Ferrari president Luca di Montezemolo is certainly no stranger to grand political posturing and his latest threat of the Formula 1 teams banding together to form a breakaway series is yet another example that should be taken with a grain of salt.
With rumours continuing to swirl that a News Corp-led consortium is looking to but the sport’s commercial rights from CVC Capital Partners, Montezemolo told the Italian press that the sports was at the crossroads with three possible avenues to pursue: negotiate a deal with CVC for a new Concorde Agreement; negotiate a deal with whomever buys out CVC; go it alone and forge a new championship.
But the devil is in the detail, and one fact that hasn’t escaped too many is that the News Copr bid is also tied with a group called Exor, a company headed by John Elkann, who also co-owns Ferrari’s parent company Fiat.
The simple reality is that di Montezemolo would never not support at Murdoch-Exor bid given the quite clear conflict of interest…
The threat of a breakaway series has been around for as long as one would care to mention, and it has almost exclusively been led by Ferrari, who will – from time to time – attempt to use their seniority as the longest-standing team in the sport as a way of leveraging a better deal for themselves.
(A side story is that FIA President Jean Todt has called for a restricted reintroduction of in-season testing, which almost all others teams are against on the grounds that it flies in the face of the cost-cutting initiatives they have tried to implement over the last few years. And surprise, surprise, the initiative has the full backing of Ferrari, which owns two test tracks and has bucketloads of cash to burn.)
A breakaway series cannot go ahead – at least for the foreseeable future – as Bernie Ecclestone very craftily negotiated a clause in the latest revision of the Concorde Agreement that binds all teams to the sport until at least the end of 2012, by which time a new Agreement giving them a little bit more of the sport’s commercial revenue will no doubt have been drawn up and signed by all.
The only real reason why di Montezemolo might be wanting to spout these breakaway threats once again is that such destabilising talk dramatically helps to undercut the value of CVC’s investment as the sport’s commercial rights’ majority owner.
A drop in value would make it a cheaper outlay for the Murdoch-Exor consortium to buy CVC out, and the longer this talk drags on, the lower the bid will go.
CVC took control of the sport in 2005 for a cool $1.23 billion, and Ecclestone recently estimated their investment to now be worth $6-7 billion – although that figure is no doubt exaggerated as a means of trying to keep the Murdoch-Exor consortium at bay.
The plain truth is that CVC has already enjoyed a few billion profiteering from the business since 2005, and it would take a handsome earner when (not if) it elects to sell.
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