Formula One Group is a group of companies responsible for the promotion of the FIA Formula One World Championship, and the exercising of the sport's commercial rights.
The Group was previously owned by Delta Topco, a Jersey-based company owned primarily by investment companies CVC Capital Partners, Waddell & Reed, and LBI Group, with the remaining ownership split between Bernie Ecclestone, other investment companies, and company directors. It has subsequently been bought out by Liberty Media (a spin-off of TCI, an American cable-television group).
Ecclestone, a former Formula One team boss, spent 40 years as chief executive of the company after gaining control of the commercial rights. As of January 2022, the Group is run by Stefano Domenicali as Chief Executive, with Ross Brawn serving as Managing Director, Motor Sports. Sean Bratches was named Managing Director of Commercial Operations.
History[]
In 1974, the Formula One Constructors Association (FOCA) was founded in order to increase commercial organisation of Formula One for the benefit of the racing teams. In 1978, Bernie Ecclestone became the executive of FOCA, and fought the Fédération Internationale du Sport Automobile (FISA) for control of the commercial rights of F1. Disputes were settled by March 1981 when the Concorde Agreement gave FOCA the right to negotiate TV contracts. Under previous arrangements, TV contracts were risky and not very lucrative.
When the second Concorde Agreement was agreed in 1987, Ecclestone ceased being a team owner and established the Formula One Promotions and Administration (FOPA) to manage TV rights for the teams. FOPA would later become known as Formula One Management (FOM). FOPA received 49% of TV revenues: 1% went to the teams, and 50% to the FIA. FOPA also received all the fees paid by promoters and paid prize money to the teams. The third Concorde Agreement was signed in 1992.
When the fourth Concorde Agreement was signed in 1995, the FIA decided to grant the commercial rights of F1 to Formula One Administration (managed by FOM) for a 14-year period. In exchange, Ecclestone would provide an annual payment. With FOM having exclusive rights to popular team names like Team McLaren, WilliamsF1, and Tyrrell Formula One, the aforementioned teams protested by rejecting the following Concorde Agreement in 1997. A compromise was reached and a new Concorde Agreement was signed by all teams in 1998.
Team McLaren, WilliamsF1, Scuderia Ferrari and Renault F1 formed GPWC Holdings, and threatened to form a rival racing franchise in 2008 when their contracts ended in 2007.
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SLEC Holdings was created as the holding company of the Formula One companies in 1996 when Ecclestone transferred his ownership of Formula One businesses to his wife, Slavica Ecclestone, in preparation for a 1997 flotation of the group.
In June 1999, the European Commission announced it would investigate the FIA, FOA and International Sportsworld Communicators for abusing dominant position and restricting competition. ISC, owned by Ecclestone, had signed a 14-year agreement with the FIA in 1996 for the exclusive broadcasting rights for 18 FIA championships.
In October 1999, Morgan Grenfell Private Equity (MGPE) acquired 12.5% of SLEC for £234 million. In February 2000, Hellman and Friedman purchased a 37.5% share of SLEC for £625 million, and combined its share with that of MGPE to form Speed Investments, which had a combined holding of 50% of SLEC. On 22 March 2000, German media company EM.TV & Merchandising purchased Speed Investments for £1.1 billion.
EM.TV's acquisitions caused it financial difficulties; following its announcement that its 2000 earnings would be below expectations and it was struggling with its debts, the share price dropped 90%. In February, the Kirch Group agreed to rescue EM.TV in return for a stake in the company and control of Speed Investments. Alan Henry of The Guardian reported that the two companies also agreed to exercise EM.TV's option to purchase another 25% of SLEC for approximately £600 million in late-March 2001. To raise Speed Investments' share of SLEC to 75% Kirch borrowed €1.6 billion, €1 billion from Bayerische Landesbank (BayernLB) and the rest from Lehman Brothers and JPMorgan Chase. Kirch's involvement raised concerns among the major automobile manufacturers who participate in Formula One; BMW, DaimlerChrysler, Fiat, Ford, and Renault formed GPWC Holding BV to secure better representation of the manufacturers in F1, improved financial conditions for the teams, stability for the championship, and maintenance of free-to-air television coverage.
Due to the agreement associated with their shareholding, SLEC was controlled by Kirch, who controlled the board of Formula One Holdings (FOH). Due to huge losses and massive expenditure, Kirch's creditors put the company into receivership in 2002. These banks dismantled the group. Kirch's share of SLEC was retained by Bayerische Landesbank (BayernLB), JPMorgan Chase and Lehman Brothers (through Speed Investments).
Before they could exercise their rights as shareholders, they had to seek clearance from the European Commission. In the intervening period, Ecclestone instituted changes in the boards of SLEC, FOH, Formula One Administration (FOA) and Formula One Management (FOM); which in effect put Bambino Holdings in control of those companies.
In mid-November 2004, the three banks sued Ecclestone for more control over the sport, prompting speculation that Ecclestone might altogether lose the control he has maintained for then more than thirty years. A two-day court hearing began on 23 November, but after the proceedings had ended the following day, Justice Andrew Park announced his intention to reserve ruling for several weeks. On 6 December 2004, Park read his verdict, stating that "In [his] judgment it is clear that Speed's contentions are correct and [he] should therefore make the declarations which it requests". However, Ecclestone insisted that the verdict - seen almost universally as a legal blow to his control of Formula One - would mean "nothing at all". He stated his intention to appeal the decision.
The following day, at a meeting of team bosses at Heathrow Airport, Ecclestone offered the teams a total of £260 million over three years in return for unanimous renewal of the Concorde Agreement, which was due to expire in 2008. Weeks later, Gerhard Gibkowsky, a board member of Bayerische Landesbank and the chairman of SLEC, stated that the banks had no intention to remove Ecclestone from his position of control.
CVC acquisition[]
In November 2005, CVC Capital Partners announced it was to acquire the 25% and 48% shares of Bambino and Bayerische Landesbank in SLEC, and acquired the shares of JPMorgan Chase in December 2005. This deal was given approval by the European Commission on 21 March 2006 and finalised on 28 March. Ecclestone used the proceeds of the sale of Bambino Holdings' share to reinvest in the company to give the Ecclestone family a 13.8% stake in the holding company Alpha Prema. On 30 March 2006, CVC purchased the 14.1% share of SLEC held by Lehman Brothers to give CVC a majority ownership in the Formula One Group with 63.4%, with other shareholdings owned by LBI Group, JP Morgan, and company directors. The deputy team principal of Force India, Bob Fernley, accused CVC of "raping the sport" during the period of its involvement in Formula One.
The Formula One Group planned an initial public offering on the Singapore Stock Exchange in June 2012, valuing the company at $10 billion. Up to 30% of the company would be listed, with most of the stock coming from the shareholding owned by the creditors of the bankrupt Lehman Brothers. However, the flotation was delayed until October 2012, with Ecclestone citing volatile markets and problems in the Eurozone. CVC sold part of its stake in the company to three investment companies: Waddell & Reed, BlackRock and Norges Bank; reducing its holding to 35.5%, and making Waddell & Reed the second-biggest shareholder. The planned flotation was kept on hold throughout 2012, until it was revived in April 2013 when Ecclestone announced it would take place within the year.
Liberty acquisition[]
In late 2016, Liberty Media agreed to buy controlling interest in the Formula One Group for $4.4 billion (£3.3 billion). The deal was approved by regulators and completed on 23 January 2017. Chase Carey subsequently became chief executive of the Group.
The Formula One Group is listed in the NASDAQ as a tracking stock under the ticker FWONK.