Wolff's $300million Mercedes stake sale - what you need to know

Wolff's $300million Mercedes stake sale - what you need to know

The $300million deal Mercedes Formula 1 team boss Wolff has done with CrowdStrike CEO and founder George Kurtz for part of his stake in the squad certainly delivers the kind of financial security that makes a good retirement.

But this is not Wolff cashing out and commencing an F1 exit plan. Retirement is far from his thoughts right now.

Instead, the sale of a stake in his Mercedes interests is more about Wolff bringing added value to the F1 team with an individual with whom he has a strong mutual bond.

Wolff remains fully committed to driving the Mercedes team forward, and is more focused than ever on putting in place foundations that will make it better over the long-haul – rather than thinking about his personal future beyond it.

We dig into the details of what has taken place and what it means.

What has been sold

Mercedes and Kurtz announced on Thursday afternoon in Las Vegas that a deal had been done for a takeover of shares.

The transaction, which is a personal deal for Kurtz rather than through his CrowdStrike company, is to take a 15% stake in Wolff's holding company, Motorsport Invest Limited (MIL), which controls 33% of the Mercedes F1 team.

This effectively gives him a 5% interest in the Mercedes team, even though his deal is not directly with the outfit.

The size of the deal, at $300million, also means the valuation of Mercedes right now is $6billion. That's a pretty impressive price considering that back in 2008, Ross Brawn bought what's now the Mercedes squad for just £1 off Honda.

The change of shareholding does not result in any alterations to the governance structure of the team – although Kurtz is becoming a 'technology advisor' to Mercedes, as well as joining its strategy steering committee.

Why do the deal now?

Wolff has had plenty of offers along the way for potential partners to come on board and buy into the team.

But he has long resisted – especially because it is understood there is an agreement in place for the current three shareholders not to sell out.

The Kurtz deal gets around this by not actually changing the financial make-up of the shareholding split – as MIL still owns the same 33% as before.

Wolff's decision to dilute some of his shares in MIL has come about because in Kurtz he has found a trusted partner whom he thinks is here for the long term – and not just for a quick profit.

As Wolff explained in an interview with CNBC, the deal is not about Mercedes selling out – it's about putting in place something unique with an individual he knows well.

"When I started this adventure with Mercedes, we are in there for the long term," explained Wolff.

"I was in partnership with Mercedes for 20 years in touring cars and smaller formulae. [I was] shareholder of the Formula E team with them. So this is the kind of journey that we had. And we are not sellers.

"But with George, we kind of grew together. We met each other long before his IPO, we've been part of the journey of growth. And George is very unique in the sense that he's not only a successful tech entrepreneur, one of the most successful tech entrepreneurs.

"He's also a racer, and that is a skill or a niche or combination of understanding that is important for us. So bringing him aboard is great."

Wolff's $300million Mercedes stake sale - what you need to know

Kurtz's own strong racing pedigree (he has a host of sportscar class titles and race wins achieved in LMP2, LMP3 and GT cars) - clearly appeals to Wolff.

For Wolff, the deal is about getting someone on board who can add perspectives and knowledge he does not have himself.

Kurtz's entrepreneurial nature, proven by the success of his cybersecurity company, shows he has a full grasp of technology operations – and that can be important as the Mercedes team looks to become an even bigger empire.

It is intended for Kurtz to support Mercedes' innovation and technology strategy in the future – as well as help grow market penetration for the Mercedes team in the United States. He can do this by helping open doors to big tech companies.

And while the $6billion valuation of Mercedes right now is eye-watering, Kurtz isn't getting involved just because it is a fun project.

He is coming on board because he thinks there is plenty to do that can make it even more valuable in the future.

"When I put something together, there's a business purpose, right?" he told CNBC. "In my opinion, there's a lot of upside in Formula 1. There is upside in Mercedes, or I wouldn't be involved."

And if Kurtz's input works, then that is only likely to help Wolff stick around even longer.

The right partners

For Wolff, the Kurtz deal is further evidence of his mindset around driving Mercedes team revenues ever higher.

Doing that requires keeping on board the very best sponsors for the long haul.

During an appearance at the F1 Business Summit in Las Vegas on Thursday, Wolff talked about success to him being about having the right partners on board – which is why in 2013 he actually had a cull of those partners he thought were not what his team needed.

"We reduced the roster of our partners because I felt that some of the brands didn't fit the brand of Mercedes," he said.

"And we're doing it in the same way today. It shouldn't have come across arrogant or entitled, but there are partners that fit the Mercedes brand, and then there are others that are very different categories. I wouldn't see their natural fit, not for us and maybe not for them.

"And in that respect, we're trying to be really focused on enhancing each other's brands and delivering return on investment.

"Today nobody puts a sticker on your car to enjoy the catering. It is about really understanding, where do we generate revenue? Where do we generate return on investment if you partner with some of these brands? 

"Because if it doesn't fly, if it doesn't work for that partner for three or four or five years, they are going to say: 'That is it. We're not interested anymore. We've kind of taken the ride.'

"We want to make sure that these brands stay there forever. Because it's just a no brainer. It makes so much sense."

That is not the talk of a team boss who is looking for a quick cash-out.