A variety of witnesses called to give evidence at the Leveson Inquiry have unwittingly highlighted a series of iniquitous arrangements, details of which have succeeded in alienating an even greater number of people from the political process.
Far too many witnesses, especially those drawn from a supercilious, openly avaricious metropolitan political class, have shown that British public life is littered with people determined to pursue their own interests at the expense of the public good.
Yet while Lord Justice Leveson’s Inquiry may appear a million miles from the sporting world, its protracted nature has effectively prevented News Corporation, a significant shareholder in BSkyB, from buying Formula One from the sport’s principle owner and private equity firm, CVC.
As this column reported in March, following the revelation from a source close to Bernie Ecclestone that the company which held various assets previously owned by disgraced US bank Lehman Brothers wanted to sell its 15.3% F1 stake, BSkyB were considered amongst the most likely buyers.
Slowly but surely, however, Leveson has put paid to such ambition, seriously damaging News Corporation’s image and reducing the probability of the company acquiring the Formula One business.
In the meantime, CVC has sold around 28% of its stake in Delta Topco, a US-based holding company (and Formula One’s parent corporation) previously majority-owned by CVC, for an estimated $2.1 billion.
The private equity firm still owns 35.5% of Delta Topco. The sale of its 28% stake, to American investment funds, money managers and even the investment division of Norway’s central bank, have proved enormously lucrative for CVC. It has recouped almost all of the $2.8 billion it paid to acquire F1 in 2006 and still owns one third of the business.
A flotation of CVC’s stake in Formula One on Singapore’s stock exchange, initially planned for the summer, was pulled in late May as the ongoing eurozone crisis continued to have a debilitating affect upon most of the world’s equity markets.
Significantly, however, this was not before the business was valued at close to $10 billion, a potentially handsome return on investment for CVC. Nevertheless, Bernie Ecclestone, who has remained involved with CVC since selling his Formula One business to them, continues to maintain that the float will proceed before the end of the year.
The delay may present an opportunity for other potential bidders to come forward. The Mubadala Investment Company, for instance, owned by the Abu Dhabi government and responsible for building the country’s impressive Yas Marina F1 circuit, could buy F1 outright. The company believes that motorsport, “helps [Abu Dhabi] achieve a number of our business objectives [and] to partner with world-class organisations.”
At this juncture, however, any sale to F1 teams can be ruled out. Although the idea has been discussed privately on several occasions since March by team owners, few wanted to assume a significant debt burden necessary to buy the business, particularly as they shared F1 receipts of $686 million between them last season.
This enormous cash boost arrived after Mr Ecclestone persuaded the teams to remain involved with F1 (without them, the sport is worthless) by handing over a 47.5% share of post-tax profits.