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SBD Global/January 12, 2017/Franchises

McLaren Reviews Possibility Of Buying Stake In Formula 1, Team Exec Says

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McLaren is the only team on the F1 grid that uses Honda engines.
McLaren is taking a close look at the possibility of purchasing a stake in Formula 1, team Exec Dir Zak Brown said. The British team is currently reviewing an offer by F1 owner Liberty Media and is weighing up its pros and cons before making a decision. “We think it’s great that Liberty has offered the teams to invest,” Brown told SBD Global. “It’s great to invest in the sport. Obviously, we are heavily invested just with our racing team. They just brought [their offer] to everyone’s attention, it’s quite sophisticated. We are reviewing that now and it will ultimately be a decision for our shareholders.” Media reports have suggested Liberty Media is providing constructors with the opportunity to buy a stake of up to 5% in the business. Depending on the number of teams interested in the offer, the individual percentage each team will be able to purchase could decrease, as Liberty Media will only make a combined stake of 22% available. While teams would get a share of F1’s annual profits, they would not receive any voting rights regarding the series’ future strategy, technology, prize money distribution or the appointment of senior officials. Brown, however, does not believe the lack of voting rights would deter potential investors. “It’s an economic investment decision,” he said. “I think there are a lot of different ways that the governance of the sport can be run in the future, and I think investing and having a board seat is one way, but it’s not the only way.” The series’ big teams, including Ferrari, Mercedes and Red Bull, are seen as the most likely candidates to invest, considering the smaller constructors are simply lacking the funds. Despite Liberty offering a rebate to the teams, a 1% stake still would cost in the region of $40M. The U.S. media company is said to have set a deadline for the end of January before it opens up the stock up to a wider audience.

Zak Brown
COMING TO AMERICA
: Many in the industry count on Liberty Media to deliver the U.S. market to F1. It is a market the series has struggled to remain relevant throughout its history. "Formula 1 is not anywhere near the size of popularity that I think we all believe it can be," Brown said. "We need more than one race there. We need to have a bigger presence there. It's a big market with lots of sport and entertainment competition. ... We just need to have more penetration in the market and the popularity will grow because people love Formula 1. We just need to expose America to it more." The Circuit of the Americas, Haas F1 Team and NBC, whose broadcast contract will expire after the season, are important puzzle pieces to F1's future success in the States, Brown added.
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