May 2, 2013

Flotation device

Bernie Ecclestone says a flotation is set to take place this year © Getty Images

Talk of floating Formula One on the Singapore stock market has started to gather pace again, with Bernie Ecclestone telling Reuters that the plan was to see a flotation by the end of 2013.

“It’s not been confirmed yet, but provided the markets are sensible, that is what is going to happen,” he said. “Last year, I thought it was the wrong time. Things are looking more positive generally.”

But the notion of floating Formula One is an odd one. While it’s an obvious exit strategy for CVC Capital Partners, who have held on to their F1 investment for longer than is typical of their portfolio, a public flotation doesn’t make sense for the labyrinth of holding companies that make up a sizeable slice of the F1 pie.

Shareholders and stock markets require a certain level of transparency with regard to financial documents and corporate structures, and it’s a level of transparency rather less opaque than that we’re accustomed to seeing in F1.

Nevertheless, moves are being made towards a flotation that weren’t underway at the same stage in proceedings last year. A new company has been formed, CVC Delta Topco Nominee, which the Daily Telegraph say “is understood to be part of a reorganisation of the F1 company structure in preparation for the flotation.”

And there’s no argument with the fact that the markets are performing better at the moment, with investments on the increase as investor confidence returns. If the paperwork can be put in place, then the F1 IPO will be sailing surer seas than it would have done last autumn.

But there are still some obstacles in Bernie’s path, one of which is the as-yet-unsigned Concorde Agreement. A cynic might say that it is because of the forthcoming flotation that the F1 boss has made so much of his commercial agreements with the top ten teams, and his Mosley-era agreement that teams outside the top ten need not have an agreement in place.

After all, if there’s no need for a commercial agreement with Marussia, the lack of an agreement doesn’t indicate possible future problems, issues that might create a less than stable environment for investors and their cash.


Posted by John B on 03/05/2013

I think this is a good thing, and to be honest, given that this will require auditors etc going through the financial records, it might re-open the possibility of a budget cap. For example, teams could be required to maintain "working capital" accounts with FOM for which they must spend all their F1 running costs from (and only topped up by either FOM prize money, sponsors or owners directly). This way that can be audited, and likewise funds from outside this account being used should be easily identified. Provided, of course, it's what everybody wants.

Posted by Yves Ferrer on 02/05/2013

Bernie is anxious to float F1 before too many people look too deeply into its wranglings; the Concorde Agreement was a fig-leaf as long as it lasted but without it, it remains to be seen whether serious investors are likely to pour millions into a venture that could collapse as soon as the next 'fad' comes along! Younger viewers may be easily entertained for so long with artificial racing but it is the older paying fans that will remain the core of the audience (or not!).
Time will tell...

Posted by Brian on 02/05/2013

Perhaps a good time for the small teams to stir things up in their favor so that Bernie could be guaranteed a stable environment.

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Kate Walker is the editor of GP Week magazine and a freelance contributor to ESPN. A member of the F1 travelling circus since 2010, her unique approach to Formula One coverage has been described as 'a collection of culinary reviews and food pictures from exotic locales that just happen to be playing host to a grand prix'. Kate Walker