Formula One entered a new era on Wednesday as US billionaire John Malone’s Liberty Media agreed a takeover that values the motor sport at $8 billion and raises questions over the role of Bernie Ecclestone, its colourful, long-time mastermind.
In a deal that ends years of speculation over F1’s future, Liberty said it had struck an agreement to buy out Formula One’s parent company from CVC Capital, and had already acquired a minority stake of 18.7%.
Liberty Media group will pay a total equity price of $4.4 billion in cash, newly-issued shares, and exchangeable debt to complete the deal, which gives Formula One an enterprise value of $8.0 billion.
Liberty said it would keep Ecclestone, who built Formula One into a global operation over nearly four decades, as chief executive, but also named 21st Century Fox vice chairman Chase Carey as the company’s new chairman.
The takeover is set to be completed next year, subject to approval by regulators, Liberty Media’s shareholders and F1’s governing body, the Federation International de l’Automobile (FIA).
It gives Liberty control of a global and highly profitable sport which includes 21 races this year stretching from Melbourne and Shanghai to Sochi, Mexico City and finishing in Abu Dhabi.
Formula One rakes in billions from advertisers and broadcasting rights for what is one of the world’s most-viewed competitions.
It also earns millions from Formula One-branded merchandise. F1’s future under CVC has long been in question and a mooted share flotation in Singapore was shelved in 2012.
Despite the big profits, some F1 teams are plagued by financial problems and the sport faces challenges to its fanbase and TV viewership, with its races often criticised as predictable.
‘Never a dull moment’
Ecclestone, a former motorcycle dealer and racing driver, has been the flamboyant figure at the centre of Formula One since the 1970s, crafting it into one of the world’s most glamorous and best known sports.
After months of talks with the sellers, Liberty agreed to retain the canny and combative 85-year-old, who insisted his role would remain unchanged despite the arrival of Carey as chairman.
“I will stay on as F1 chief executive,’ Ecclestone told the Autosport website. “I will continue to do all the things I have previously done, such as negotiate with the circuits, television companies and people like that.
“The good news is we will have someone on board in Chase, and he will hopefully be able to push F1 into new territories with social media. I have never found a way to make money from that.”
CVC co-chairman Donald Mackenzie praised Ecclestone, who forked out $100 million to German authorities to end a high-profile bribery trial in 2014.
“Bernie has been a wonderful CEO for us over the last 10 years,” Mackenzie said in a statement.
“There have been many successes and the occasional challenge but there has never been a dull moment and we have had a lot of fun. The combined skills of Chase and Bernie mean that the successes should continue and we wish them well.”
The purchase also adds a new gem to the growing collection of savvy, low-key tycoon Malone, who Forbes estimates has a fortune of $7.1 billion.
The broader Liberty group runs a wide range of media-centric businesses, including Time Warner cable television, concert promoter Live Nation, the Atlanta Braves Major League Baseball team, and a stake in Formula E, the all-electric version of Formula One which launched in 2012.
“We are excited to become part of Formula One,” Liberty Media president and chief executive Greg Maffei said.
“We think our long-term perspective and expertise with media and sports assets will allow us to be good stewards of Formula One and benefit fans, teams and our shareholders.”