CVC still at a loss in 2010… despite F1 profits
Paradoxically, the revenue generated by Formula 1 in 2010 reached a new high (at $1.08 billion), but the losses of CVC, its owner, deepened further to 660 million euros due to the financial expenses related to the acquisition of this sport in 2005.
The investment fund has, in fact, decided to take advantage of the very low interest rates currently in effect to anticipate the repayment of the £2.9 billion debt contracted with Lehman Brothers and the Royal Bank of Scotland.
Nevertheless, one should not be misled by the losses recorded by CVC. Indeed, it is not widely known that investment funds get involved in any field purely for philanthropic interest. The losses currently recorded are related to the repayment of contracted debt, which must be completed by 2014 at the latest, according to the latest information we have. Once CVC is free of this debt, it will have an asset with a very high value, which should enable it to make a sale with a comfortable profit.
Conversely, the share redistributed to the teams has never been higher as it reached $658 million for the 2010 season. The main reason for this financial source granted to the teams is the threat of a parallel championship that emerged during the 2009 season. Thus, the contribution that the participants received increased by 164% between 2007 (the year of the last Concorde Agreements, which govern the financial aspect of F1) and 2010. In the year 2010 alone, the teams saw their revenues increase by 21%, amounting to $110 million.
But only someone very clever will be able to indicate how this jackpot is divided among the twelve teams on the grid. Indeed, part of it is determined by on-track performances (the world championship standings being the reference) but a significant part is also linked to discretionary redistributions granted to the oldest teams (this allowed Renault F1 to record a profit of 12.8 million euros in the 2009 season) but also to the new teams. These new teams are also one of the reasons for the significant increase recorded during the 2010 season.
In parallel, Bernie Ecclestone, never one to oppose his personal interests, also saw his remuneration increase by 21% to reach the sum of 7.9 million dollars, which is more than the salary paid by Mercedes to Nico Rosberg and Michael Schumacher…
With the participation of RacingBusiness.fr
