Strange as it may seem to read it, flop-haired sinister Andy Warhol impersonator Bernie Ecclestone doesn’t actually own Formula One. The group with the biggest stake in the biggest spectacle of motorsports actually belongs to private equity firm CVC Capital Partners. And word on the street is they want out – and someone else wants in.
That CVC wants out really isn’t surprising at all. Private equity firms actually operate on a pretty simple business model, one that is ingenious and also a bit ethically dubious. In incredibly simple terms, a bunch of people pool their money together, and then use that money as a down payment to buy something, usually a company. The rest of the company is then bought with massive, torrential amounts of loans, and those loans are then transferred to the company. The company, now newly-saddled with debt and new managers, either does better or worse.
But at the end of the day, the private equity firm tries to flip the asset. Whether three years, five years, or ten years down the road, there’s going to come a day when the firm decides its time to make some big money on a big sale. And those loans that were originally transferred to the asset become someone else’s problem.
And for F1, it looks like that day is coming up damn soon.
The Financial Times reports that suitors are lining up for the racing circus, including the owner of the Miami Dolphins, Stephen Ross, and the entire nation of Qatar, because Qatar just happens to have a crapload of oil money that it’s got to do something with.
They’re expected to pay somewhere between seven to eight billion dollars for around a 35 percent stake, which would give them a controlling interest.
But here’s where things get weird, and back to this dark muppet:
Bernie Ecclestone doesn’t actually own much of F1, only around five percent, but over the years he’s been able to structure deals in such a way that he basically controls the whole show. (And no, that is not the same picture we’ve been using for years now. It’s actually a new picture. We always try to use new pictures. That picture is from this past weekend. That’s just his face, always.)
According to the FT, however, he’d be selling what remains of his stake along with CVC.
But don’t worry! Because the aged specter of the hand of capitalism over all isn’t going anywhere:
Even if Mr Ecclestone does sell his shareholding, a person close to the talks said RSE was keen to keep the 84-year-old involved and had discussed the idea with him.
“They believe he brings a lot to the sport and they can help expand it into the US and Chinese markets,” the person said.
So what would F1 look like under Ross, Qatar, and Bernie?
Which means F1 will continue be the shitshow it’s always been.
Photos credit: Getty Images