MotoGP For Sale?

There is a confirmed rumor circulating that some of all of Dorna's investors are looking for the exit ramp. Like all rumors, the sale is being offered to the public without context, leading to more rumors, hearsay, and nonsensical clickbait. Time to separate fact (as far as we know) from fiction.

Dorna acquired the commercial rights for MotoGP for the 1992 season. Prior to 1992, the commercial rights were apparently handed out piece meal to various media organizations and promoters by the FIM, but the sale to Dorna brought everything under one roof. When Bernie made this move in F1 he negotiated a 99 year lease for a tuppence, making him a wealthy man almost overnight. The terms of Dorna's lease are unclear but according to this article, their lease rights will expire in 2036.

In 1998, CVC purchased a controlling interest in Dorna, somewhere in the neighborhood of 70%. Dorna still held the commercial rights, but CVC controlled Dorna. In 2005, CVC acquired a controlling interest in Formula 1, and EU regulators forced them to divest in MotoGP. In 2006, Bridgepoint capital acquired CVC's stake in Dorna, and they later sold a 38% stake to the Canadian Pension Plan in 2012.

In 2017-2018 Bridgepoint and Dorna apparently started shopping around for a new buyer, with CVC listed as one of the potential buyers. Ultimately, Bridgepoint pulled the rug by selling MotoGP from one of their funds to another fund in 2019, providing the cash required to payback a group of investors who were looking to divest (right before the pandemic, how convenient).

Carmelo Ezpeleta has confirmed that Dorna and it's stakeholders are looking for a buyer, but this should surprise to no one, since they were already shopping Dorna around in 2018. Some people believe the Ezpeletas will be gone after the sale, but Dorna has already traded hands many times, and the Ezpeleta's have always remained. Unlike Bernie, Carmelo Ezpeleta does not seem to be an embattled CEO without an heir. It is unlikely that he and his family will be removed from the board and executive suites at Dorna, unless they choose to leave on their own accord. Though the sport may be sold, we don't know who is looking to exit. Bridgepoint? Canadian Pension? Ezepeletas? All of the above? If the new owner wants a controlling interest, but the Canadian Pension Board won't budge, what happens? Maybe this was the problem in 2018?

The financial dealings matter because they affect what we see on track. The push for fewer engines, bore limiting instead of fuel limiting, standardized parts (brakes, wheels, forks, ECU, etc) cheaper satellite bikes, calendar expansion, concessions, grid size and sprint races are all about changing the cost and revenue structure of MotoGP. That's what private equity funds do. They buy things. Rearrange and repackage, and then dump. The selling price and the new buyer will profoundly impact the future of the sport, and that's why we should probably pay attention. What's their plan for making MotoGP more profitable? Truer motorsport (laff)? Social media reality TV? Slash and burn? Leverage and collateralize?

We should probably pay attention.

mikesbytes said:

Free vs paid is an interesting debate. If MotoGP is available free then there are more watching it which the sponsors love, if it is paid then there are less watching but the owner makes more money. So free = more money for the teams and paid = more money for the owner

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It's true. The interests of the teams via sponsorship and the interests of the commercial rights holders via TV contracts are divergent, and that is an unfortunate feature of the current revenue sharing arrangement. The manufacturers supposedly get around €8M and another €2.5M for each satellite bike from the satellite teams. Ducati have 6 satellite bikes, and with the manufacturer money and sponsorship, they might just be covering the cost of their MotoGP operation. But the other manufacturers? It seems they are spending shareholder money, and some of that shareholder money indirectly benefits the satellite teams, which is perhaps why Yamaha and others have been reluctant to supply satellite machines, despite the importance of data gathering.

For the last 15 years, Dorna has focused on cost-cutting to reduce the amount of shareholder money required. I'm surprised they let aero and ride height hang around. It seems antithetical to their mission, and it seems 5 out of 6 manufacturers would have been opposed. The negotiations for 2022, must have been lazy or crazy.

michaelm said:

Sure, these things have tangible effects. My understanding in regard to the control tyre over 15 years ago now was that while there was a tyre war the big teams got their tyres free while Dorna had to subsidise the tyres for the satellite teams, and part of the deal for the control tyre was that all teams get tyres for free.

Who knows now ?, perhaps the venture capitalists see a crunch coming with internal combustion engines etc. The CVC forced divestment seemed to me to be more based on theoretical concerns than anything else, with the same company owning both motogp and WSBK possibly a greater conflict of interest in my view..

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I'd be interested to learn the rationale behind letting Bridgepoint own both MotoGP and WSBK. Bridgepoint did not own a controlling interest in MotoGP at the time it acquired InFront and WSBK. Maybe that is the reason MotoGP and WSBK have been effectively united under the Dorna banner.

The operational nexus between MotoGP and WSBK is the intrigue regarding a pending sale. How much can you really do with MotoGP at this point? It's already 4-stroke. It already has sprint races and 20 events. Social media seems like a hot place to acquire more viewership, but Dorna has always struggled to reconcile access to it's content online with the desires of the TV companies. I doubt a former NBA executive will fix the situation.

The low-hanging fruit is to merge WSBK and MotoGP. World Superbike would shed the cost of logistics and TV production and website streaming costs. The cost of running the GP feeder classes would be slashed overnight. The FIM would unite the national championship series with the grand prix paddock. I cannot imagine the mountains that must be moved to make it happen, but cost reduction would be enormous. Dorna already indicated that Bridgepoint pushed for this outcome in 2013 before abandoning a merger to focus on differentiation.

I personally don't think merger is the correct strategy, but the MSMA have painted themselves into a corner. Their products aren't selling. They don't have the money or the willpower on their boards to reboot SBK into the crazy circus and sales orgy it once was.