Vodafone set to leave Formula 1?

Hamilton signs with Mercedes for 2013  by Les Speed – via F1QA – September 28th, 2012

With Lewis Hamilton jumping the good-ship McLaren Mercedes and Mexican Sergio Perez quickly brought on-board as his replacement, can Vodafone be far behind?

Celebrity Life Image by JohnONolan via Flickr

Reports had confirmed that McLaren were offering Lewis quite a bit less then his previous deal, which possibly with Jenson Button as team-mate and the fact that Lewis hasn't won a World Championship for some time might have been justified. That argument could go both ways, as with co-number one drivers and a slightly unrealiable car, how could Lewis have won a World Championship anyway?

Nonetheless, in the last four years since Lewis did win his one and only World Championship, everything has gone up in price; gas, food, travel, etc. So to be offered a lower salary as reward for the years of service, probably didn't sit right with the Flash of Stevenage, OBE and of whom, with the firing of his greatest mentor, his father Anthony, is obviously a man of few sentiments and of many ambitions.

Enter, stage right, Mercedes, who have known and somewhat nurtured Lewis' career over the years, to throw one of their own overboard and scoop the disorientated Flash while the scooping was good. After-all, the team needed a good reason to get the board in Struttgart to continue funding their addictions.

That in itself warrants a report of its own – as does, how McLaren is actually faring after launching a $200,000 Supercar in the midst of a Global recession.

Yet, with Telmex backed Perez in at McLaren, what does that say, in addition to the lower pay-packet offer, about Vodafone's committment to the future? Especially, now with the dynamic-British-duo no more. And to the rumours of Coca-Cola as a 2013 McLaren sponsor?

Are they the Real-Thing, after-all?

If you do recall Schweppes was a McLaren sponsor for years, so the Woking outfit knows how to service a drinks company and current sponsor, Lucozade, a potential clasher with Coca-Cola, has recently taken to promoting its MaxiMuscle brand on the rear wing. Plenty of intrigue and B2B potential ahead, no doubt.

Enjoy the show!

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Apply brakes before investing in Formula 1

 

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June 26, 2012, 12:02 a.m. EDT

Commentary: The $2.5 billion IPO may be too ritzy for investors

Formel 1 - Nürburgring 2009 - Siegerehrung Image by mjohn2101 via Flickr

TEL AVIV. Israel (MarketWatch) — The real hot seat in Formula 1 may not be inside Michael Schumacher’s Mercedes, but rather in the boardroom when the executives meet to finalize the timing and pricing for its much-anticipated $2.5 billion Singapore initial public offering.

With recent share sales by F1’s major shareholder implying a valuation of F1 at a ritzy $9 billion, its flamboyant 81-year-old chief executive, Bernie Ecclestone, may need to kick his cherished car racing empire into high gear to convince investors. And F1 is not the only lucrative licensing company on the circuit, either. If investors are willing to trade in fast cars for a couple of beloved fictional cartoon characters, ahead of F1 in the grid is Walt Disney Co. DIS +1.31%  and Hello Kitty’s Sanrio Ltd JP:8136 +0.11%   .

Who is holding pole position in F1

The FIA Formula One World Championship may be the most viewed sporting championship in the world with an annual audience of over 500 million, but the most interesting viewing is how the British-born Ecclestone found his way into the F1 driver’s seat. Through four decades of dealings and legal tussles, a former race car driver himself, Ecclestone, managed to steer the F1 commercial rights away from both the industry body and the race drivers association.

Today, F1’s shareholders include Ecclestone (5.3%), his ex-wife, Slavica Ecclestone (8.5%), together with private equity fund, CVC Capital Partners (35%) , Lehman Brothers (15%), Waddell & Reed Financial WDR +1.35%   (21%) and others including BlackrockBLK -0.86%  and Norges Bank, Norway’s sovereign wealth fund.

Financials of Formula 1 

  2011
Revenue $1,520m
EBITDA $684m
Net Income $358m
Enterprise Value(est) $9,100m

Source: UBS

 

Unquestionably, F1 is a winning brand and a trophy asset. Its 20 races in 19 countries generate close to $1.5 billion in annual sales. In fact, by 2016, UBS analysts estimate that there will be 22 races and F1’s annual sales will have grown to $2.4 billion at a healthy 25% profit margin. Such is the glamour of the F1 business, rumored buyers in recent years have included a consortium led by Rupert Murdoch’s News Corp. NWS +3.05%   and an investment unit of Fiat IT:F +1.88%  and Ferrari’s Agnelli family, and Carlos Slim of Mexico, the world’s richest man. (News Corp. is the parent company of MarketWatch.) The financial effect that F1 can have on a host city from tourism and other services is unmatched by any other sporting event, including the Olympics — this, despite the fact that F1 generally hoards all the trackside advertising or broadcast revenues for itself.

But just how sustainable is F1’s growth, and have we begun to see its wheels slowly fall off? In the past few years, Honda, Toyota and BMW have all pulled out as race teams, unable to generate a meaningful return on their investments.

Formula 1 vs. Disney and Hello Kitty…

More at Apply brakes before investing in Formula 1 – MarketWatch

 
 

Ben Weiss has worked throughout the Asia-Pacific region for hedge funds and private equity firms. He runs a boutique venture capital firm in Hong Kong.