Posted in Finance Articles, Total Reads: 5962
, Published on 24 March 2011
Glamour and Sports industry have always been in the forefront in terms of attracting massive viewership single-handedly. Now when these two come together the outcome would surely be one successful enterprise. Two such entities that come to our mind when we think of combination of Sports and Glamour are IPL and Formula 1.
IPL as a brand is immensely popular in India but Formula 1 can be considered to be a global brand. It has a massive fan following across the globe which even IPL cannot match. This article tries to understand the way Formula 1 is managed and also learn the administrative structure of the same.
Formula One Group, the parent holding is basically a group of companies responsible for promotion of FIA Formula One World Championships. It is also responsible for the commercial side of the business. Formula One Group is owned by 3 major groups namely
1. CVC Capital Partners which holds around 70%
2. JP Morgan which holds around 20%
3. Bernie Ecclestone family which holds the rest
When we refer Formula One group, it is basically referring to Formula One Management, Formula One Administration, Formula One Licensing BV, all of which are the subsidiaries of Formula One Holdings. Apart from these there are certain other subsidiaries which are responsible for the successful running and organizing of Formula . They are Formula One Productions, Formula One Promotions and Administrations and All Sport management. Now let us try to understand what each of these subsidiaries do and also how they are important for the efficient running of this huge enterprise.
Formula One Administration Ltd (FOA) is the holder of the commercial rights of Formula One. These rights have been obtained from FIA as per the terms of the Concorde Agreement and is managed by the Formula One Management. The Concorde Agreement is a basically a contract between the Fédération Internationale de l'Automobile (FIA), the Formula One teams and the Formula One Administration which dictates the terms by which the teams compete in races and take their share of the television revenues and prize money. It is the major money spinner for this enterprise and has a turnover of around $750 Mn and a profit of around $450 Mn.
Formula One Management Ltd (FOM) is responsible for the media distribution and promotion of content regarding Formula 1. The website pertaining to Formula 1 is managed by this subsidiary. It is also responsible for providing part investments for tracks and teams in order to popularize the sports in those places where it is yet to be popular. It is also responsible for the coordination, planning and efficient running of the races. It works closely with FIA and Bernie Ecclestone is at its helm since it has been in existence.
Formula One LicensingBV is the owner of Formula One Trademarks and logos. So this subsidiary basically ensures that there is no violations of Formula 1 trademarks across the world.
Formula One Productions is a part of FOM and is responsible for the television feed of the races taking place across the world. Formula One Productions is based in Biggin Hill, Kent.
Formula One Promotions and Administration (FOPA) was a company formed by Bernie Ecclestone to manage the commercial rights of Formula One. These rights were originally granted to the Formula One Constructors Association (FOCA) by the FIA under the terms of the Concorde Agreement. FOCA allowed FOPA to manage the rights on its behalf.
AllSport Management SA is a Swiss company which manages the sale of almost all Formula One trackside advertising and the Formula One Paddock Club. It was founded by Paddy McNally who pioneered the concept of “tidy up” trackside advertising. The solution put forward was called “themed advertising” wherein one advertiser is given total exposure of one particular part of the track.
All these subsidiaries should function in tandem efficiently and effectively so that the we get to see the Formula 1 races in the manner in which we see them today. Formula One - a sport of big money, glamour, speed and adrenaline rush is here to stay and keep the world in the fast lane.
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