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SBD Global/March 15, 2013/Finance

Formula One Co-Owner CVC Targets $7B As Smaller Teams Struggle

F1 co-owner CVC Capital Partners Ltd. is "rankling smaller teams as the buyout firm cashes in on its investment in the auto racing series," according to Alex Duff of BLOOMBERG. CVC began selling its 63.4% stake last year after "setting new terms" with Red Bull, Ferrari and McLaren. Those teams, "the three most successful over the last 15 years," share in $180M of signing-on payments and each get a seat on the board of the series. At the other end of last season’s 12-team standings, Spain’s HRT team folded and Marussia "has not agreed to terms" for the '13 season. Force India Deputy Dir Robert Fernley said that giving the most powerful teams a more favorable deal is a “disaster” because it discourages new investment in F1. Fernley: "CVC is not interested in developing the sport, it’s interested in making as much money as possible and then selling it." CVC partner Donald Mackenzie said that the buyout firm "expects to make as much as $7 billion." CVC spokesperson James Olley "declined to comment." In '11, CVC oversaw capital spending of 0.3% of revenue, "which was mainly spent on TV production equipment," according to the IPO prospectus. Fernley said, "You need to have an investor who gets a good return but one that also has an interest. CVC has milked it and anyone investing in it should be looking very closely at what they’re getting” (BLOOMBERG, 3/13).
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