Donald Mackenzie becomes the new president of F1
The economic environment of F1 has been marked for months by the Gribkowsky affair. The current owner of F1, CVC Capital, has therefore decided to take matters into its own hands and demonstrate that it is clearly in control of its investment. That is why Donald Mackenzie, one of its co-founders, has just been appointed chairman of Delta Topco, which holds the commercial rights to the sport.
This news will certainly not please Bernie Ecclestone as it is a clear takeover by the investment fund. Earlier in the year, the F1 boss stated: “I don’t think F1 needs a president. Presidents don’t run companies. We will probably bring up the issue at a future board meeting.” However, he now simply has to acknowledge that “Donald is the president.”
This should reassure some of the investors who have entrusted their funds to CVC Capital, worried about the lack of communication since the announcement of the arrest of the former BayernLB employee regarding the F1 sale. A major European investor had stated to the Financial Times: « Every significant investor has this question on their radar and wants answers to the following two questions: Did you know what was happening? If not, what changes did you make within the company after you found out?” Another major institutional investment fund would have long made the necessary changes in F1 management and communicated transparently. »
If F1 represents only a part of its $48 billion managed, it is one of the most publicly visible assets. In 2006, it was Donald Mackenzie who was the main force at CVC Capital in closing the deal and signing a check for $1.7 billion. Since the fund did not have the equity to cover the entire transaction, it could only pay “only” $960 million in cash while the rest came from a loan taken from the Royal Bank of Scotland.
Since the investment has proven to be very profitable, as according to Formula Money, the revenue of Formula One has increased by 60% since 2006, reaching $1.6 billion. This has resulted in a net gain of $800 million over five years for the investment fund, translating to an impressive return of 15% per year. In these times of global economic and financial crisis, few investments can boast such results. For someone whose childhood hero was his fellow countryman Jim Clark, F1 is not just a means to satisfy his passion…
With the participation of RacingBusiness.fr
