Red Bull To Leave F1 And Buy MotoGP Series - Dorna Ousted As Bridgepoint Cashes Out
As many of you will have spotted, this was in fact an April Fool's story. Though Red Bull owner Dieter Mateschitz has made vague threats to pull out of F1 over the new rules, as quoted in the Kurier story, there are no signs that Red Bull is looking to expand its presence inside MotoGP, beyond expanding the number of riders it backs. Red Bull's strategy continues to be to back individual athletes in motorcycle racing, as fans tend to follow riders rather than teams. However, that Bridgepoint will at some point sell its remaining stake in Dorna is a certainty. The question is, who they will sell it to, and at what price. Private equity firms are always seeking large returns on medium-term investments. Bridgepoint have owned Dorna now for 7 years, and so a sale is likely in the next two or three years. In the meantime, both the MotoGP and World Superbike series must be made as profitable as possible, which means cutting costs and raising revenues. The shift to pay-per-view broadcasting deals is possibly one strand of that strategy. Arguably, if Red Bull were to produce content and stream it free over the internet, it could help to grow the sport enormously, especially outside of the established markets. That is one area where Dorna's twin strategies - striking deals with PPV broadcasters, and expanding its online video offering - collide and conflict. Free, and freely shareable online content will remain a difficult subject for Dorna, unfortunately.
Now that April Fool's Day is over, we will once again focus on trying to ensure that all of the stories on the website are as accurate as possible. Normal service has now been resumed...
Red Bull are poised to make two dramatic announcements over the next two weekends, MotoMatters.com can exclusively reveal. At next weekend's Bahrain F1 race, the Austrian energy drink firm will announce its withdrawal from the premier four-wheeled racing series at the end of 2014. A week later, at the Austin MotoGP round for which it is the title sponsor, Red Bull is to announce that it is to purchase Bridgepoint Capital's remaining stake in MotoGP, and take over the running of the series.
Sources in the private finance industry with knowledge of the situation say that Bridgepoint has been looking to rid itself of its motorcycle racing business for some time. The private equity firm had acquired 71% of Dorna in 2006, at the peak of MotoGP's popularity, reputedly for GBP400 million. Since then, they have seen the value of their investment drop, and have been looking to get their money back from the deal ever since. The sale of a 39% stake in Dorna to the Canadian Pension Plan Investment board was the first step in recouping their investment. That deal was rumored to be worth 400 million euros, or just over 70% of their initial outlay. Sources with knowledge of the situation say that Red Bull is to acquire the remaining 32% of Dorna for around 300 million euros, but with full control over the series.
That was a condition for Dieter Mateschitz, the Austrian billionaire owner of the energy drink giant, to pull his investment from F1 and take over control of world championship motorcycle racing. Mateschitz had been unhappy with the direction F1 had been taking for some time now, and the debacle at the opening race of the year had prompted the Austrian to drop the first hints that he would withdraw from the series entirely. Speaking to the Austrian newspaper Kurier, Mateschitz had said 'The point of F1 is neither to set new records for fuel economy, nor to allow people to have whispered conversations during a race.' He suggested that there were better ways to get a return on investment. 'GP2 partially provides more racing and fighting and almost equal lap times as F1 with a small fraction of the budget.'
But mention of the open wheel support series to F1 was merely subterfuge, MotoMatters.com has exclusively learned. For a sum equivalent to a little more than the annual budget of the Red Bull F1 team, Mateschitz is able to obtain not just a team, but an entire race series. What is more, MotoGP is a better fit for Red Bull's target audience than F1, fans being generally younger and more open to new experiences than the older, more staid F1 audience. Though Red Bull had refrained from sponsoring a team directly, the energy firm had been slowly extending its reach in motorcycle racing, backing more and more riders, as well as three MotoGP rounds.
Mateschitz had reportedly been displeased at the way in which rival Monster had been expanding in to MotoGP more and more aggressively, snatching top riders away from under their noses. By buying both the MotoGP and World Superbike series outright, Red Bull controls the series completely. Though existing energy drink sponsorship deals will be allowed to stand, all bikes and riders will be obliged to carry the Red Bull logo on both leathers and fairings. The deal hits Yamaha most heavily, with Monster sponsoring both the factory team and Tech 3 satellite squad. Tech 3 is to be renamed 'Red Bull Tech 3 Monster', a further blow to the US-based energy drink firm.
The Red Bull takeover will also have far-reaching consequences inside of Dorna. With the F1 team to be disbanded, senior personnel are to be given key positions overseeing both the MotoGP and World Superbike series. The biggest change is the most controversial: Carmelo Ezpeleta, who has run MotoGP since 1992, when Dorna first acquired the sport through the former Banesto bank, is to be removed from MotoGP and sent to run the World Superbike series. In Ezpeleta's place, Mateschitz is to put F1 team principal Christian Horner, MotoMatters.com has learned. Though Horner has no experience of running a race series, the young Englishman is known to be a great organizational talent and extremely ambitious.
There will be major technical changes as well. Red Bull designer Adrian Newey is to take charge of the technical side of the series. The manufacturers are to be encouraged to focus on World Superbikes, one of the reasons Ezpeleta is to be placed in charge there, as Ezpeleta has long experience of managing the relationship with the factories. Newey is to focus on managing a new set of technical regulations, based around a tightly-controlled engine specification. MotoMatters.com understands that the bikes are to be powered by normally aspirated 1400cc four-stroke triples, to be housed in prototype chassis using spec electronics. Newey's long experience in F1 and with the engineering firms based in the UK's 'F1 corridor' is hoped to bring fresh blood into the series, managing costs while still presenting significant engineering challenges to frame builders wishing to get involved.
The sale could be good news for MotoGP fans around the world who currently have no access to the sport. MotoGP would be a keystone of Red Bull's promotional platform, featuring heavily on the Red Bull TV channel. Vast amounts of content would be released online, making it freely available to everyone with an internet connection. With fears that the many TV deals done with pay-per-view broadcasters could see the popularity of the sport take a nosedive, having a large amount of content freely available - and in easily sharable format, with strong Red Bull branding - should increase the profile of the sport.
Red Bull's acquisition of Dorna is the logical extension of the ever-greater reliance of motorcycle racing on energy drink sponsorship. Mateschitz is believed to see owning and running the race series as the best way to circumvent any attempts to regulate promotion of the highly caffeinated sugary drinks. By creating an overwhelming association between motorcycle racing and Red Bull, the Austrian billionaire is hoping that if the advertising of energy drinks is limited, the promotion of MotoGP will trigger subconscious associations with Red Bull, and maintain sales among the key younger demographic. The fear for MotoGP fans must be that if Red Bull decides to sell its share in Dorna once again, there will be no more sponsors left to invest in the sport. Motorcycle racing never really learned the lesson of the years of tobacco sponsorship; the takeover of the sport by energy drinks puts it right back where it started.