Formula One Holdings, PLC/Inc. or Whatever

Formula One Holdings, PLC/Inc. or Whatever

Post by MFMetzg » Tue, 20 May 1997 04:00:00


     Show Me Your Money!!!

  Or words to that effect, is what one Bernard Ecclestone is saying to
Formula One sponsors and fans.  This morning's Financial Times, London
Edition, is reporting that the once shelved floatation of Bernie's Formula
One Holdings is now on again.  Apparently all obstacles to this move have
been overcome, according to the U.S. investment bank Salomon Brothers, who
are handling the offering.  Prospecti for the deal are due out "shortly."
This ought to be interesting reading for any F1 fan.

   Here, in a nutshell, is the deal.  They're going to sell 50% of
Bernie's Formula One Holdings to the public in the form of stock.  Bernie
will keep 30% of the equity (in shares) and be CEO.  Marco Piccinini,
ex-Ferrari, will be Bernie's deputy.  Former Mercedes-Benz chairman Helmut
Werner will be chairman of the board of directors.  The teams will get 10%
equity.  Finally, the FIA (run by old buddy Max) will get 10% of the
shares in return for a 25 year extension on the contract by which it gave
Bernie 's companies the commercial rights to the World
Driving/Constructors Championship. The hype-meisters think they'll get
between pounds 1.4 to 2 billion (US$  2.3-3.3 billion) for the entire
deal.  Basically, they're betting the public will buy 50% of the Circus
for between 1.1-1.6 billion USD.

   Curiouser and curiouser.  What does this mean for the future of Formula
One?  The Financial Times quotes "City analysts", i.e., London stock
experts, as saying basically, the only way to support such a high initial
valuation is to dramatically increase revenues from TV.  That means,
y'all, PAY PER VIEW.  They think this years F1 Holdings will gross around
L200 million (US$ 326 mil), with pre-tax profits of L86 million (US$ 140
mil).  These analysts think that F1 will need to go to pay per view and
digital TV and sell this service to the estimated 100 million fans who
watch each F1 race (analysts viewing numbers).  Ecclestone and Salomon
Bros. expect revenues to be US$ 1 billion over the next five years.  They
base that on expected pay per view earnings, merchandising, and restaurant
chains (no kidding).  The Financial Times says some stock analysts are
skeptical of the announced expected valuation.  Most, but not all,  of the
initial offering will be made on the London exchanges

  For this to work as Bernie expects, those who will purchase stock at
Bernie's price will be betting that you and I, average F1 fans, will be
willing to spend more of our disposable income on F1.  I really don't see
how additional advertising can account for the increase in revenues
required.  That means, within the next 5 years or so, you and I are going
to have to purchase a subscription package similar to what's being offered
in Germany and Switzerland now.  It's going to be real interesting to see
what happens when the current TV agreements with ITV, RTL, and ESPN
(Disney/ABC) expire.  My guess and my hope is that potential stock
purchasers wil recognize the "irrational exuberance" on the part of
Bernie, et al, and Formula One Holdings will generate significantly less
that expected.  If they get what they ask for then one of two things is
going to happen:  (1) those who bought stock are going to lose on awful
lot of money, or (2) those who love F1 are going to spend an awful lot of
money.

  The only good thing I can see out of this is that such a deal makes F1
much less reliant on tobacco sponsorship money.  The trend against
permitting tobacco advertising, (see Queen's Speech), looks like the
handwriting's on the wall for tobacco sponsorship in Europe.  (Soapbox
mode on.) For me, fine, tobacco money is *** money as far as I'm
concerned.  (Soapbox mode off.)

   As an American (in the U.S. sense of that term), I'm intrigued by the
prospect of Bernie trying to raise a portion of his capital here.  While
the main part of the float will be in London, a portion will take place in
New York.  This means that Bernie is going to be submitting himself to
U.S. securities laws and regulations.  Our laws have real teeth and permit
shareholders to go after corporation officers and directors for
mismanagement and misrepresentations affecting stock value.  I really
wonder what will happen the first time Bernie says/does something that is
fine in Europe but is verboten in the U.S.  Speaking from my legal
experience, I predict that some U.S. shareholder will sue Formula One
Holdings and Bernie in a U.S. court and they will get jurisdiction.
Either Bernie fights the case here or risks a default judgment.  If a
judgment is obtained against F1 Holdings, it can be enforced against any
property the company may have in the U.S. (e.g., the proceeds from a U.S.
GP).  For the foregoing reasons, the risk of F1 doing business in the U.S.
is going to go up.  Doesn't improve the chances of a U.S. GP.  Of course,
that's a worst case scenario, but similar things have happened in other
businesses.

  In summary, it's hard to say exactly what this means for F1 fans, but I
don't think it looks to good.

Mike Metzger
San Diego, California

 
 
 

Formula One Holdings, PLC/Inc. or Whatever

Post by Cheek Sr » Tue, 20 May 1997 04:00:00

Quote:

>      Show Me Your Money!!!

>   Or words to that effect, is what one Bernard Ecclestone is saying to
> Formula One sponsors and fans.  This morning's Financial Times, London
> Edition, is reporting that the once shelved floatation of Bernie's Formula
> One Holdings is now on again.  Apparently all obstacles to this move have
> been overcome, according to the U.S. investment bank Salomon Brothers, who
> are handling the offering.  Prospecti for the deal are due out "shortly."
> This ought to be interesting reading for any F1 fan.

>    Here, in a nutshell, is the deal.  They're going to sell 50% of
> Bernie's Formula One Holdings to the public in the form of stock.  Bernie
> will keep 30% of the equity (in shares) and be CEO.  Marco Piccinini,
> ex-Ferrari, will be Bernie's deputy.  Former Mercedes-Benz chairman Helmut
> Werner will be chairman of the board of directors.  The teams will get 10%
> equity.  Finally, the FIA (run by old buddy Max) will get 10% of the
> shares in return for a 25 year extension on the contract by which it gave
> Bernie 's companies the commercial rights to the World
> Driving/Constructors Championship. The hype-meisters think they'll get
> between pounds 1.4 to 2 billion (US$  2.3-3.3 billion) for the entire
> deal.  Basically, they're betting the public will buy 50% of the Circus
> for between 1.1-1.6 billion USD.

>    Curiouser and curiouser.  What does this mean for the future of Formula
> One?  The Financial Times quotes "City analysts", i.e., London stock
> experts, as saying basically, the only way to support such a high initial
> valuation is to dramatically increase revenues from TV.  That means,
> y'all, PAY PER VIEW.  They think this years F1 Holdings will gross around
> L200 million (US$ 326 mil), with pre-tax profits of L86 million (US$ 140
> mil).  These analysts think that F1 will need to go to pay per view and
> digital TV and sell this service to the estimated 100 million fans who
> watch each F1 race (analysts viewing numbers).  Ecclestone and Salomon
> Bros. expect revenues to be US$ 1 billion over the next five years.  They
> base that on expected pay per view earnings, merchandising, and restaurant
> chains (no kidding).  The Financial Times says some stock analysts are
> skeptical of the announced expected valuation.  Most, but not all,  of the
> initial offering will be made on the London exchanges

>   For this to work as Bernie expects, those who will purchase stock at
> Bernie's price will be betting that you and I, average F1 fans, will be
> willing to spend more of our disposable income on F1.  I really don't see
> how additional advertising can account for the increase in revenues
> required.  That means, within the next 5 years or so, you and I are going
> to have to purchase a subscription package similar to what's being offered
> in Germany and Switzerland now.  It's going to be real interesting to see
> what happens when the current TV agreements with ITV, RTL, and ESPN
> (Disney/ABC) expire.  My guess and my hope is that potential stock
> purchasers wil recognize the "irrational exuberance" on the part of
> Bernie, et al, and Formula One Holdings will generate significantly less
> that expected.  If they get what they ask for then one of two things is
> going to happen:  (1) those who bought stock are going to lose on awful
> lot of money, or (2) those who love F1 are going to spend an awful lot of
> money.

>   The only good thing I can see out of this is that such a deal makes F1
> much less reliant on tobacco sponsorship money.  The trend against
> permitting tobacco advertising, (see Queen's Speech), looks like the
> handwriting's on the wall for tobacco sponsorship in Europe.  (Soapbox
> mode on.) For me, fine, tobacco money is *** money as far as I'm
> concerned.  (Soapbox mode off.)

>    As an American (in the U.S. sense of that term), I'm intrigued by the
> prospect of Bernie trying to raise a portion of his capital here.  While
> the main part of the float will be in London, a portion will take place in
> New York.  This means that Bernie is going to be submitting himself to
> U.S. securities laws and regulations.  Our laws have real teeth and permit
> shareholders to go after corporation officers and directors for
> mismanagement and misrepresentations affecting stock value.  I really
> wonder what will happen the first time Bernie says/does something that is
> fine in Europe but is verboten in the U.S.  Speaking from my legal
> experience, I predict that some U.S. shareholder will sue Formula One
> Holdings and Bernie in a U.S. court and they will get jurisdiction.
> Either Bernie fights the case here or risks a default judgment.  If a
> judgment is obtained against F1 Holdings, it can be enforced against any
> property the company may have in the U.S. (e.g., the proceeds from a U.S.
> GP).  For the foregoing reasons, the risk of F1 doing business in the U.S.
> is going to go up.  Doesn't improve the chances of a U.S. GP.  Of course,
> that's a worst case scenario, but similar things have happened in other
> businesses.

>   In summary, it's hard to say exactly what this means for F1 fans, but I
> don't think it looks to good.

Thanks Mike,that's a very interesting posting and a good analysis.Seems
to me Bernie must be pretty deperate,seeing as how he has sunk so much
of his own money into the digital TV thing.Digital TV has hardly taken
off at the expected rate in Germany this year afaik,if the prospects of'
this development making so much money are so good why does BE want to
go public now on airy visions of the promised land?Why does he not sit
around raking in the money,and then sell shares when the wonderful
income of digital TV is there for all to see.Methinks the smell of rat
is pretty obvious here.BTW,how's the court case against the FIA TV
monopoly in Germany going?If they lose that one,might that not upset
the applecart just a wee bit?
Doc

 
 
 

Formula One Holdings, PLC/Inc. or Whatever

Post by Keith Crossle » Tue, 20 May 1997 04:00:00

Mike

Great post.  My thoughts... Bernie's been reading his own press clippings too
much and if he tries this he (we) will lose.

Pay per view will not work, I think, for F1.  Especially in the US.  Heck, we
are lucky to get F1-dependent sponsors picking up the ad tab part of the
morning, the rest of the ads being devoted to TV promotions for events in ice
arenas featuring guys with no front teeth.

I pay almost $40 US monthly for some flukey package deal which is the only way
to get ESPN2.  That alone is outrageous;  any more and I'll be back to the days
of reading about it in Road & Track 6 months later.  (OK - I know... no-one
here reads R&T anymore.. used to be worthwhile but now its ROAD AND track in
very very small letters.  Get On Track.  And, too bad, Autoweek is now a wkly
R&T.  Never the same since Satch was banished).  

F1's prime cachet / drawing card is that it is the absolute top of the
automobile competitive heap.  And, for us true believers, it really is the
pinnacle.  In boxing, the WC is the top of the heap.  And even though there is
plenty of silliness, it truly is a World Champ system(s).  The trouble is that
though we true believers know F1, by definition, is the top, there are them'all
that consider Dale E. & company the be-all and end-all.  I consider DE to be
(or to have been?) in the same league as most top F1 drivers.  Not the series.
But in the perception of the audience here, Doesn't Matter.  Tnat's what they
turn their TVs on for.  Not the Sturmbahnfuhrer brothers.

Bottom line - F1 will disappear from US, Canadian and many other western
hemisphere countries faster than Fast Eddie moves up places at the start (how
does he DO that?).

How about the Rest Of The World?  Divide into the Olde Worlde (and their
Allies) and The Rest.

In the Olde World, F1 is, for many, part of the landscape;  as are football
teams, rain and public toilets.  Muck with that and I see a lot of people being
pissed off in protest, or just pissed off and dumping it all.  Not good for
B.E.

In the R.O.t.W... Malaysia, China, etc. (this is also prob true of the non-West
(Eastern Euro) too), I'm a bit vague as to the population we're dealing with.
My possibly wrong assumptions (but here we go anyway) about the East (or from
here , far, far West) are that there's a Very Prosperous class, probably  a
small middle class and a lot of Others.  My guess is that it's the VP class
providing the $$ right now (e.g. Petronas).  My impressions of the, say,
Vienamese people (gathered circa 1967) is that even Dale Earnhart wouldn't turn
them on (gasp!), let alone  the Brothers S.  Doesn't seem to me that the very
few VP people could amount to enough to make PPV worthwhile.

So, in summary, Bernie either hasn't got the breadth of the market or the
depth.  But he could be enough of a megalomaniac to***it up for us all.
Leaving a future where we sit over our keyboards and type "boy - the way Clark
went through almost the whole field at the Glen in '63.. boy that was
something!".  Then we may turn on our TVs and watch NASCAR from Azerbaijan.

For free.  Along with some Basketball ads.

KMC



Quote:
>      Show Me Your Money!!!

>   Or words to that effect, is what one Bernard Ecclestone is saying to


 
 
 

Formula One Holdings, PLC/Inc. or Whatever

Post by Ralph van der Meul » Tue, 20 May 1997 04:00:00

Quote:

>Digital TV has hardly taken off at the expected rate in Germany this year
>afaik,

I don't know what they did expect, but in any case it's not burning ground.
It's poorly advertised on TV, and it looks more like a 'freak' thing to
German TV consumers, I suppose.

Quote:
>Methinks the smell of rat is pretty obvious here.BTW,how's the court case
>against the FIA TV monopoly in Germany going?I

I didn't hear anything about it since the posting in this group.

Yours, *RvdM*
      -    Ralph van der Meulen,  Aachen, Germany:    -

 
 
 

Formula One Holdings, PLC/Inc. or Whatever

Post by MFMetzg » Thu, 22 May 1997 04:00:00

Doc:  Thanks for your comments.  As for the German TV case, I dunno.  I'll
do some research (probably this weekend) and post the results.

Keith:  And thank you.  I concur with your analysis.  Seems to me that PPV
will only work in Europe and those portions of the Far East that look to
Europe and have the money to spend.  (Japan, Hong Kong/Guangzhou, Taiwan,
Malaysia, Indonesia, certain Arab countries).  I wonder about Aus/Nz, but
PPV would probably work.  As for North America, I really doubt it.  As you
say, there just isn't enough interest in F1 for enough people to shell out
for Bernie TV.

  So something has to give.  Donning my prognosticator hat, I expect that
Bernie won't get as much as he thinks for his IPO.  I think PPV will take
off in certain countries within 5 years.  I suspect that a PPV package wil
be available for those who want to pay, as will a broadcast package for
those who don't.  That'll happen pretty much world wide.  I just don't
think the PPV revenues will be as rosy as Bernie and Salomon Bros. claim.

Mike

 
 
 

Formula One Holdings, PLC/Inc. or Whatever

Post by MFMetzg » Thu, 22 May 1997 04:00:00

Quote:

>Digital TV has hardly taken
>off at the expected rate in Germany this year afaik,if the prospects of'
>this development making so much money are so good why does BE want to
>go public now on airy visions of the promised land?Why does he not sit
>around raking in the money,and then sell shares when the wonderful
>income of digital TV is there for all to see.Methinks the smell of rat
>is pretty obvious here

   Oh, reading between the lines, I think there are two things driving
Bernie to go public now.  First, in the U.S. Roger Penske (CART/NASCAR),
Bill France (NASCAR), and Bruton Smith (NASCAR) have all gone public,
successfully, with their motorsports properties within the last three
years.  The large amount capital raised in IPOs have allowed those groups
to "vertically integrate" by purchasing the venues at which they race.
This allows them to capture all the profits from events held at their
tracks.  This capital also allows them to fund and capture their own
marketing businesses, e.g., NASCAR cafes and theme parks.  Bernie's twist
on this is to use the capital to develop the television broadcast of F1,
which is ultimately more important than money derived from attendance
because of the huge world wide popularity of F1 and the inability of most
F1 fans to attend the events.  Bernie will work to eliminate the national
TV coverage of the events.  He will then approach the national TV
companies and sell them the package which they can then use to sell
advertising.  This will be attractive to the TV guys because they will
have almost no costs of production.  Bernie will also have PPV for the
higher end of the market.  He gets to eliminate middle men, capture the
profits himself.  This is not a new idea.  Major League Baseball (U.S.)
had this idea a few years ago and attempted to start it up.  It failed
because of the acrimonious baseball players strike and because the
broadcasts produced by MLB were really amaturish and too infrequent.

  Second reason, I think, is that Bernie wants to retire soon.  Better to
try and sell something that looks promising than to wait and risk that it
won't be as good as advertised.  I suppose the ***-analogy would be
vapor-ware [which I'm sure Bill Gates NEVER used to bolster Microsoft's
stock price :) ]  I really don't think he wants to work 5-10 years to
establish Formula One Holdings in TV and other things. He wants to take
the cash, control the thing for as long as he feels the need (he's got
30%, the most of any group, and the political capital, after giving
Williams, McLaren, and Tyrrell what they wanted, to elect his chosen board
of directors), and most importantly, much less risk.  Half the risk of the
venture will be fobbed off on those who purchase the stock.  They won't be
"partners" with Bernie, merely those who are assuming his risk in the hope
that he will make good on his revenue predictions.

  Now if a large block of institutional investors (pension funds,
insurance companies etc.) bought stock, they might have the ability to
rein in Bernie.  This, however, is unlikely, as the venture is too risky
for most institutional investors to entertain.

   I must say, it's a pretty good deal from Bernie's point of view.
Delegate risk, raise cash, retire when he wants on his own terms.  If I
were him, I would not float this on any U.S. exchange.  He simply won't
generate enough capital to justify exposing himself to U.S. securities
laws and shareholder suits.  For instance, in this country, a principal
taking a company public generally cannot sell any of his portion of the
stock for some time after the initial offering (to prevent fraud by
cashing out after the intial run).   Things corporations and officers can
do in Europe definitely don't work here.  He also may not be taking into
account the activisim of U.S. shareholders and the large number of
excellent, well-trained, lawyers (okay, some shameless self-promotion
there) in the U.S. who would love to hold Bernie accountable for any
shenanigans.  I don't know if Bernie has beard of Bill Lerach
(famous/infamous shareholder lawyer, depending on your point of view) but
Salomon Bros. should have informed him.

I'm getting off topic, so I'll close,
Mike

 
 
 

Formula One Holdings, PLC/Inc. or Whatever

Post by Thomas Gmu » Thu, 29 May 1997 04:00:00

Quote:

> Thanks Mike,that's a very interesting posting and a good analysis.Seems
> to me Bernie must be pretty deperate,seeing as how he has sunk so much
> of his own money into the digital TV thing.Digital TV has hardly taken
> off at the expected rate in Germany this year

Yes, they expected to have 200'000 subscribers by the end of 1996 and
20% of them would also subscribe to the F1 package. At the moment (May
1997) they would be happy to have 30'000 (6'000 for F1). What a
minority:-)

But actually the german problem is not Formula 1, or digital, or
anything in the hands of Bernie. The same package in Italy (Telepiu) and
France (Canal+) is successfull, because they are not new services and
are based on a already large subscriber base. Germany has 30 free
TV-Stations and only one Pay-TV-Network "premiere" wich finally has
become profitable, but still has to repay credits of more than 500
million dollars. Setting up a new rivaling station with a new technique
a potential user has to buy was certainly not a good idea.

Quote:
> Why does he not sit around raking in the money,and then sell shares when
> the wonderful income of digital TV is there for all to see.Methinks the
> smell of rat is pretty obvious here.

I can smell it too, actually it starts to stink:-)

Quote:
> BTW,how's the court case against the FIA TV monopoly in Germany going?If
> they lose that one,might that not upset the applecart just a wee bit?

The Landgericht Frankfurt will issue the decision on June 4. It will
certainly goes to several more courts and it will take years until it
reaches the EU supreme court. The going public only works because Max is
selling the exclusives to Bernie until 2027. If this first Verdict is
against Bernie it will surely makes investors think about it twice.

Thomas
--

 
 
 

Formula One Holdings, PLC/Inc. or Whatever

Post by Thomas Gmu » Thu, 29 May 1997 04:00:00

Quote:

>      Show Me Your Money!!!

Do you accept italian Lira?

Quote:
>    Here, in a nutshell, is the deal.  They're going to sell 50% of
> Bernie's Formula One Holdings to the public in the form of stock.  Bernie
> will keep 30% of the equity (in shares) and be CEO.

[snipped lot's of the excellent post]

What makes me wonder, why have Salomon Brothers recommended Bernie NOT
to use the NYSE? Instead he should sell in London where companys are
much less controlled than in New York? Thats the first suspicious
circumstance.

Quote:
>    Curiouser and curiouser.  What does this mean for the future of Formula
> One?  The Financial Times quotes "City analysts", i.e., London stock
> experts, as saying basically, the only way to support such a high initial
> valuation is to dramatically increase revenues from TV.

Point 2: What is Mr. Bernie selling? AFAIK he owns FOCA-Travel, FOCA-TV,
ISC (who does all the sponsorships) and several more companies or shares
in them (Intertechnique, the only company allowed to sell re-fueling
rigs) who are directly profiting from Bernies-Monopoly. I don't think
Bernie sells them all together in this "Holding" he keeps the honeypies
and sells the problem childs.

Point 3: What is Formula 1 anyway? A bunch of freaks running some cars
fast around a track. Can you sell them? No way! All you can, is selling
the TV-rights as these are the only valuable stuff in F1. There is a lot
of technology, but unlike by selling any "real" company, nothing of that
tech stuff or the engineers behind it is owned by F1. By investing in F1
I don't get a dime worth back from a star like Villeneuve or Schumacher,
or cannot advertise with him. Rights like these are seriously missed by
Bernie.

Quote:
>   For this to work as Bernie expects, those who will purchase stock at
> Bernie's price will be betting that you and I, average F1 fans, will be
> willing to spend more of our disposable income on F1.  I really don't see
> how additional advertising can account for the increase in revenues
> required.  That means, within the next 5 years or so, you and I are going
> to have to purchase a subscription package similar to what's being offered

Exactly, this is where we come to point 4: More, more, more until the
big bang leads to an quick end. As Formula 1 is already walking fast in
this direction i wouldn't invest in it, cause i don't see a chance to
get my investment back in time.

Quote:
> in Germany and Switzerland now.  It's going to be real interesting to see
> what happens when the current TV agreements with ITV, RTL, and ESPN
> (Disney/ABC) expire.  My guess and my hope is that potential stock

That is at the moment where all the money comes from. And i mean *all*
the money. These networks are paying lots of money, and all track or
team sponsors are only paying lots of money, cause they have the
advertising on these channels. As the hype of bidding more and more
money for any seventh class Tennis tournament or similar sport event, it
can be expected to be similar in F1. Actually ITV, RTL, RAI and other
major networks had a come-together at the Monaco GP to discuss their
future. I wouldn't expect them to pay a lot more since they have already
a hard time to get their money back. Moving it to Pay-TV or Pay-per-View
is in no way a problem solver as most sponsors would immediately drop
down.

The money from the Spectators on the track is going to the organizers
and not to F1, and even they are complaining about high prices
(Organizers as well as Visitors). Bernie has done a "good" job here and
is balancing perfectly at the limit. But i don't see a chance to
increase the revenues here.

Quote:
>   The only good thing I can see out of this is that such a deal makes F1
> much less reliant on tobacco sponsorship money.

Now, here you are completely wrong. NO money from these stocks would go
to the teams or the benefit of F1. It goes to the pockets of the Bernie
& Max gang, a few hundred lawyers and stock brokers. And after the big
sale, Formula 1 has to increase their profits to keep the shareholders
happy i.e. tobacco and other sponsors are even more important than ever.

The planned (and heavily discussed in other threads) tobacoo bans in the
major markets of Formula 1 will not help to increase that sponsoring.
Just one example: Canada does it - Bernie removes Montreal from the
calendar - Villeneuve leaves F1. This can happen in a short term (1-3
years) and F1 would have lost North America completely to CART, NASCAR
and IMSA. Where are long term plans for investors, Mr. Ecclestone?

Quote:
> I really wonder what will happen the first time Bernie says/does something
> that is fine in Europe but is verboten in the U.S.  Speaking from my legal
> experience, I predict that some U.S. shareholder will sue Formula One
> Holdings and Bernie in a U.S. court and they will get jurisdiction.

And here is the final point (sorry for beeing a little long)

As explained above the worth of F1 is only it's TV coverage. And does
the FIA really owns them? You know about german TV-producer Eisele who
sued everyone involved with these rights. Several other sports in the
European Union already lost similar cases (in the Netherlands even a
sportschannel went bankrupt due to that). The EU itself is preparing a
law that "major events" such as Olympic Games or the World Cup of
Football cannot been shown exclusivly on Pay-TV. France already have
one, who nearly leads to the cancellation of this years GP. Hard times
ahead of Mr. Ecclestone, and all he wants is take his money and run...
But he's no Woody Allen and doing it for our entertainment!

Thomas
--

 
 
 

Formula One Holdings, PLC/Inc. or Whatever

Post by MFMetzg » Sun, 01 Jun 1997 04:00:00

Weekly Update:  Eye on Bernie

  Seems this isn't quite such a done deal after all.  Apparently Williams,
McLaren and Tyrrell are leading the charge to increase the top 10 teams'
percentage of ownership from an aggregate 10% to 20% plus a larger share
of the TV royalties.  The London stock experts think this might delay the
floatation.  Bernie and Salomon Bros. say, "Don't panic, all is well," and
have implied that the teams have agreed ot the 10% plan.  Unnamed sources
say no deal is yet concluded and everyone's trying to figure out why
Bernie wants the float done this summer.

  Apparently, Bernie flew out some suits from Salomon Brothers and
associated sub-underwriters for a schmooze-fest at the Spanish Grand Prix.

Source:  The London Financial Times and the London Independent

Michael Metzger
San Diego, California

"When the going gets weird, the weird turn pro."
Hunter S. Thompson

 
 
 

Formula One Holdings, PLC/Inc. or Whatever

Post by MFMetzg » Tue, 10 Jun 1997 04:00:00

Weekly Update:  Fear and Loathing on the Road to Floatation or See You in
September

   Oh, the plot has thickened.  The long knives are out for our hero,
Bernie.  Those stock underwriters who care about their Errors and
Omissions insurance coverage are running away from this deal faster than
Donovan Bailey from a suddenly lame Michael Johnson.

   Developments This Week

   A Wrench in the Works:  Litigation by a German TV corporation, Wolfgang
Eisele's AE TV (see Thomas Gmuer's posts for a thorough exposition), and a
new lawsuit in France may end up putting the floatation on hold.  On
Wednesday, June 4, a court in Frankfurt sided with Eisele and ruled that
the FIA's central marketing of TV rights for its European Truck Racing Cup
violates European competition (antitrust) law.  Source:  London Daily
Telegraph.  Bernie and the FIA use the same method to market TV rights for
F1.  This court's ruling undercuts the validity of those F1 TV rights,
essentially the only assets floatable by Formula One Holdings (FOH).
Others who've experienced the FIA/FOCA brand of doing business are
locking, loading and training their sights on Bernie.  On Friday, June 6,
the "GTR Organisation" announced it was suing the FIA for breach of
contract regarding promotional rights to the GT racing championship.
Source:  London Daily Telegraph.

   Bernie's Reaction:  When asked whether the litigation affected the
floatation of FOH, spinmeister Bernie said, "It does not affect it.  This
is just an imbecile in France who thinks he can get on the bandwagon
because of this German television producer."  Memo to Mr. Ecclestone's
lawyer:  better research EC, British, and French defamation law, just in
case.

    Salomon Brothers Reaction:  Big meeting scheduled for Monday, June 9,
to discuss the impact of the litigation on the float.  Leading
institutional investors who've been lined up are backing off the deal
until the FOH rights are clarified.  Squads of lawyers will be deployed to
research and write opinions on the matter.  This is expected to take
several months and delay the floation until September.  Source:  London
Daily Telegrah.  Bernie had wanted to announce the float at the British GP
on July 13.

   Show Us the Money, Please?  Some financial figures are have been
emerging, or more accurately, have been leaked by sources connected to the
floatation.  FOH is counting on some TV deals and payments from GP circuit
owners which guarantee a certain level of revenue.  FOH is guaranteed at
least pounds 57 million/US$ 93 million from deals from three of their
broadcast partners (Germany's Kirch, France's Canal+, and Italy's
Telepiu).  FOH also is getting a total of pounds 46 million/US$ 75 million
from all the GP circuit owners, each year for the next five years.  That
amount is subject to escalator clauses tied to the inflation rate.
Source: London Daily Telegraph.

      Dissension is spreading amongst the ranks of the float's
underwriters.  Salomon Brothers leads a syndicate of 16 houses
underwriting this deal.  Some of the small fry are getting cold feet.
Apparently, Bernie and Salomon have been less than forthcoming with
details about FOH's financial and contractual information making it nearly
impossible for syndicate analysts to assess the value of the deal.
Observers close to the deal said, "There is unease among some analysts in
the syndicate, who feel the level of disclosure is woefully inadequate.
They are anxious about being asked to express an opinion about this
thing's value with so little information."  And, "Never has a company has
a company had more opaque financial information."  Source:  London Daily
Telegraph.  Bernie also limited the distribution of research notes written
by his top-secret crack squad of London analysts to big institutional
investors who've expressed interest in FOH stock.  Source:  The
Independent (London).

   Skeletons in the Closet.  Bernie is apparently the highest paid
executive in the world.  In 1995, Mr. Ecclestone earned pounds 54
million/US$ 88 million.  Source:  The Independent (London).  By my
calculation, Bernie is taking home amounts about equal to 20-25% of the
total gross revenues generated by F1.  Seems to me he could easily afford
to spend more on his wardrobe and have someone other than his wife cut his
hair.  Speaking of Mrs. Ecclestone, a former model from Croatia,
apparently she is the one who owns most of the rights Bernie wants to sell
as FOH. Bernie has constructed a labyrinth of trusts and other instruments
to avoid, not evade mind you, inheritance taxes when and if he dies.
Source:  Londond Daily Telegraph.

   Keeping the Workers in Line.  Those trouble-makers at Williams,
McLaren, and Tyrrell are coming around to Bernie's way of thinking.  Why,
is not yet clear (can you say "increased participation"?).  Ron Dennis
says negotiations regarding these teams signing of the new Concorde
Agreement are "at a promising stage."  Source:  The Independent (London).
Unfortunately, I can't translate Ronspeak into reality, so take it for
what it's worth.

Stay tuned for more fun with Bernie & Max

Michael Metzger
San Diego, California

 
 
 

Formula One Holdings, PLC/Inc. or Whatever

Post by Irwin Saba » Tue, 10 Jun 1997 04:00:00

Quote:

>Weekly Update:  Fear and Loathing on the Road to Floatation or See You in
>September<

Great stuff Mike.

Your efforts in compiling this digest of events is genuinely
appreciated.

Quote:

>   Oh, the plot has thickened.  The long knives are out for our hero,
>Bernie.  Those stock underwriters who care about their Errors and
>Omissions insurance coverage are running away from this deal faster than
>Donovan Bailey from a suddenly lame Michael Johnson.

>   Developments This Week

<Posting snipped>

Quote:
>Stay tuned for more fun with Bernie & Max<

Definitely.

--
Irwin

t.i.n.s.t.a.a.f.l.
(Helping victims of conventional wisdom)

 
 
 

Formula One Holdings, PLC/Inc. or Whatever

Post by Geoff Schul » Tue, 10 Jun 1997 04:00:00


Quote:
>Weekly Update:  Fear and Loathing on the Road to Floatation or See You in
>September

- <Excellent analysis snipped> -

Mike, thanks for the information... your efforts are much appreciated. (-:

Quote:
>Stay tuned for more fun with Bernie & Max

>Michael Metzger
>San Diego, California

If the F1 float doesn't work out maybe Bernie the Dollar can sell the film
rights to this saga instead... it's better than any soap opera!

--
Geoff Schuler

------------------------------------------------------------------
 Each + marks 1 Spammer whose Internet access has been cancelled
 as a result of my complaints to their ISP. You have been warned!
 + + + + + + + +
------------------------------------------------------------------

 
 
 

Formula One Holdings, PLC/Inc. or Whatever

Post by Cheek Sr » Tue, 10 Jun 1997 04:00:00

Quote:

> Weekly Update:  Fear and Loathing on the Road to Floatation or See You in
> September

>    Oh, the plot has thickened.  The long knives are out for our hero,
> Bernie.  Those stock underwriters who care about their Errors and
> Omissions insurance coverage are running away from this deal faster than
> Donovan Bailey from a suddenly lame Michael Johnson.

>    Developments This Week

>    A Wrench in the Works:  Litigation by a German TV corporation, Wolfgang
> Eisele's AE TV (see Thomas Gmuer's posts for a thorough exposition), and a
> new lawsuit in France may end up putting the floatation on hold.  On
> Wednesday, June 4, a court in Frankfurt sided with Eisele and ruled that
> the FIA's central marketing of TV rights for its European Truck Racing Cup
> violates European competition (antitrust) law.  Source:  London Daily
> Telegraph.  Bernie and the FIA use the same method to market TV rights for
> F1.  This court's ruling undercuts the validity of those F1 TV rights,
> essentially the only assets floatable by Formula One Holdings (FOH).
> Others who've experienced the FIA/FOCA brand of doing business are
> locking, loading and training their sights on Bernie.  On Friday, June 6,
> the "GTR Organisation" announced it was suing the FIA for breach of
> contract regarding promotional rights to the GT racing championship.
> Source:  London Daily Telegraph.

>    Bernie's Reaction:  When asked whether the litigation affected the
> floatation of FOH, spinmeister Bernie said, "It does not affect it.  This
> is just an imbecile in France who thinks he can get on the bandwagon
> because of this German television producer."  

This quote tells you something about the man,does it not?Thanks for a
very good posting Mike,this is one topic vital to the future of the
sport we love and I really appreciate you taking the time to do an ana-
lysis like this one.Makes all the sweat of sifting through some pretty
mindless postings on this ng worthwhile!
Doc

--
Fredrik B. Knutsen MD    !!please remove "nowaste" when replying!!
Director,
Cheek Racing Cars
Fax: 47 69 19 02 55
Mobile: 47 90 78 70 32

 
 
 

Formula One Holdings, PLC/Inc. or Whatever

Post by MFMetzg » Wed, 11 Jun 1997 04:00:00

Though you'd get a kick out of this -- MFM

From today's Times (London), Commentary from the City Editor
http://www.the-times.co.uk

-----------------------------

    Will F1 move out of first gear?

     A company is planning to float on the stock market, valued
at a good seven-and-a-half times last year's turnover,
buoyed by the prospects from pay-per-view TV. Sounds
familiar. You could be forgiven for thinking this was a
football float before realism set in during the spring. It is
actually Formula One which, if it reaches its expected price
tag of more than 1.5 billion, will be worth the same as four
Manchester Uniteds. Is it worth that much?

     If investors think it is, they should take a closer look. The
business is run by an ageing mercurial entrepreneur, who is
attempting to formalise many of the contracts that up until
now have been largely verbal. Formula One relies on the
support of racing teams and track owners, which are waking
up to the money that the middleman is making. This
middleman pays himself 54 million and puts almost
everything in his wife's name. He is also attempting to strike a
pay-TV deal when there is a legal question mark about the
competition issues surrounding the existing TV deals. Also
the sponsors that made Formula One what it is are unhappy
about pay-TV because it greatly reduces the audiences who
watch the sport when compared with free TV channels.
Given this background it is no surprise the Salomon Brothers
is finding it difficult to issue a timetable for the flotation of this
business. The investment bank has made the City unhappy
with its prevarication, and it will be an achievement to float it
at all.