CVC Reducing its Ownership Stake in F1

2012 Grand Prix of Monaco is in the books

To say that F1 is struggling is a bit of an understatement. First, the lack of parity has somewhat alienated fans and sponsors, as Red Bull and Ferrari both pulled corporate association last year. Then came the delay in releasing F1 stock on the Singapore stock market, citing worldwide economic unrest as its main reason, though we tend to think F1 officials are waiting for the time when the sport regains its footing.

The latest bit of F1 business news that may indicate that F1 is in for a tough future is the fact that F1’s majority owner, CVC Capital, has sold down its share in the racing series. It’s one thing if a majority owner dumps 5 of 6 percent of its stock, that’s simply business, but when an owner dumps 1/5 of its stack, that is a little more serious.

CVC Capital dumped $1.6 billion first and has more recently dropped another $500 million of its F1 ownership, dropping its overall stake from a hefty 63.4 percent to just 42.5 percent. The total sale was split amongst three different investment groups.

CVC still remains the majority shareholder, but its drastic drop is rather ominous. Does this mean that CVC sees something on the horizon that could cause the worth of F1 to drop significantly? We really don’t know, but there is no other reason to drop over 20 percent of your ownership in such a short period of time. Add this drop to the lack of two monster-sized corporate racing sponsors – Red Bull and Ferrari – not being a part of F1 and you can start seeing the writing on the wall that marks change.

There is no way that F1 would simply fold up, but we suspect that there will be some serious restructuring coming down the pipe very soon. We’ll keep you updated as more news becomes available.


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