Formula 1 has seen a huge increase in profits for its owners CVC and Bernie Ecclestone. The private investors CVC have seen a $6.9 billion profit for its owners after floating it on the stock market.
The private equity firm who has racked up huge investment profits for its share holders has over 290 investments worldwide and are usually backed by banks funding.
With yearly dividend returns of 35.7% for its share holders as they will buy into a company and sell it off at a profit.
CVC invested in Formula 1 in 2006 with the aide of Bernie Ecclestone that was backed by JP Morgan and Lehman Brothers.
Formula 1’s biggest returns come from its commercial rights on all races across the world.
In 2011 Delta Topco had revenue of $1.5bn and it generally comes from four main sources.
1) Starting at the bottom, trackside advertising at each race and sponsorship of the series itself comprises 15% of the revenue. This comes from companies such as parcel delivery service DHL and electronics firm LG which are two of F1’s official partners.
2) Next up is revenue from corporate hospitality, freight fees and two F1 junior series which provide around 20% of the total.
3) Fees from F1’s 63 TV broadcasting contracts bring in 32% of its revenue and are second only to the money received from the 20 races on the calendar.
4) Together, the race hosting fees comprised 33% of F1’s revenue last year and came to a total of $512m. Just five years earlier the revenue from race hosting fees only came to $304m but it has been boosted by more than $200m thanks to a bidding war for the prized slots on F1’s calendar.
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