So it's the silly season as financial news dries up this Holy Week. The latest rumour has it that Mexican multibillionaire Carlos Slim--the world's richest man and whose worth is currently pegged at an astronomical $74 billion--is teaming up with media mogul Rupert Murdoch (who isn't even on the Forbes Top 100 Rich List this year) to make an unsolicited bid for the commercial rights for Formula One. Call it a Latin habit: Just as Hugo Chavez has involved state enterprises in sponsoring Williams' Venezuelan driver Pastor Maldonaldo, Slim is sponsoring Sauber's Mexican driver Sergio Perez. (The above picture is of Sergio Perez and Carlos Slim Jr):
Formula One Chief Executive Officer Bernie Ecclestone said there are no plans to sell the car racing competition to media company News Corp. (NWSA) or Mexican billionaire Carlos Slim. News Corp., owner of cable-television channels including Speed, may make a bid with partners for motor racing’s most popular series, a person familiar with the matter said yesterday. Sky News, which is controlled by News Corp., reported the company had talked to Slim.Despite private equity firms not exactly being known as long-term investors, Ecclestone pooh-poohs the alleged bid:
Formula One owner CVC Capital Partners Ltd., a London-based private equity company, recorded losses of $660 million last year on costs associated with a $2.5 billion loan the firm took out to pay for the 2005 acquisition of Formula One, according to accounts published for its Delta (3) U.K. Ltd. unit on April 6.
“CVC are not in the slightest bit interested in selling,” Ecclestone said in a telephone interview today. “A lot of people approach them but they are there for the long term.” Ecclestone helped set up the series, which hosts Grand Prix races from Monaco to Abu Dhabi. The sport has attracted wealthy team owners like U.K.-based billionaire Richard Branson and Indian liquor magnate Vijay Mallya. Car companies like Fiat SpA’s Ferrari group, Renault SA and Daimler AG’s Mercedes compete for the constructors’ championship.Given the nasty walling-off habits of his enterprises--exclusive cable channels and pay-per-view on Sky on one hand and newspaper online paywalls (Wall Street Journal, Times of London, and even the tabloid News of the World) on the other--Murdoch has an uphill struggle if he thinks he can "privatize" the sport's viewer access. For, the infamously complex Concorde Agreement between Bernie Ecclestone's firm and the FIA stipulates that free-to-air is one of the preconditions for its maintenance. Free-to-air obviously maximizes the viewer audience of F1's sponsors, hence its commercial importance. In other words, Slim and Murdoch would have to rewrite the commercial agreement behind the sport even if the agreement is up for renegotiation soon:
Ecclestone, 80, has become a billionaire since setting up the sport. He said he knows Slim and News Corp. chairman Rupert Murdoch. “If they were interested for sure they would have called me and they haven’t,” he said. Yesterday, Julie Henderson, a spokeswoman for News Corp., declined to comment, as did Arturo Elias, a spokesman for Slim...
Ecclestone said that though CVC is committed to owning the series, he couldn’t rule out a sale if an “enormous” bid was tabled. “If someone was to come along with an enormous offer,a lot more than it were worth, then they have to look at it,” he said. “They have never talked about selling, though.”
One obstacle to a deal with News Corp, the co-owners of Sky, could be the existence in the Concorde Agreement of a clause specifying that transmission of the races must be available on free-to-air terrestrial television, a stipulation supported by major sponsors. That could be a subject for discussion in any redrafting of the next agreement, which has already been drawn up and is due to be signed in 2012. But Formula One already splits its television deals in Austria and Germany, where Sky share the rights with ORF and RTL, each of them transmitting the qualifying sessions and races simultaneously.If there's one thing for sure, though, it's that the man who's run the show for years on and while growing the business tremendously will be richly rewarded whatever the outcome is since he knows the ins and outs of the business he has built:
Despite his advanced age, however, Ecclestone will be playing a long game, giving himself plenty of room for manoeuvre. His recent criticisms of Todt and of the new technical regulations scheduled for 2013 will be part of that game. Murdoch and Slim may well get whatever it is they are after. But, deal or no deal, Formula One's ringmaster will not be the loser.And yes, this is a story of globalization pure and simple as a race series spanning several prosperous (or increasingly prosperous) countries is being fought over by a wizened Englishman against a purported combination of a wealthy Latin American seeking to join forces with the most recognizable media titan--an Australian--of our age. Heck, Ecclestone may decide to sell at the top given signs of declining attendance and potential troubles over connivance with authoritarian regimes alike that of Bahrain. Sometimes the smartest know when to just walk away.
UPDATE: To pile one rumour atop another, it's said that the Slim/Murdoch bid would need to gain approval from each of the 12 teams (in addition to the above proviso of broadcasting free-to-air wherever possible).