News Corp., Exor Face ‘Olympic-Sized’ Negotiations to Purchase Formula One
News Corp. and the Agnelli family’s Exor SpA (EXO) face “Olympic-sized” negotiations should they go ahead with an attempt to buy Formula One auto racing, team owner Frank Williams said.
The prospective bidders must hold three-way talks with owner CVC Capital Partners Ltd., teams and series ruling body Federation Internationale de l’Automobile, said Mark Jenkins, a business strategy professor at the U.K.’s Cranfield University who has written about Formula One.
Series chief executive officer Bernie Ecclestone will also play a part in talks as a signatory of the Concorde agreement that governs the commercial part of the sport, Williams said. That agreement expires after the 2012 season.
“It would be an Olympic-sized negotiation,” Williams said in an interview in London. “I would pay a lot of money just to listen” to Ecclestone and News Corp. (NWSA) CEO Rupert Murdoch reach an agreement, Williams added.
London-based CVC said on May 3 that News Corp. and Exor had made a “friendly” approach about buying Formula One. The potential bidders also opened discussions with teams, which for years have pressed for more say in the running of the sport and more of its income, Jenkins said.
The companies will also need to win over the FIA, which ceded the commercial rights to Formula One’s previous owners in 2001 while retaining the right of veto over future buyouts, Jenkins said. Norman Howell, a spokesman for the FIA, didn’t return a call seeking comment.
Williams, who founded and controls the nine-time champion team of the same name, said News Corp. and Exor would have to increase prize money to satisfy teams if they decided to screen races on pay-television. That would dilute the value of future sponsorship contracts, he said.
Teams currently get about 75 percent of their income from sponsorship, and 25 percent from prize money, Williams said. In 2010, teams shared $658 million in prize money, a 21 percent increase on the previous year, according to filings by CVC at Companies House in London last month.
Formula One had net income of $296 million after increasing sales by 2 percent to $1.08 billion, the filings said.
Separately, Williams said it was important to shake up his team this week after it failed to win a point in its first three races this season.
On May 3, the Grove, England-based team said technical director Sam Michael and chief aerodynamicist Jon Tomlinson would leave at the end of the season.
“We need a reaction, we will get one,” Williams said. The next race is the Turkish Grand Prix in Istanbul on May 8.
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