta Topco to asset managers BlackRock BLK +0.95%, Waddell & Reed and Norway’s Norges sovereign wealth fund.
A plan to list the business on the Singapore stock market in 2012 hit the skids due to the Eurozone crisis and the future ownership of the business has been the subject of great speculation since then.
The cash-generating engine under F1’s hood has brought it to the attention of a number of suitors – most recently last year when media mogul John Malone’s Liberty Global and broadcaster Discovery Communications were in talks about buying a 49% stake in Delta Topco.
However, there have also been a number of rumoured bids which didn’t get going including interest from Rupert Murdoch’s News Corporation and the world’s richest man Carlos Slim in 2011.
Although the talks with RSE and the QIA may still get the red light, the involvement of banks representing both sides gives an air of seriousness to the report.
Goldman Sachs is reportedly working with CVC while JP Morgan is understood to be representing the potential investors. There is still a lot of speculation as few firm details have been confirmed. In fact, Mr Ecclestone told the Financial Times that he was not yet aware of a “deal on the table.”
He added that “my shares will be sold together with theirs,” which may seem like confirmation of a sale but is actually far from it. Indeed, in March last year he said almost the same thing to the Daily Telegraph.
“If I sell I would sell with CVC. If somebody wants to buy CVC’s shares but doesn’t need mine then I will keep them,” Mr Ecclestone told the newspaper.
There is even a cloud of uncertainty over the identity of the potential buyers as Reuters claimed that Dieter Hahn, chairman of the supervisory board of German sports marketing group Constantin Medien, is also involved with the investment consortium.
It remains to be seen whether this is the case but, if it is, one wonders whether the deal could ever get off the grid.
The reason for this is that, according to Mr Ecclestone, Mr Hahn drove a lawsuit against him in London for undervaluing F1 when a 47.2% stake in it was sold by German bank BayernLB to CVC. Constantin had an agreement entitling it to 10% of the proceeds if BayernLB’s F1 stake sold for more than $1.1 billion.
However, Constantin received nothing as CVC paid $765 million for it. Constantin claimed that Mr Ecclestone paid a bribe to smooth the sale to CVC as it had agreed to retain him as F1’s chief executive.
According to Constantin, if Mr Ecclestone had not done this another buyer would have come forward with an offer which would have given BayernLB’s stake a higher valuation.In 2011 Mr Ecclestone told the Independent that Mr Hahn approached him with a settlement barely three months after the lawsuit was filed.
“Dieter Hahn just wants to shake down, to settle before it gets to court. He would like to settle. He would like somebody to pay him,” he said. Mr Ecclestone won the battle when Constantin lost the lawsuit and he also won the war by paying a $100 million settlement which preserved his innocence after being charged with bribery in Germany.
Following his settlement, Mr Ecclestone told the Independent that he was plotting revenge and Mr Hahn was high on his list.
“Now I am in a position where I have got a little bit more time and I shall follow my old idea in life: ‘Don’t get mad, get even.’ I haven’t got mad but I’m going to get even.” Anyone who knows Mr Ecclestone well will be able to confirm that his word is indeed his bond.
forbes.com
No comments:
Post a Comment