A report from a prominent British newspaper, the Financial Times, has indicated that Liberty Media, the rights holder of Formula 1, is on the verge of acquiring Dorna, the promoter of MotoGP and World Superbike. This follows previous rumors from last month suggesting that the American sports giant was interested in expanding its motorsport portfolio by taking over the two-wheeled series.
According to the Financial Times, Liberty has emerged as the winner in a bidding war that involved Qatar Sports Investments and William Morris Endeavor, an American sports agency that also owned the Ultimate Fighting Championship. It is not surprising considering that there has been speculation for some time about Dorna being put up for sale by its current owner, Bridgepoint Capital. Dorna CEO Carmelo Ezpeleta has also been vocal about the possibility of a sale.
There have been indications of financial restructuring within the company in recent years, which further suggested that Bridgepoint was preparing for a sale. The company has taken on significant debt in the form of loans to pay dividends to its owners, a common business tactic before a potential sale.
Currently, Bridgepoint owns 39% of Dorna, while the Canadian public pension fund CPPIB owns 31% (acquired from Bridgepoint in 2012), and the Ezpeleta family owns the majority 20%, which is held by a group of current and former employees.
However, the Financial Times report also highlights a significant obstacle to the proposed sale – obtaining approval from the EU’s monopolies commissioner, a position with the authority to block any potential takeover. Bridgepoint acquired Dorna in 2006 after being forced by the EU to sell it following its acquisition of Formula 1. The regulators may argue that the situation has not substantially changed since then.
It is expected that competition regulators will closely scrutinize the deal. The EU commission will likely conduct months of analysis before deciding whether to approve or deny the prospective sale to Liberty. Given Formula 1’s dominant position in the global motorsports market, thanks to the success of the Netflix documentary Drive to Survive, it is highly unlikely that a judgment will not be passed before any takeover can proceed.
Liberty and Dorna have likely sought extensive legal advice before entering into advanced negotiations, as decisions from the monopolies commission often come as surprises when ruling against major companies.
The prospect of Liberty, the owner of Formula 1, taking control of MotoGP is likely to face resistance and skepticism from a portion of MotoGP’s dedicated fanbase. While it is natural for fans to be wary of F1’s owner running their beloved series in a similar manner, it is difficult to argue that Liberty’s ownership of Formula 1 has been entirely negative.
Some may make the case that Formula 1’s on-track product has not been impressive in recent years. However, it is evident that Liberty has brought a more modern approach to a sport that desperately needed it under its previous ownership. Formula 1 has seen increased popularity and has been able to reject new team entries, indicating a strong promoter interest.
Under Liberty’s management, Formula 1 successfully navigated through the challenges posed by COVID-19 and has grown in terms of popularity. All the teams that were present when Liberty took over are still on the grid in some capacity, and most of them have seen their valuations increase.
At the very least, Liberty Media appears to be a capable potential owner.