Detailed Look into F1 Owners’ Profits Revealed
May 19, 2011
Huge profits of Formula One owners have been revealed following new analysis of the finances of the sport, with a Formula Money report saying that F1’s holding company made net profits of US$137.1m in 2010, after costs, which included paying race teams $658m.
The report claims that the latest figures bring the net profits made since private equity firm CVC took control of F1 in 2006 to $1.22bn, amid speculation that potential bidders are circling the sport.
Estimates suggest that CVC, which now owns 63.4 per cent of F1’s Jersey-based parent company Delta Topco, made $87m from the sport last year, while the remaining $50m in profits were split between investment banks and individuals who own the rest of Delta Topco.
Christian Sylt, who with colleague Caroline Reid publishes the annual dissection of F1’s finances, said that Delta Topco made revenues of $1.6bn last year, and $5.9bn over the five years, stating: “It’s an astonishing return.”
CVC bought majority control of F1 from Bernie Ecclestone’s family trusts and a group of investment banks, while Ecclestone remains the sport’s chief executive and a large shareholder in Delta Topco. The analysis reveals that Ecclestone and his family trusts have earned more than $148m in five years from their stakes in Delta Topco.
The biggest single source of revenue last year was the race-hosting fees of about $567.5m, paid by governments and track owners to stage the events. The increase in profits came despite a small fall in television audiences to about 527 million last year, and a decline in ticket sales.
Sylt said that Delta Topco paid off $338.5m of debts – and $59.2m in interest payments – last year, leaving the holding company with about $2bn of debts and he puts a $5bn-$7bn price tag on F1, adding: “It’s at least worth that, and may be worth more to a determined buyer.”
While speculation over a bid from a consortium led by Rupert Murdoch’s News Corp still surrounds the sport, Sylt played down any chance of a potential takeover, stating: “From what I hear from the inside, this idea of a News Corp bid is a non-starter. All it’s done is just focus attention on how valuable F1 is. I think all this stuff about bids has a lot to do with a new Concorde Agreement (with the current deal running out in 2012).”