Dubai buys Formula One team: weeks of speculation ended in August when a company controlled by Sheikh Ahmed bin Saeed Al Maktoum of Dubai announced it was buying a Formula One racing team
GRAND PRIX INVESTMENTS (GPI), a company controlled by Sheikh Ahmed bin Saeed Al Maktoum of Dubai, has acquired a controlling stake in the Jordan Formula One racing team. The Belgravia Group, which acts as investment advisor to Jersey-based GPI, described the deal as “not simply about cheque-books” but being about “creating a credible and proper Formula One team”.
A statement issued on behalf of Sheikh Al Maktoum named no teams. It simply read: “The Emirate of Dubai is pleased to announce that following extensive planning and development, GPI is in negotiations to acquire, operate and manage a Formula One team, to be headquartered in Dubai.”
“I am delighted to reconfirm my support to GPI and the purchase of a Formula One team, which will then become known as the ‘official’ Dubai team,” Al Maktoum told the press. “This is an exciting time for Dubai and the United Arab Emirates as the team will compete with the very best in motorsport and assist in promoting the country on a global basis.”
Before the Jordan deal was finally confirmed in early August, a number of Formula One companies were being considered by GPI. Both the Ford-owned Jaguar team, and the British American Tobacco sponsored BAR team were rumoured to have been involved in exploratory talks with representatives of GPI. The Minardi team, although Formula One’s weakest team, was also believed to be a possible bid target.
Earlier this year Bahrain hosted a Grand Prix at its new purpose-built circuit–the first time that a Formula One event had ever been held in the Gulf. Dubai’s move to become directly involved in a Formula One racing team is seen as the Emirate’s latest strategy to develop its tourism and commerce sectors–in line with its vision to become the ‘Monaco of the Middle East.’ The ultimate aim is to move the economy away from its heavy reliance on oil revenues.
By purchasing an existing team, rather than building one from scratch, GPI has avoided the necessity of paying to the motorsport’s governing body, Formula One Administration, a $50m bond that new entrants are obliged to raise under the sport’s existing rules.
The Jordan team was founded in 1990 by Eddie Jordan–one of the most colourful and outspoken personalities on the Formula One scene. The team has had a difficult 2004 season–as have all the teams who have struggled with the seemingly invincible supremacy of the Ferrari team and its driver Michael Schumacher–although Jordan has scored four Grand Prix victories over the years, including the Brazilian Grand Prix last season.
The deal values the Jordan team at some $74m–roughly equivalent to its 2003 turnover on which it made a profit of well over $1m. Under the terms of the deal, Eddie Jordan’s 50.1% stake will be diluted to some 15%. Interestingly, Jordan was the first Formula One team to acquire equity investment from a financial institution when Warburg Pincus purchased a minority stake in the team in November 1998. Warburg Pincus’s share was bought in October 2003 by a consortium of Irish investors, Merrion Capital, which sunk $15.6m into the team to take a 49.9% stake. Merrion Capital will more than double its money in selling to GPI.
The deal includes the purchase of the Jordan team’s factory at Britain’s Grand Prix race track, Silverstone, as well as a wind tunnel at the nearby town of Brackley, located five miles away from the circuit. The Jordan factory alongside Silverstone employs about 200 people who have been assured by GPI that their jobs are secure.
“There is no intention of picking up the team and moving it lock, stock and barrel to Dubai,” a GPI spokesman said, adding that “Europe is the base for Formula One and, while the team will be headquartered in Dubai, it is very much going to keep its European base”. The new owners are expected to invest in the building of a new factory that has been planned for some time. However, the team will be rebranded as Team Dubai F1 and relaunched with a new image in time for the 2005 Grand Prix season.
Eddie Jordan, as well as retaining a minority stake in the new team, is believed to have agreed to remain as team manager for the next couple of Grand Prix seasons whilst a successor is groomed. He will thereafter assume an ambassadorial role for Team Dubai F1.
Formula One is the most televised sporting championship in the world. In 1998, the sport’s governing body developed what it calls the ‘Digital Village’ –a $80m portable digital TV studio complex staffed by 300 technicians that attends every Grand Prix to bring digital pictures, sound, interaction and pay-per-view systems into the homes of fans around the globe, believed to currently number more than 350 million for each race.
Dubai’s decision to become involved in Formula One is just the latest addition to the Emirate’s widely varied participation in competitive sport that includes the world’s richest horse race, the Dubai World Cup, the Dubai Classic golf tournament, and powerboat racing’s ultimate prize, the Dubai Duty Free Grand Prix held at the Dubai International Marine Club (DIMC) each December.
Motorsport is also widely popular in Dubai with Go-Karting, Motorbike racing, Dune Racing and Auto-Rallying attracting enthusiastic followings (see TME January 2004 issue). And now, with its very own Formula One team in the making, and a Formula One Grand Prix held annually in neighbouring Bahrain, Formula One is poised to gain millions of additional fans from the Gulf.
Formula One supremo Bernie Ecclestone, chief executive officer of Formula One Administration, says he is delighted to see a Middle East-based team on the grid next season. “It will be good for Formula One as a whole, and I’m very supportive.” Ecclestone is keen for Formula One to expand into new markets. There are currently 10 teams in F1, but under its cur rent rules the sport could accommodate two more teams.
Meanwhile, Sheikh Maktoum Hasher Maktoum Al Maktoum, scion of the Dubai royal family and legendary race-horse owner, has taken his vision of a new motorsport, Al Grand Prix, a step closer to commercial viability. The sport signed a three-year broadcasting deal last August with Sky Sports. “We are pleased and extremely proud to welcome Sky Sports on board as our first broadcast licensee,” he said. The Al Grand Prix series, while a direct rival to Formula One in terms of attracting sponsorship, will hold its races during the European winter months–Formula One’s off season. Described as the equivalent of a ‘World Cup of Motorsport’, up to 20 franchises will be made available, but limited to only one car from each country.
Each national team franchise will be represented by a driver who must be a national of that country. The cars will be identical, supplied by Lola and powered by a 520bhp Al Grand Prix V8 engine. As the cars are identical it is believed that Al Grand Prix will provide a genuine test of driving skills on racetracks scattered around the world, including Dubai, Bahrain, South Africa, Indonesia, Malaysia and South America.
Selected by Fred Rhodes
COPYRIGHT 2004 IC Publications Ltd.
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