Two for the Road is a hangout for mystery writers Tammy Kaehler and Simon Wood to chat, reminisce, gossip, speculate and argue about all things motorsport.

Friday, April 27, 2012

How To Own Shares in F1

Reports abound this week that CVC Capital Partners, the largest stakeholder of commercial rights to Formula 1 (the largest motorsports game there is), would be listing it for an IPO in Singapore. Reports have the the entity (it's hard to refer to "the commercial rights to a motorsports competition") valued north of $3 billion ... far short of Bernie Ecclestone's suggestion of $10 billion. But plenty of clams.

Two reports: in the Wall Street Journal and on MotorAuthority.

TAMMY: First of all, the money involved in F1 just boggles the mind. Second, genius of the rights-holder, because what fan doesn't want to own a piece of the action? Shoot, NASCAR fans buy a brand of beer or gas or motor oil because it supports their driver. The articles I've seen talk about CVC partners doing the work, but I can't help but wonder if Bernie is behind this, because the man seems to do nothing but figure out how to make more money. (He says he won't sell his 5.3% share of the rights, but that's an awful lot of value to borrow against.)

SIMON: I don't quite get this. Is F1 struggling for cash that it needs to raise more? I don't think so. If you look at how F1 is owned, it hurts the brain. Bernie has shell corporations for different parts that make up the whole. It's very confusing. The thing I don't get even more is why would Bernie would want to do this in the first place. He's had a tight grip on F1 for decades, but if he floats it, he'll lose a certain amount of control and with all those freely available shares, F1 is open to hostile takeover. Many English football teams have fallen a foul of this. Raise a bunch a cash in an IPO and then some billionaire comes in and buys the place out from under them. So it doesn't quite make sense to me and I think it's dangerous. F1 should be privately held so that outside interests don't sweep in to take over and make "changes."

Tam Tam, I like your point about buying a chunk of a sport you love for the sheer feel good factor of just owning a piece of heritage. I've done this. I bought shares in my soccer team a few years ago and wrote off the money, because it wasn't an financial inventment, but an emotional one. However with the F1 IPO being done in Singapore and not New York or London, I don't know what chance any of us have at owning a chunk of F1.

TAMMY: Oooooh, the idea of a hostile takeover getting Bernie out of there makes me giddy. Just think, races in old-school places like the U.K., France, Germany, Italy, and not Bahrain and Abu Dhabi. Hmmm, I bet we know people who know people in Singapore. Maybe if we get 300,000 of our closest friends, we could run things?

What do you all think? Will you buy a piece of Formula 1?

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