In recent weeks much of the media has been speculating that F1's new owners CVC could end up with a lame duck if the car makers pull out of the sport. Without them, we are told, CVC won't be able to cover the costs of its F1 purchase by getting out a huge loan guaranteed on the strength of future earnings from the sport. But as Christian Sylt and Caroline Reid reveal, CVC is already laughing all the way to the bank.

F1's rightsholding company SLEC was bought for around $1 billion last year and CVC is the majority shareholder in the new holding company Alpha Prema. Investment funds managed by CVC put in the majority of the money for the purchase with debt taken out to cover the rest. All told, CVC's funds are likely to have spent around $600m on F1. And it's made it back already.

One of F1's biggest 'secrets', but previously reported by Pitpass, is that there's $1 billion sitting in the bank of Formula One Administration (FOA), the company which signs the contracts to run F1.

The money has come from the company's annual profits and has been building up over the past seven years. According to its latest accounts, FOA had profits of $281 million on turnover of $705 million in 2004. However, instead of paying out profits to its shareholders, FOA's profits are stored in its bank account and by the end of 2004 it had built up $910 million in its reserves. This is now likely to be more than $1 billion.

The reason for this is that FOA was prevented from paying out its profits under the terms of a $1.4 billion loan (known as the 'Bernie bond') it took out in 1999 secured on F1's future revenues. FOA has been paying off this loan each May and November every year with annual repayments totalling around $300 million. At the end of 2004 $414 million was still remaining meaning that it is likely to have been cleared in May this year.

With the bond now believed to be fully repaid, FOA is free to pay out its profits to shareholders with CVC set to take the majority in line with its stake in the company.

So, since there is $1 billion in FOA's bank account, this will cover the bulk of CVC's costs of buying F1.

But CVC won't want to stop there. CVC invests the money in its funds to make a massive return for the wealthy individuals who give it their money to look after. For example, CVC made at least eight times its money back by selling Dorna, the company which owns the rights to MotoGP. One way it could make more money from F1 quickly would be taking out another loan guaranteed on the sport's future earnings.

But one thing that is for sure is that when CVC finally gets out of its investment in F1, it won't have made a loss. And the $1 billion sitting in the bank is most probably one of the reasons why it bought in the first place.