Formula 1 financial world on brink of change, says motorsport boss
Toto Wolff’s minority stake sale in Mercedes could start a domino effect across Formula 1, according to the chief of motorsport’s global trade association.
The Austrian is in talks to offload five per cent of Mercedes – which he co-owns equally with the car manufacturer and Ineos billionaire turned Manchester United investor Sir Jim Ratcliffe – to CrowdStrike co-founder and Le Mans racer George Kurtz.
The deal would value the eight-time constructors’ championship winners at £4.7bn, just months after McLaren reached a valuation of £3.5bn following a number of minority stake sales.
“The most interesting thing about this apparent sale is what’s bound to be happening over the next year or two, because suddenly the Formula 1 world has become commercialised, and these shareholdings in the various companies are going to be exchanged, because the value is going up so rapidly,” Chris Aylett, Motorsport Industry Association chief executive, told City PM.
“In a relatively unstable investment world, sports investments are really hot subjects right now, so there’s no question that Toto being a highly publicised seller of five per cent of the shares, you’ll find that most of the teams over the next year or two will start realising in real cash terms their values.”
Wolff Mercedes sale to trigger domino effect
Based on recent valuations, Formula 1 teams could be valued as highly as Premier League clubs when offered for sale. They remain some way off the small number of North American sports franchises that have broken the $10bn barrier in recent years, however.
But Formula 1, and the wider motorsport industry, has deep roots in the UK with a huge number of businesses clustered in the Midlands in what is known as Motorsport Valley. The area gets R&D credits from the UK government and even the sport’s newest team, Cadillac, is opening up in Silverstone.
“You’ll find that it applies to many of the Formula 1 teams that are based in the UK, they’ll be sorting out the values,” Aylett, the man who coined the term Motorsport Valley, added on whether the Wolff sale could start a domino effect.
“And that’s good for the sport, and it indicates a really strong, healthy sports investment. I’m quite sure we’ll see the financial world of Formula 1 and the investors behind it change, for sure in the next 12 months or two years.
“America is the home of understanding how you can increase value for sporting investments, and we’ve learned fast. And we’re grateful to Liberty Media for putting that forward, making our sport look even stronger than it ever has been.”