Elite Traveler July-August 2016

101 elite traveler JULY/AUG 2016

Research published last year shows it has made more than $14bn for its various owners – driven by the sale of shares, dividends and a $1.4bn bond issue in 1999 – since the first stake in the sport’s parent company was sold in 1999 to investment bank Morgan Grenfell. In 2014, F1’s operating profits hit $519.8m. AMONEY SPINNER “At the top of the list of investors is the private equity firmCVC, which is F1’s single largest shareholder and has made a 351.8% return on the $965.6m it invested in 2007 to buy the sport,” says Christian Sylt, co-author of F1’s trade guide FormulaMoney . CVC intended to list F1 on the Singapore stock exchange in 2012 but stalled in the wake of the economic crisis. Instead, it has raised $4.4bn from dividends and selling stakes in F1, leaving it with a 35% shareholding. Although F1 shares aren’t publicly traded, it is still possible to invest in the business. The most lucrative route is to buy CVC’s stake outright for around $3.5bn. “That is the price tag the firm is understood to have put on its stake with bidders believed to include RSE Ventures, owner of the Miami Dolphins NFL team, and investment firm China Media Capital,” says Sylt. “CVC’s representatives on the board of F1 are known as ‘I Directors’ and they have the power to outvote their counterparts. It means that CVC controls the company that puts a premium on its stake.” After CVC, the biggest shareholder is the estate of bankrupt investment bank Lehman Brothers with a 12.3% stake, which it will eventually have to sell to pay off creditors, creating another potential way in. Together, fees from race hosts and broadcasters comprised more than $1.2bn of F1’s total revenue in 2014 with a further $161m coming from TV production as well as travel and freight services to the sport’s teams. Advertising and sponsorship – the latter of which provides 37% of teams’ budgets on average – from brands such as Rolex and the Emirates airline came to $254.4m. “As the world’s most-watched annual sports series, with 425 million viewers in 2014, its sponsorship values are some of the highest in sport, ranging from $1m for a small logo on the side of a top car, to $25m for a big one on the rear wing,” says Sylt. “When the economy is in top gear, blue chip brands sponsor F1 to differentiate themselves from their competitors. However, in a declining economy, it is easy to save money by pulling out of the deals.” GOLDEN TICKET In 2014, revenue from the sale of tickets to F1’s corporate hospitality outfit, the Paddock Club, grew 4.9% to $110.9m. Tickets for the club cost around $4,800 each, making it the more cost-effective way of putting money into F1, if not exactly a long-term investment. Benefits

Sparks can fly when intelligent, wealthy, driven people are thrown together in an inherently competitive environment. There is constant bickering over who gets what in Formula 1 (F1), especially as it broadens its horizons across 21 venues around the world. Just as there is always the next race, there is always the next deal, meaning there are many investment opportunities for those wealthy and bold enough to take them. Since British billionaire Bernie Ecclestone took the driving seat of F1 in the 1970s, he has made a lot of people very rich. His zeal and energy live on, to F1’s benefit. While these days it’s a largely respectable environment – attracting the likes of global premium brands such as Rolex, Mercedes, Hugo Boss and Bose – F1 remains the domain of the hustler, where some of the world’s wealthiest rub shoulders with CEOs, celebrities and supermodels. Indeed, if you have the desire and the courage, there is smart money to be made. There is a mighty cash-generating engine under F1’s hood.

include an open champagne bar, unlimited buffet and race viewing spots above F1’s nerve center, the paddock. It attracts high rollers such as actor Michael Douglas,

Top left: Pinnacle Rock, by Sullivan Bay, Santiago and Bartholomew Islands