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Is Formula 1 for Sale?

Formula 1 Supremo Bernie Ecclestone: the F1 commercial rights aren't his to sell

There’s an old Hollywood joke that runs something like this: Two old style movie producers (think portly, bald, expensive Italian suits, too much gold jewelry and leathery tans) are wandering around in the dessert (God knows why, but this is Hollywood, where most narratives aren’t expected to make much sense), about to die of thirst.  Suddenly, in the manner of most Hollywood happy endings, they stumble upon an oasis, that is, a pool of clear, drinkable water (do these really exist?) in the middle of an otherwise sandy wasteland.

“Thank God!” one producer says, about to dunk his whole head into the shimmering pool, “it’s a miracle!”

But the second producer is less sanguine.  He restrains his colleague, saying, “Let’s p*ss in it first.”

Now, for those who have little knowledge of the lore of Hollywood producers, this little fable might seem a bit obscure.   But the point, if not obvious, is this: there’s a certain brand of business mogul (the Hollywood producer is a classic type) who can’t resist taking a beautiful thing and mucking it up in the name of commerce, personal gain…or perhaps just bad taste.

Cut to: Rupert Murdoch and Fox News Corp.  Murdoch has made a name for himself by (a) owning a stable of tabloid news rags on three continents, (b) acquiring a number of prominent, formerly respectable newspapers on said continents (e.g. The Wall Street Journal, The London Times), and (c) by launching a television network that has become, essentially, a house organ for the Republican party in the U.S.

And now there are rumors that News Corp is sniffing at a possible acquisiion of Formula 1.  Is the inevitable endgame here the Rupertization of the pinnacle of open-wheeled motor sport?

Perhaps not.  Bernie Ecclestone has labeled the rumor as “rubbish,” although, contrary to popular perception of the matter, Formula 1 isn’t Uncle Bernie’s to sell.  The fact is, the Evil Gnome began leasing commercial rights for Formula 1 from the FIA in 1981.  While Ecclestone has done much to turn the sport into a commercial behemoth, he’s never really owned a piece of the sport, he’s only leased the right to strike lucrative deals with venue promoters and TV networks worldwide.

Moreover, a few years ago he sold those rights to the private equity firm CVC Capital Partners.  CVC, in turn, now retains Bernie at a salary of more than $4 million per year to run the show.  So the Formula 1 Supremo himself is actually nothing but an employee of  CVC.

It should be remembered, though, that private equity firms generally don’t acquire assets as long term holds.  Typically, the idea is to plant seed money, grow the asset quickly, and flip it in about five years’ time.  The recent global economic meltdown has put a drag on on CVC’s timeline, but one can still see a sale on the horizon.  Nevertheless, Uncle Bernie insists it won’t happen soon.  As he recently told The Guardian, “CVC is not looking for any exit over the next two or three years.”

But will the Fox/News Corp outfit still be in the hunt, and, if so, what would be the ultimate result?  Fox/News Corp owns SpeedTV in America, and I suspect the cable channel has generally benefited from an influx of Fox money.  Their coverage certainly hasn’t deteriorated since the Fox acquisition, and unless they decide to send Glenn Beck to the F1 paddock to give color commentary, I don’t expect that to change.  But if Fox owned the commercial rights to the sport as a whole?

Personally, I’m not worried.  Considering that the commercial end of the sport has been under the thumb of the Evil Gnome for the past 30 years, what more havoc could Murdoch wreak?

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