25/11/2014
NEWS STORY
It has been revealed that the FIA has a 1.06% stake in F1's parent company worth $120m
Writing for Forbes, Christian Sylt reveals that the latest filings for F1's parent company, Delta Topco, reveal that the FIA 45,819,734 ordinary shares (out of a total of 4,286,181,944) thereby giving it a 1.06% stake.
An IPO (Initial Public Offering) of Delta Topco was planned in 2012 but this was subsequently hatled following the Eurozone crisis and then legal battles involving the sport's supremo, Bernie Ecclestone, who had previously said that the FIA would get 1% if the the floatation went ahead.
Since then, the sport's major shareholder CVC has been looking to sell its 35% stake with Discovery Communications and media mogul John Malone’s Liberty Global looking to be the most likely buyers.
CVC bought F1 in a $2 billion leveraged buyout in 2005 and is already understood to have made $4.4 billion from its investment. This staggering amount is due to share sales and dividends, the most recent coming in the summer when Delta Topco increased its debt by $1 billion in order that the money could be paid to its owners. This resulted in $350m for CVC and the FIA’s 1% stake yielding $10m pro rata.
The FIA's income is usually made up of fees from motor sport's various series and their participants whilst its biggest outgoings are salaries and travel costs. In February the Daily Telegraph revealed that the FIA’s latest financial statements reveal a net loss of $3.4 million on revenue of $81.5 million in the year to 31 December 2012.
Ultimately, the FIA owns F1's commerrcial rights though since 2011 Delta Topco has had the licence to them, a deal which runs for 100 years. The FIA sold the licence in 2001 for $313.6 following an anti-trust investigation by the European Commission (EC) which claimed it was restricting competition by favoring F1.
The EC ruling that the commercial exploitation and governance of F1 must be completely separate, the FIA agreed to sell the rights for 100 years "in exchange of one-off fixed fee, payable at the outset".
This meant the FIA had no reason to favour F1 and when the EC subsequently closed the proceedings it issued a statement confirming that "the role of FIA will be limited to that of a sports regulator, with no commercial conflicts of interest." It added that "to prevent conflicts of interest, FIA has sold all its rights in the FIA Formula One World Championship."
Approved by the its own legal department, the FIA is confident the 1% stake in Delta Topco does not contravene the agreement. Nonetheless, when revealing the FIA's option earlier this year, the Guardian quoted a spokesperson for the EC as saying: "the Commission is monitoring market developments in the sport sector, including motor sports. This is all we have to say for the time being."
Chris Balfe