OCTOBER 6, 1997
Bernie's float still afloat
BERNIE ECCLESTONE's plans to float Formula One Holdings, the company which exploits the commercial rights to Grand╩Prix racing on behalf of the FIA, is going to go ahead, probably early next year. Ecclestone told The Financial Times newspaper in London that he is not worried about the ongoing dispute with the Formula 1 teams and said that they would not be given any shares in the company, although they will be offered shares at reduced rates before the general public is allowed to buy into the business. Bernie is hoping to raise $2.5 billion in the sale.
Ecclestone and Salomon Brothers, the US investment bank which is underwriting the deal, are currently going through all the legal issues related to the float. The question of whether the FIA is allowed to centrally-market the TV rights to motorsport has yet to be examined by the European Commission but once this hurdle is cleared the float should be able to go ahead. Obviously it would be advantageous if a deal can be struck with the teams before the float to guarantee a stable future for the sport, and Bernie and the teams are working a new version of the Concorde Agreement which will guarantee that the teams are paid significant sums in exchange for a commitment to take part in all Grands Prix for the term of the contract - which is likely to be 10 years.
The current signatories to the 1997-2001 Concorde Agreement are getting around $10m a year but the new agreement is likely to allow for considerably more money - linked in some way to the earnings of the company. This means that profit margins will be reduced and, as a result, shares will be less attractive than previously was the case.
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