F1 teams given option to purchase shares by Liberty Media


World © Octane Photographic Ltd. Chase Carey - Vice Chairman of the 21st Century Fox media conglomerate and the Chairman of the Formula One Group/Liberty Media with Bernie Ecclestone and Christian Horner - Red Bull Racing. Saturday 26th November 2016, F1 Abu Dhabi GP - Paddock, Yas Marina circuit, Abu Dhabi. Digital Ref : 1764LB1D9553

Formula 1 teams are to be given the option to purchase a stake in the sport by new commercial rights holders Liberty Media, in a bid to bring a closer working partnership between the squads and the sports parent company.

Previous majority shareholder CVC Capital Partners, had owned a twenty percent stake in the business, and this portion will be offered out to the teams at $22 a share, though no team will be allowed to amass more than a five percent stake.

Taking up the deal on offer would see the team enjoy a share in the annual profits generated by the business, but that is where the benefits are believed to stop, with no voting rights relating to strategy, technology, marketing, prize money distribution or the appointment of senior officials, allowed.

Rumours are abound however, that the two teams with the most Liberty Media shares, will be given the opportunity to nominate one director each to the board of F1’s immediate parent company, Delta Topco.

Liberty Media have set a deadline of the end of January, by which time the teams will have to have made up their minds on whether they wish to take up the deal, before the shares are offered up to a wider audience.

The smaller teams are unlikely to have the available funds to invest in such a scheme, when a one percent stake at the price offered, would cost in the region of $40 million. They would also have to hold onto the shares for at least ten years before they would have the option to sell them on, as part of the deal.

Having the money will not be a problem for top teams such as Scuderia Ferrari, the Mercedes AMG Petronas Formula One Team or Red Bull Racing, but they will need to consider whether it will be worth their while, when the sports value is said to be in decline and estimated at £3.6 billion, down from £4.1 billion prior to the sale to Liberty Media.

Liberty are in the throes of finalising their takeover of F1, with a vote by shareholders due to take place on January 17, which will then need to be given approval by the FIA.

The commercial rights holders are set to make drastic changes to the way in which the sport is currently run, including big amendments to the administration and marketing of F1, as well as bringing in someone with commercial expertise, in a bid to attract new sponsors.