Formula One has sometimes been blamed for being too predictable, but the weekend’s British Grand Prix offered some excitement for the fans with the rainy conditions mixing up the raise. Furthermore, the industry experienced another twist in the saga of new ownership when private equity firm CVC denied rumours suggesting it might sell its stake of the commercial rights.
We recently reported on the rumours suggesting the private equity firm might be looking to move on from Formula One. Numerous news agencies had been reporting the private equity firm wants to find another owner, with other private equity firms predicted to buy the stake.
More fuel was added to the fire by comments within the industry suggesting the Formula One franchise needs to move on. The firm invested in the franchise in 2006, when it bought controlling stake in the commercial rights for the franchise. CVC has since reduced its controlling stake to 35.5% by selling nearly 63% of shares in a number of deals to investment groups such as the US company, BlackRock.
Therefore, CVC has been involved with the franchise for nearly 10 years, which is on the high end of private equity firm investment. During its involvement in the franchise, the private equity firm has tried to float Formula One twice without success.
CVC Denies the Reports
But over the weekend, it became clear that the private equity firm might not be as keen to sell as some would have hoped. Co-chairman of CVC Capital Partners, Donald Mackenzie, was reported by the Guardian to have said he does not intend to sell the shares.
Mackenzie responded to the rumours by answering to the Guardian’s question of whether the firm has a deadline for selling its stake by saying, “No, we don’t…We have 12-year funds, which we have to return the original money. We have already done that. So the pressure’s off.”
Furthermore, Bernie Ecclestone, the current chief executive of Formula One, was quoted in Autosport stating, “He (Donald Mackenzie) loves Formula 1, loves the business”.
Pressure to Sell
There’s no denying that CVC has plenty of pressure to sell. The franchise has generated plenty of interest and both Mackenzie and Ecclestone did acknowledge the private equity firm has been approached by a number of groups willing the spend plenty of money in the business franchise.
Furthermore, in an interesting statement, Ecclestone hinted the private equity firm might be forced to sell under the pressure, but that Mackenzie might well return to the franchise as a private investor.
The Daily Mail quoted Ecclestone commenting the Mackenzie situation by saying, “Whether he’ll invest himself, or maybe with me, we’ll have to wait and see”.
Formula One looks to stay in the headlines for the time being. The pressure for improvements has remained heated and it is likely the franchise will introduce changes on the grid for next year.
But whether the ownership of the commercial rights is to change is another matter. For now, it looks likely the private equity firm will continue to hold on to its stake.