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MAY 5, 1997

F1 flotation sinking?

NEWSPAPER reports from London are suggesting that F1 boss Bernie Ecclestone has decided to delay or even cancel his plans to float F1 Holdings Ltd. on the stock exchange. Ecclestone has refused to make any official comment about a possible share offering in F1 but it is curious that only eight weeks have passed since the first hints of a flotation and suddenly the idea is fading - and it is hard to see what has happened in that period to change the situation.

According to the newspapers the flotation is to be delayed because of a fierce resistance from some of the F1 teams which feel that they should get a bigger share of the profits from the sport. There is some truth in this but it is no different to the situation as it was in March.

One possible explanation which might explain the strange change of direction is that the entire flotation issue was nothing more than a commercial maneuver by Ecclestone to secure the promotional rights of the sport from the international automobile federation (FIA) for the longest possible period. The rights are owned by the FIA but these have been subcontracted to Ecclestone - the F1 "Commercial Rights Holder" - since the late 1980s. Under the terms of the new Concorde Agreement Ecclestone pays the FIA an annual fee (which increases every year).

It makes perfect sense, with a flotation in mind, that Ecclestone would have wanted to secure these rights for as long as possible and the need to guarantee stability would have been a convincing argument for the FIA to sign over the rights in the long-term.

It is perhaps significant that in the last few weeks we have heard that there is a deal for Ecclestone to control the rights for the next 15 years.

If such a deal is in place and Ecclestone then decides not to float his company he will have gained the rights without having to give up his control of the sport - and, inevitably, it will appear that this may well have been his aim in the first place.

If the flotation does not go ahead and if a 15-year deal has been done, it will reflect very badly on the FIA President MaxÊMosley - either because he leaves himself open to accusations of collusion with Ecclestone or suggestions that he has not shown his usual political dexterity.

Any suggestion of collusion is undermined by the fact that if Mosley knew there would not be a flotation, it does not make sense for him to sell the rights as it would leave the FIA - and therefore Mosley himself - in a much weaker position than previously. Claims of collusion would only make sense if Mosley were to stand down as FIA President - which, at the moment, does not look very likely.

Political ineptitude is not a likely explanation either, because Mosley is only too aware that he is facing re-election at the FIA in October - unless, of course, he has other plans.

It may sound far-fetched but a Briton who retires as president of an international sporting federation has a good claim to recognition for his services and a life peerage at 57 years of age might propel Mosley into a political career with a seat in Britain's House of Lords.

Whether an honor can be wangled would depend largely on Mosley's connections in British politics - which, it should be noted, are extremely good.