SLEC Holdings - AbsoluteAstronomy.com

The Formula One Group is a group of companies responsible for the promotion of the FIA

Fédération Internationale de l'Automobile

The Fédération Internationale de l'Automobile is a non-profit association established as the Association Internationale des Automobile Clubs Reconnus on 20 June 1904 to represent the interests of motoring organisations and motor car users...

Formula One World Championship and exploitation of the sport's commercial rights. The Group is owned ultimately by Delta Topco, a Jersey

Jersey

Jersey, officially the Bailiwick of Jersey is a British Crown Dependency off the coast of Normandy, France. As well as the island of Jersey itself, the bailiwick includes two groups of small islands that are no longer permanently inhabited, the Minquiers and Écréhous, and the Pierres de Lecq and...

–based company owned by CVC Capital Partners

CVC Capital Partners

CVC Capital Partners is one of the top five largest private equity firms globally with approximately US$46 billion in funds focused on management buyouts...

' funds

Collective investment scheme

A collective investment scheme is a way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group...

(approximately 70%) and JPMorgan (approximately 20%). Bernie Ecclestone

Bernie Ecclestone

Bernard Charles "Bernie" Ecclestone is an English business magnate, as president and CEO of Formula One Management and Formula One Administration and through his part-ownership of Alpha Prema, the parent company of the Formula One Group of companies. As such, he is generally considered the primary...

's family trust owns the remainder apart from small shares held by financial advisers and Ecclestone himself.

"Formula One Group" strictly refers to Formula One Management, Formula One Administration and Formula One Licensing BV, which are subsidiaries of the Formula One Holdings holding company. However Delta Topco owns other Formula One businesses which are referred to in the same way.

History

In 1974 the Formula One Constructors Association

Formula One Constructors Association

The Formula One Constructors' Association is an organization of the chassis builders who design and build the cars that race in the FIA Formula One World Championship...

, or FOCA, was founded in order to increase commercial organisation of Formula One for the benefit of the racing teams. In 1978 Bernie Ecclestone became the executive of FOCA and fought the Fédération Internationale du Sport Automobile

Fédération Internationale du Sport Automobile

The Fédération Internationale du Sport Automobile was the governing body for motor racing events. The organisation's origins date from 1922, when the Fédération Internationale de l'Automobile delegated the organisation of automobile racing to the CSI , an autonomous committee that would later...

(FISA) for control of F1 commercial rights. Disputes were settled by March 1981 when the Concorde Agreement

Concorde Agreement

The Concorde Agreement is a contract between the Fédération Internationale de l'Automobile , the Formula One teams and the Formula One Administration which dictates the terms by which the teams compete in races and take their share of the television revenues and prize money...

gave FOCA the right to negotiate TV contracts. Under previous arrangements, TV contracts were not very lucrative and were risky. When the Concorde Agreement ended in 1987, Bernie Ecclestone ceased being a team owner and established the Formula One Promotions and Administration (FOPA), to manage TV rights for the teams. FOPA would later become known as Formula One Management (FOM). FOPA received 49% of TV revenues, 1% went to the teams, and 50% to the FIA. FOPA, however, received all the fees paid by promoters. In exchange for this FOPA paid prize money to the teams.

In 1995 the FIA decided to grant the commercial rights to F1 to Formula One Administration (managed by FOM) for a 14-year period. In exchange, Ecclestone would provide an annual payment. With FOM having exclusive rights to popular team names like Team McLaren, WilliamsF1

WilliamsF1

Williams Grand Prix Engineering Limited, trading as AT&T Williams, is a British Formula One motor racing team and constructor. It was founded and run by Sir Frank Williams and Patrick Head...

, and Tyrrell Formula One, the aforementioned teams protested by rejecting the following Concorde Agreement in 1997. Team McLaren, WilliamsF1

WilliamsF1

Williams Grand Prix Engineering Limited, trading as AT&T Williams, is a British Formula One motor racing team and constructor. It was founded and run by Sir Frank Williams and Patrick Head...

, Scuderia Ferrari

Scuderia Ferrari

Scuderia Ferrari is the racing team division of the Ferrari automobile marque. The team currently only races in Formula One but has competed in numerous classes of motorsport since its formation in 1929, including sportscar racing....

and Renault F1

Renault F1

Lotus Renault GP, formerly the Renault F1 Team, is a British Formula One racing team. The Oxfordshire-based team can trace its roots back through the Benetton team of the late 1980s and 1990s to the Toleman team of the early 1980s. Renault had also competed in various forms since , before taking...

formed GPWC Holdings and threatened to form a rival racing franchise in 2008 when their contracts ended in 2007.

Ecclestone sells shares of F1

SLEC Holdings

The Formula One Group is a group of companies responsible for the promotion of the FIA Formula One World Championship and exploitation of the sport's commercial rights. The Group is owned ultimately by Delta Topco, a Jersey–based company owned by CVC Capital Partners' funds and JPMorgan...

was created as the holding company of the Formula One companies in 1996 when Bernie Ecclestone transferred his ownership of Formula One businesses to his wife, Slavica Ecclestone, in preparation for a 1997 flotation of the group.
In October 1999 Morgan Grenfell Private Equity (MGPE) acquired 12.5% of SLEC for £234 million. In February 2000 Hellman and Friedman purchased a 37.5% share of SLEC for £625 million and combined its share with that of MGPE to form Speed Investments which thus had a combined holding of 50% of SLEC. On 22 March 2000 German media company EM.TV & Merchandising

EM.TV

Constantin Medien AG is a German media group, based in Ismaning near Munich...

purchased Speed Investments for £1.1 billion.

EM.TV's acquisitions caused it financial difficulties; following its announcement that its 2000 earnings would be below expectations and it was struggling with its debts, the share price dropped 90%. In February the Kirch Group

Kirch Group

KirchGruppe was a German media group founded by Leo Kirch. The group collapsed in 2002 largely due to the debts associated with the purchase of sports rights for its television channels and the launch of pay-TV services....

agreed to rescue EM.TV in return for a stake in the company and control of Speed Investments. The two companies also agreed to exercise EM.TV's option to purchase another 25% of SLEC for approximately £600 million in late-March 2001. To raise Speed Investments' share of SLEC to 75% Kirch borrowed €1.6 billion, €1 billion from Bayerische Landesbank

BayernLB

BayernLB or Bayerische Landesbank is a publicly regulated bank based in Munich, Germany and one of the eight Landesbanken. It is 94% owned by the free state of Bavaria and 6% owned by the Sparkassenverband Bayern, the umbrella organization of Bavarian Sparkassen...

and the rest from Lehman Brothers

Lehman Brothers

Lehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...

and JPMorgan Chase. Kirch's involvement raised concerns among the major motor manufacturers who participate in Formula One; BMW

BMW

Bayerische Motoren Werke AG is a German automobile, motorcycle and engine manufacturing company founded in 1916. It also owns and produces the Mini marque, and is the parent company of Rolls-Royce Motor Cars. BMW produces motorcycles under BMW Motorrad and Husqvarna brands...

, DaimlerChrysler

DaimlerChrysler

Daimler AG is a German car corporation. By unit sales, it is the thirteenth-largest car manufacturer and second-largest truck manufacturer in the world. In addition to automobiles, Daimler manufactures buses and provides financial services through its Daimler Financial Services arm...

, Fiat

Fiat

FIAT, an acronym for Fabbrica Italiana Automobili Torino , is an Italian automobile manufacturer, engine manufacturer, financial, and industrial group based in Turin in the Italian region of Piedmont. Fiat was founded in 1899 by a group of investors including Giovanni Agnelli...

, Ford, and Renault

Renault

Renault S.A. is a French automaker producing cars, vans, and in the past, autorail vehicles, trucks, tractors, vans and also buses/coaches. Its alliance with Nissan makes it the world's third largest automaker...

formed GPWC Holding BV to secure better representation of the manufacturers in F1, improved financial conditions for the teams, stability for the championship, and maintenance of free-to-air television coverage.

Due to the agreement associated with their shareholding SLEC was controlled by Kirch, who hence controlled the board of Formula One Holdings (FOH). Due to huge losses and massive expenditure, Kirch's creditors put the company into receivership

Receivership

In law, receivership is the situation in which an institution or enterprise is being held by a receiver, a person "placed in the custodial responsibility for the property of others, including tangible and intangible assets and rights." The receivership remedy is an equitable remedy that emerged in...

in 2002. These banks dismantled the group. Kirch's share of SLEC was retained by Bayerische Landesbank

BayernLB

, JPMorgan Chase and Lehman Brothers

Lehman Brothers

(through Speed Investments).

Before they could exercise their rights as shareholders they had to seek clearance from the European Commission

European Commission

The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....

. In the intervening period Ecclestone instituted changes in the boards of SLEC, FOH, Formula One Administration (FOA) and Formula One Management (FOM) which in effect put Bambino Holdings in control of those companies.

In mid-November 2004, the three banks sued Ecclestone for more control over the sport, prompting speculation that Ecclestone might altogether lose the control he has maintained for more than thirty years. A two-day hearing began on November 23, but after the proceedings had ended the following day, Justice

Justice

Justice is a concept of moral rightness based on ethics, rationality, law, natural law, religion, or equity, along with the punishment of the breach of said ethics; justice is the act of being just and/or fair.-Concept of justice:...

Andrew Park

Andrew Park born in Lafayette, Indiana is an American Theatre Director and puppeteer. Park is the current Artistic Director of the John G. Shedd Aquarium and Chicago’s Quest Theatre Ensemble.-Career:...

announced his intention to reserve ruling for several weeks. On December 6, 2004, Park read his verdict, stating that "In [his] judgment it is clear that Speed's contentions are correct and [he] should therefore make the declarations which it requests". However, Ecclestone insisted that the verdict - seen almost universally as a legal blow to his control of Formula One - would mean "nothing at all". He stated his intention to appeal the decision.

The following day, at a meeting of team bosses at Heathrow Airport in London

London

London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...

, Ecclestone offered the teams a total of £260,000,000 over three years in return for unanimous renewal of the Concorde Agreement

Concorde Agreement

, which expires in 2008. Weeks later, Gerhard Gibkowsky, a board member of Bayerische Landesbank and the chairman of SLEC, stated that the banks had no intention to remove Ecclestone from his position of control.

CVC acquisition

In November 2005 CVC Capital Partners announced it was to acquire the 25% and 48% shares of Bambino and Bayerische Landesbank in SLEC and acquired the shares of JPMorgan Chase in December 2005. This deal was given approval by the European Commission on March 21, 2006 and finalised on March 28. Ecclestone used the proceeds of the sale of Bambino Holdings' share to invest in Alpha Prema to give the Ecclestone family an unspecified stake in Alpha Prema. On March 30, 2006 CVC purchased the 14.1% share of SLEC held by Lehman Brothers to give Alpha Prema full control of the Formula One Group.

Group companies

The Formula One Group is controlled by its shareholders through the Delta Topco holding company

Holding company

A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...

, which through a number of holding companies registered in the United Kingdom

United Kingdom

The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

, Jersey

Jersey

and Luxembourg

Luxembourg

Luxembourg , officially the Grand Duchy of Luxembourg , is a landlocked country in western Europe, bordered by Belgium, France, and Germany. It has two principal regions: the Oesling in the North as part of the Ardennes massif, and the Gutland in the south...

controls the SLEC Holdings company, the Formula One Group's immediate owner. The Formula One Group comprises several subsidiary companies which control the various rights, management, and licensing operations of the Formula One World Championship.
The commercial rights of Formula One are controlled by Formula One World Championship Ltd, which received the rights to Formula One for a period of 100 years from the FIA. Formula One World Championship's control of the rights began from the beginning of 2011, where it took over from sister company Formula One Administration, which controlled the rights for a 14-year period beginning in 1996. FOWC, as the commercial rights holder, negotiates the contracts for holding Grands Prix

Formula One

Formula One, also known as Formula 1 or F1 and referred to officially as the FIA Formula One World Championship, is the highest class of single seater auto racing sanctioned by the Fédération Internationale de l'Automobile . The "formula" designation in the name refers to a set of rules with which...

, organising television contracts with broadcasters and receiving licensing fees for use of Formula One material. The company also has a seat on the FIA World Motor Sport Council

FIA World Motor Sport Council

The World Motor Sport Council is the most powerful body of the Fédération Internationale de l'Automobile . It decides on rules and regulations for the FIA's various racing series, from karting to Formula One. Its membership is chosen by the FIA General Assembly, which contains representatives from...

, the body responsible for regulating international motorsport. Formula One Licensing BV is a related Dutch registered company of the Formula One Group which owns the trademarks of Formula One; the F1 logo, "Formula 1", "Formula One", "F1" and the "Sweeping Curves device" shown before Grands Prix.

Formula One Management (FOM) is the main operating company of the group, and controls the broadcasting, organisation and promotional rights of Formula One. The company makes the televised feeds of all Grand Prix sessions, which are then supplied through the Eurovision satellites network (EBU) to broadcasters who provide commentary and distribute the feed in the broadcasters region. The production arm of FOM is based at Biggin Hill Airport, Kent

Kent

Kent is a county in southeast England, and is one of the home counties. It borders East Sussex, Surrey and Greater London and has a defined boundary with Essex in the middle of the Thames Estuary. The ceremonial county boundaries of Kent include the shire county of Kent and the unitary borough of...

, for easy travel of the equipment needed to broadcast the race. Financially, FOM provides partial investment for new tracks and teams, to allow them to establish themselves in the sport and grow Formula One's presence in new markets. The season calender for the championship is structured by FOM, with the WMSC having oversight. Payments to the teams are determined by the Concorde Agreement

Concorde Agreement

, which gives the teams 50% of the television money in constructors championship order, and awards a prize fund to teams based upon their results, which is drawn from the fees Grand Prix promoters pay for staging the race.The logistics of moving equipment and personnel from each race is also handled by FOM, which provides the teams with a set amount of transport for the races outside of Europe.

Related companies

The Formula One Group is used to refer to several related companies, which although not part of the Group are controlled by the Delta Topco holding company and have business related to Formula One. GP2 Motorsport Ltd was acquired by CVC in 2007, with its ownership controlled by Formula One's holding companies. The GP2 series

GP2 Series

The GP2 Series, GP2 for short, is a form of open wheel motor racing introduced in 2005 following the discontinuation of the long-term Formula One feeder series, Formula 3000. The format was conceived by Bernie Ecclestone and Flavio Briatore, while Ecclestone also has the rights to the name GP1...

is Formula One's main feeder series, and runs races at the European rounds of the F1 championship, in order to give drivers experience and exposure to Formula One teams. The GP3 series

GP3 Series

The GP3 Series, or GP3 for short, is a single seater motor racing series launched in 2010 as a feeder series for the GP2 Series, introduced by GP2 organiser Bruno Michel. It was initially thought that the GP3 series would merge with the International Formula Master series...

, the next singe-seater level down from GP2, is also controlled by GP2 Motorsport. The Formula One Group also owns Istanbul Park AS, which runs the Istanbul Park

Istanbul Park

Istanbul Park , also known as the Istanbul Racing Circuit or initially Istanbul Otodrom, is a motor sports race track in Akfırat County east of Istanbul, Turkey. It was inaugurated on 21 August 2005...

racing circuit, the host to the Turkish Grand Prix

Turkish Grand Prix

The Turkish Grand Prix is a Formula One motor race that was first held on August 21, 2005 as part of the 2005 Formula One season. It is held at the newly built Istanbul Park Circuit, constructed by famous German civil engineer Hermann Tilke...

.

Allsport Management SA is a Swiss registered company which manages the sale of almost all Formula One

Formula One

trackside advertising and the Formula One Paddock Club. Allsport Management was founded by Paddy McNally who had begun to work with Bernie Ecclestone in the late 1970s. McNally, who was a former Marlboro sponsorship consultant, came up with a solution to "tidy up" trackside advertising; This solution was called "themed advertising" where one advertiser is given total exposure at one part of the track. This is in contrast to the Monaco Grand Prix

Monaco Grand Prix

The Monaco Grand Prix is a Formula One race held each year on the Circuit de Monaco. Run since 1929, it is widely considered to be one of the most important and prestigious automobile races in the world, alongside the Daytona 500, Indianapolis 500, and the 24 Hours of Le Mans...

, the only grand prix where Allsport is not involved, where space is sold such that multiple advertisers are visible in every picture, which is a less effective marketing strategy. The Paddock Club is Formula One's corporate hospitality organisation, which provides a luxury area for VIP's and sponsors for the Grand Prix weekend, and also gives access to teams and drivers and tours of the pits. In 2006 Allsport Management (and the related Allsopp Parker & Marsh companies) were acquired by CVC through Delta Topco, meaning that the sport's complete revenues are controlled by the Formula One Group.

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