Over-excitement relating to the buyout of a controlling stake in exclusive MotoGP commercial rights holder Dorna Sports, by US-based Formula One car racing owner Liberty Media, has yet to subside – even though conclusion of that deal has potential hurdles to overcome.
Liberty, a broadcast entertainment company, is set to extend its motorsports reach by acquiring an 86% holding in Dorna Sports from current private equity parents, Bridgepoint and Canada Pension Plan Investment Board, for €4.2bn (£3.6bn, $4.5bn). Dorna management will retain 14% of the business as an independently controlled company, and Dorna chief executive Carmelo Ezpeleta will remain in his leadership role.
Hailing these moves, Liberty president and chief executive Greg Maffei wallowed in the usual effusive nonsense: “We are thrilled to expand our portfolio of leading live sports and entertainment assets with the acquisition,” he said. “MotoGP is a global league with a loyal, enthusiastic fan base, captivating racing and a highly cashflow-generative financial profile. The business has significant upside, and we intend to grow the sport for MotoGP fans, teams, commercial partners and our shareholders.”
Among the latter, US investment guru Warren Buffett’s huge Berkshire Hathaway operation has a major stake in Liberty Media, holding more than seven million of its Series C Formula One shares.
However, Dorna’s putative transition into the arms of Liberty wasn’t entirely smooth. It has transpired that Bridgepoint, supposedly maximising a profitable exit, actually rejected a higher bid from another top-ranking US sporting entertainment market player, TKO Group Holdings. Beaming its broadcast output to more than a billion TV-viewing households worldwide, TKO’s existing star turns are UFC martial arts and WWE World Wrestling global franchises, and it was evidently keen on a suck of the motorcycle racing sauce bottle too.
Complaining to a Financial Times reporter, TKO chief executive Ari Emanuel pointed out that his bid was €200m up on Liberty’s final figure, and he couldn’t understand why Bridgepoint spurned this better offer. Bridgepoint apparently didn’t dispute the value of TKO’s offer and declined to comment. But rubbing salt into the wounds, an unidentified individual close to the deal negotiations had remarked that TKO and Emanuel were “culturally not a good fit”.
Maybe that was a snarky reference to broadcast sports, which involve participants beating each other to a pulp, but do not have the in-depth appeal of those merely crashing their motorcycles. Who knows?
Returning to the issue of hurdles, Liberty Media’s Greg Maffei had also told the Financial Times that he is “very confident” Dorna’s buyout deal will be approved by anti-trust regulators in due course. History suggests otherwise. When private equity investor CVC Capital Partners sought approval for its majority acquisition of Formula One in 2006, European Commission competition authorities insisted upon the sale of MotoGP rights, which CVC also owned at that time.
And interestingly, no mention of the World Superbike (WSPK) Championship’s future status – theoretically now sitting within the Dorna/Liberty portfolio – has emerged. Against this background, it could be ripe for a sell-off enforced by disgruntled regulators.