Racing News and Notes, Nov. 28, 2005

November 26, 2005

Formula 1:


Meet the New Boss, Same as the Old Boss: It was announced late last week that CVC Capital Partners, a London-based venture capital firm, has acquired 75 percent of SLEC Holdings Ltd., which controls the commercial rights of the Formula 1 World Championship. In a deal speculated to be in the range of $1 billion, CVC acquired the 50 percent of the company owned by German financial instutution Bayerische Landesbank and approximately 25 percent owned by the Bambino Trust, controlled by the family of F1 impresario Bernie Ecclestone. CVC is reportedly negotiating to obtain the remaining 25 percent of the business held jointly by JP Morgan and Lehmann Brothers, however these are non-voting shares. The announcement stated that a new company, called Alpha Prema, will be formed to control the F1 commercial rights, and that the shareholders would be CVC, the Bambino Trust and Ecclestone (via a reinvestment) and the vaguely-named “Formula One management team.” The deal must be approved by both the FIA and the EU. The Alpha Prema board will include the 75-year-old Ecclestone as chief executive, along with Bayerische Landesbank’s Gerhard Gribkowsky, CVC’s Donald Mackenzie and a representative of the Bambino Trust.


Thumbnail Background: In 1999, Ecclestone sold 12.5 percent of SLEC (named for his wife, SLavica ECclestone) to Morgan Grenfell Private Equity for $325m, and 37.5 percent to Hellman & Friedman for $975m. Morgan Grenfell and Hellman & Friedman combined their shares to form a company called Speed Investments. Ltd., which was sold to German television network EM.TV for $1.6bn. EM.TV’s stock price crashed from $88 to $3 in the summer of 2000, and Speed Investments was sold to German media firm Kirch at the bargain-basement price of $550m. Kirch then also purchased another 25 percent of SLEC for $1 billion, giving Speed Investments 75 percent of SLEC. However, in 2003 Kirch went bankrupt and Speed Investments was acquired by the trio of banking institutions Bayerische Landesbank, JP Morgan and Lehmann Brothers.




What Now? CVC has experience in motorsport, as it also owns Dorna Sport, which controls the commercial rights of the wildly popular MotoGP motorcycle world championship. It also owns Britain’s AA (equivalent to our AAA) automobile association, which makes it well known to FIA. With Bernie still in charge (and richer than ever, go figure), changes should be barely noticeable. It is no doubt hoped that the deal will further blunt the movement by the manufacturer-based GPMA (BMW, Daimler-Chrysler, Honda, Renault and Toyota) to establish a rival series in 2008. The GPMA issued a statement saying it was anxious to talk with CVC, but is continuing to develop their plans for a new series. For now, it looks like more of the same (unless CVC decides to sell at a profit after a short time, which it has done before). Stay tuned.


Farewell, Old Friend: The team known as Minardi, which began life in 1979 as a Formula 2 team and entered Formula 1 in 1985, ceased to exist for all intents and purposes this week. The team held its last test at Italy’s Vallelunga circuit, giving a number of youngsters a tryout (as has been the team’s custom) and giving a number of special guests rides in the team’s specially-built two-seaters. Among the youngsters taking part was 25-year-old Britishwoman Katherine Legge, who won three rounds of the Toyota Atlantic series this year. Her test started out inauspiciously, on a cold track late Tuesday afternoon, as she spun off track, brushing a wall. However, she came back undeterred the next day and put in an impressive performance, logging 27 laps, one of which was the third-fastest lap of the week, and prompting compliments from team owner Paul Stoddart. The team’s last-ever day on track was Thursday, and Stoddart closed out the chapter by taking to the track to log the last-ever Minardi laps before the team is handed over to its new ownership by Red Bull. Incidentally, Red Bull announced this week that the team will not be known as Squadra Toro Rosso, but rather as Scuderia Toro Rosso, as “scuderia” is a more fitting term for a racing team and “squadra” is a term used more by soccer teams. The new team still has not announced its driver lineup, but American Scott Speed is rumored to be teamed up with Italian Vitantonio Liuzzi.

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