Bridgepoint Bidding For Infront - But Will MotoGP And World Superbikes Be Allowed To Merge?

Behind the world of motorcycle racing lies a hidden world of high finance, and moves there have a potentially huge effect on the racing itself. A report in the Financial Times from earlier this week - spotted and reported by Bikesportnews - carries news of a financial transaction that could, potentially, have major implications for the two major two-wheeled racing series, MotoGP and World Superbikes.

According to the report in the Financial Times, Infront Sports and Media, the parent company of Infront Motor Sports, which owns the commercial rights to the World Superbike series, is being put up for sale by its current owners, Andreas Jacobs (heir of the eponymous coffee company) and the United in Sports private equity fund. But the interest comes from the parties bidding to take over the company: the Financial Times reports that three parties are involved, two sovereign wealth funds - the Qatar Investment Authority and an unnamed fund from Abu Dhabi - and a British private equity group, Bridgepoint Capital.

The intriguing detail behind these bids is that Bridgepoint Capital is the current owner of Dorna, the rights holder for the MotoGP series. The sale of Infront to Bridgepoint would see the two major motorcycle roadracing world championships owned by the same company. And that raises a potential conflict which could cause the deal to be modified under European competition law. If the deal does fall foul of the EU rules on mergers and acquisitions, then Bridgepoint could be forced to dispose of either the World Superbike series or of MotoGP.

The situation is complex, and the rules for mergers and acquisitions are by necessity highly complicated. The European Commission only comes into action if the companies involved are large enough to have a European impact, the basic principle being that only when all companies involved have a combined turnover of 5 billion euros a year is approval by the Competition Commissioner required. The companies themselves have to apply for clearance, the Commission itself does not get involved beforehand, an EU spokesperson told MotoMatters.com. As such, the Commission does not take a position on deals that have not yet taken place.

Given that the sale of Infront Sports and Media involves private equity funds who do not publish a full set of financial results, it is hard to gauge whether the deal would technically fall foul of the regulations, though the combined assets of the funds suggest that may well be the case. However, the Commission is also known to take advice from parties with an interest in a particular merger, and if Bridgepoint were to acquire Infront Sports and Media, it seems inevitable that some parties would object to World Superbikes and MotoGP being held by the same owner. When CVC acquired a large stake in Formula One owner SLEC, it was pressure from the TV companies - including Spanish broadcasters TVE (who show MotoGP) and Telecinco (Formula One) - who lobbied the Directorate General of Competition to force CVC to sell off Dorna, the commercial rights holder for MotoGP. Given the status of both MotoGP and World Superbike racing in Italy and Spain, it seems almost certain that the TV companies will once again push for the deal to be examined, potentially causing one or the other series to be sold off as a separate concern.

MotoMatters.com approached both Infront Motor Sports and Dorna CEO Carmelo Ezpeleta for a reaction. A spokesperson for Infront Motor Sports said that the company had no comment to make at this time, and referred us to a contact in Infront Sports and Media. MotoMatters.com asked Carmelo Ezpeleta for a reaction at a press conference to announce the Moto3 tire deal with Dunlop, but the Dorna chief merely dismissed the reports as "A typical internet discussion. We don't know anything about that." When referred to the Financial Times as a source for the story, Ezpeleta reiterated his point: "I have good connections with Bridgepoint, and if they were to do something like that, they would tell me. So we don't have any news about that."

In the hypothetical case that Bridgepoint were to take over Infront, and be allowed to keep both series, a potential dispute brewing between the two series over the CRT regulations could be neatly solved. Paolo and Maurizio Flammini, the founders of FGSports, the company that was sold to Infront and became Infront Motor Sports, have continually threatened the FIM with legal action over the so-called Claiming Rule Team regulations, which would allow engines derived from production bikes to be used in a prototype chassis in the MotoGP class from 2012. So far, no action would be forthcoming, but if both companies were owned by the same parent, such litigation would most likely be quickly smothered. It would also allow for much closer coordination of the two series' calendars, though both series already attempt to avoid too many scheduling clashes.

Of course, while this story has been picked up in several places by the motorcycle racing press, the emphasis in the Financial Times is the involvement of the Qatar Investment Authority. That is a much more interesting story: Infront Sports and Media is run by Philippe Blatter, nephew of FIFA president Sepp Blatter. FIFA is currently mired in allegations of corruption, stemming in part from the awarding to Qatar of the 2022 World Cup. The fates of two championships of a minority interest sport is a much lesser deal on the grand scale of things.

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Comments

Trying to avoid an acrimonious, drawn out legal saga between the worlds two premier motorcycle racing series? Get the CRT's established in GP's, bring WSBK back to their roots more, and flog them off a couple of years down the track?

Or are there darker clouds brewing? Perhaps a merger would be a post GFC economic reality. I cannot see that many would actually want this to happen (nor would it make sense to the buyer of Infront as all that goodwill value is immediately wiped from its books), but with bikes sales plummeting in the mature western markets due to their toy status perhaps this is inevitable? Or do both circuses move more of the show to where the manufacturers actually make money - Asia? Or Arabia if the Qatari or Abu Dhabi fund win out in the case of WSBK.

An interesting one to watch indeed, with potentially big ramifications.

I like your first part about CRTs and reorganization with a production racing reset. If they could make a case for a plan being 'for the good of the sport' to regulators it could play better. But overall I'm not sure how that would make as much financial sense for Bridgepoint unless they'd have a plan to restructure debt (bankruptcy) and have both series come out leaner and in a better position to generate profits. To melt them together would reduce the speculative value of both so it would have to be based on projected profits (and I think that's a good thing).

But if they do end up under the same roof, expect threats of a break away series from disgruntled team owners within a few years.

Who owns/runs the World Endurance series?

The possibilities are so vast, it is difficult to know what to make of the situation. Suppose Bridgepoint only own the series for a single day before a European Court forces them to sell. Is that not enough time to sign a new contract between IMS/FIM/MSMA (suppose it is already being drafted)? If the series are united, can the courts force them to sell? If all of the WSBK teams are incorporated into IRTA, and all the officials are incorporated into GP Race Direction, wouldn't WSBK be just a contract?

It is interesting that Ezy would claim ignorance b/c Dorna have very little to gain from this arrangement. A vast majority of future profitability would flow to Bridgepoint Capital. The big winners would be the MSMA which opens the possibility to an MSMA/Bridgepoint collaborative effort. If Bridgepoint buy IMS, Bridgepoint have control of the WSBK rulebook. If Bridgepoint are working with the MSMA to differentiate the two series, the MSMA have basically regained control of the WSBK rulebook, imo.

Returning the rulebook to MSMA control (or at least heavy influence) seem counter-intuitive b/c the MSMA have caused so many problems in GP by controlling the rulebook. However, the MSMA's original vision for 1000cc SBK was very different than the current WSBK rulebook. The original MSMA plan was to run WSS rules (same as AMA runs now), and to homologate any specialty racing parts in complete kits that would be sold on the open market. It was supposed to return to the original WSBK format with distributors, major dealers, and tuning companies running teams to generate sales--the way SBK was before the serious homologation specials started to arrive (RC45, R7 OW-02, 9** SPS/R). The 1000cc reboot lasted 1 season before IMS took control of the rulebook. The prototype control tire, and the loose tuning regs have forced the factories to pay people to run their equipment (almost no sales motive from teams) and supply them with factory racing parts (violation of the production concept).

So why would the MSMA and Bridgepoint work together when the current state of GP suggests that the two organizations would be mortal enemies? Got to read between the lines a bit, imo. No doubt Dorna wants to raise fuel capacity. Big fuel tanks with a bore limit = horsepower-limited racing. The MSMA have surely said, "We already play that game, it's called WSBK". To which Dorna/Bridgepoint have surely said, "you've raised the production requirements to stop small production companies (Norton, Triumph, KTM), and WSBK doesn't meet the needs of boutique manufacturers (Kalex, Moriwaki, etc)".

If the MSMA and Bridgepoint are working together on this one, they are almost certainly looking to eliminate the production exclusivity clause between IMS and the FIM. The exclusivity clause is the source of friction between WSBK and GP. It was necessary when GP and WSBK were owned by different companies, but if Bridgepoint own both, the clause will no longer be necessary (unless the FIM are determined to maintain two different series).

Complicated.

Fuel is the problem with GP. If they add fuel at 81mm and 1000cc, MotoGP is basically a very expensive version of WSBK. Is it surprising then that Bridgepoint are bidding for IMS after years of asking the MSMA to run WSBK Part II in GP?

It makes sense. The MSMA are tired of manufacturers like BMW and Aprilia building semi-prototype bikes and developing proprietary electronics in a production series. Bridgepoint are tired of seeing BMW and Aprilia race semi-prototypes in a production series rather than WSBK. In addition, Bridgepoint/Dorna are interested in the WSBK competitive model, and the MSMA want control of the rulebook that was taken away from them in 2004. Both of them probably want to be ride of the production exclusivity clause as well.

Whether or not MSMA and Bridgepoint are enjoying a marriage of convenience is uncertain. We don't even know that this bid is about motorcycle racing, but it is not inconceivable that the MSMA and Bridgepoint would work together to reinvent the relationship between WSBK and GP.

There are some clear advantages of owning both series that are tempting. First, a clear delineation of purpose between the two strengthens both and provides a clear view for fans into what they are watching. Of course, this requires a little finesse in order to avoid pushing WSBK into insignificance. Second, with control over both rulesets, the whatever entity controls both (assuming that Bridgeport puts both series under a single manager) can freely craft a set of rules that are cohesive and promote whatever interests they have. Of course, since recent history has shown us that the MSMA have no interest in producing a good racing product, the MSMA is likely to come out the loser (and thus Brookespeed's splinter series). However, with the combined market control of both series, it will be hard to attract the talent away from MotoGP and WSBK to something that is less clearly understood by fans.

Finally, and perhaps most important to Bridgeport would be the strengthening of their position to negotiate television contracts.