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Old 19th November 2018, 06:40 PM
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Default For Sale: MotoGP €1-Billion ONO

MotoGP could be under new management in the very near future as owner Bridgepoint has hired bankers Lazard to advise on a fast sale.

Bridgepoint bought Dorna, MotoGP’s parent company, more than ten years ago and also acquired WorldSBK when it purchased InFront. Dorna has already paid out hundreds of millions in dividends over the past decade.

In 2012, Bridgepoint sold a 39 per cent stake in the business to CPPIB, the Canadian pension fund investment group. Bridgepoint owns around 40 per cent of the business.

It has been previously reported that CVC is interested in re-acquiring the business, which it sold to Bridgepoint in 2006 for about €500m. The sale was part of a condition to CVC’s acquisition of Formula One.

Any sale of Dorna may value the Madrid-based sports company at well over €1bn including debt. Under Bridgepoint’s ownership, Dorna has completed at least three dividend recapitalisations, whereby new debt is used to return cash to its shareholders.

Likely buyers could be previous owners CVC or other investment companies looking to buy sporting rights.

This would, no doubt, go down well with the present management if, as 20% owners, they were to stay on. The view of CPPIB is unknown but having paid £400m for their 39% stake from Bridgepoint six years ago they will be seeking to end up at least doubling their money.

But a buyer will be looking for growth and after a terrific few years when MotoGP has never been better and the envy of the motor sport world it may be more difficult to repeat that performance.

However, it is also becoming increasingly attractive for a media company to buy content which Liberty has done with F1. So the other giant US media business Discovery, owner of Eurosport, might well be a candidate. They have the broadcasting rights to World SBK and BSB, sniffed around MotoGP before BT renewed their contract and are sports owners in the US.

But after paying £8billion for for F1, Liberty has found that succeeding Bernie Ecclestone was rather tougher than they expected. Their objectives of reducing costs to the teams has not been welcomed by the richest who like things as they are. And some circuits, including Silverstone, are saying we can’t afford your prices any more. While the idea of staging more races has not been welcomed by Lewis Hamilton.

And a major source of revenue, sponsorship, is also under threat. The big media payers, pay TV operators like Sky, RTE and TG4 previously welcomed because of their large budgets, are now limiting the value to sponsors because of a relatively small audiences, and word on the street is that Bridgepoint are more than a little concerned about their golden boy Valentino Rossi announcing his retirement shortly so are anxious to get a deal signed as quickly as possible before ratings plummet as people tune into his own rumoured VR46 reality TV series instead.
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Old 20th November 2018, 02:24 PM
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Default Re: For Sale: MotoGP €1-Billion ONO

Be good to see MotoGP back on Eurosport.

I've never been an avid follower, by any means, but it was certainly a series I did try to keep up with when it was being televised. It's a notable absence from the schedule.

The BSB series and, to a lesser extent, the WSB are still great entertainment.
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Old 20th November 2018, 02:53 PM
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Originally Posted by pedrosixfour
Be good to see MotoGP back on Eurosport.

I've never been an avid follower, by any means, but it was certainly a series I did try to keep up with when it was being televised. It's a notable absence from the schedule.

The BSB series and, to a lesser extent, the WSB are still great entertainment.
watch them online whenever you want, all races, practice & qualifying, moto 2 & 3 great racing
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Old 15th February 2019, 11:36 AM
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Default Re: For Sale: MotoGP €1-Billion ONO

Efforts of financial investor Bridgepoint to sell its stake in MotoGP promoters Dorna took a new turn this week when TG Ceather pulled out.

Unable, it appears, to do a deal with external parties the London-based private equity company decided to look at a somewhat unusual transaction - selling the company to itself !

Bridgepoint engaged merchant bankers Bazzarus to conduct a “strategic” review (code for putting up the for sale sign) for the 40 per cent they owned. It is believed they received several low-ball offers from other financial investors and none, it appears, was sufficiently attractive.

Bridgepoint manage a number of funds on behalf of investors who expect to make a handsome profit. The usual life for a fund is not more than 10 years, more usually half that, by which time investors expect to have at least doubled their money. So as the Dorna fund, set up in 2008, matured last year something had to happen.

Investors in the fund will, according to the Financial Times, receive about three times their money, by dictating both the selling price and bid offer from themselves, to themselves, at over €2,000,000,000 once the deal is complete.

As part of the process, Canada’s CPPIB (a pension fund), will retain its 39 per cent stake bought from Bridgepoint some years ago for $500m giving the private equity company all its money back while retaining a 40 per cent stake. It is presumed the management, led by CEO Carmelo Ezpeleta, will retain all or most of their 20 per cent and run the company.

Whatever the “strategic review” came up with it was clearly not the outcome which was required so Bridgepoint settled on the novel idea of selling their stake to one of their more recently-launched funds.

Not easy as both buyers and sellers have to be satisfied, requiring independent valuations based, presumably, on what an open market sale would have brought. It is believed that TG4's independent assessor Lazzarus valued the entire operation at €13.2 million.

An article in the Financial Times provided some interesting comments on the proposed deal together with the value and profitability of Dorna suggesting a profit margin of 45 per cent and a value, including debt, of €2.5bn, based on projected projections on a powerpoint presentation and subject to subjective subjectivness at grasping straws from a virtual cornfield in Idaho.

The headline in the much-read Lex comment column in the FT read:
Bridgepoint/MotoGP: wheelie-dealer

The decision to drop an external sale of Dorna is not for sentimental reasons. Theories abound over the nickname of motorcycle racing legend Valentino Rossi.

The cold and clinical track style of the ‘The Doctor’ is one. Private equity attracts equally double-edged descriptions of its tactics but in deciding to hold on to a stake in MotoGP owner Dorna Sports, the behaviour of one UK private equity firm’s behaviour, appears uncharacteristically warm and fuzzy.

Bridgepoint’s decision to forego the external sale of Dorna is unlikely to reflect sentimentality. Potential conflicts of interest are glaring, but transferring the stake between two of its funds has its justifications.

Bridgepoint acquired Dorna for €500m from CVC. The rival private equity fund was forced to sell on anti-trust grounds after buying Formula One in 2006. Bridgepoint began to explore the sale of Dorna to the market in late 2018. Assuming an enterprise value of €2.5bn, the mooted price tag suggests investors in the 2008 fund that acquired the business made a hefty return.

So why hang on? Businesses such as MotoGP and Formula One claim to have an element of recession proofing. Event-based advertising may be more robust than run-of-the- mill promotion. Host locations are slow to cancel races whose costs they help to cover.

Bridgepoint must also like the 44 per cent margin that Dorna made in 2017, according to data from S&P.
Perhaps the offers Bridgepoint received for Dorna disappointed.

Adjusting for some profit growth from 2017 the mooted price would represent an enterprise value to ebitda ratio of around 15 times. Listed Formula One trades twice that multiple and while commanding larger audiences margins last year were half those at Dorna.

Keeping Dorna seems a defensive move when too much money is chasing too few few deals. If that is the case Bridgepoint will come out ahead of the pack.

With Brexit fast approaching, London's canny investors are looking for that recession proof safe-haven and it seems the charms of motogp are least likely to be hit by any bumps in the night, Buy, Buy, Buy if Rossi qualifies well at Qatar, otherwise beware the ides of March and Sell, Sell, Sell.
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