OCTOBER 5, 1998
The name's bond... Formula 1 bond
The main aim of the bond issue is to liquidate some of the Ecclestone Family's money in the sport, while also increasing knowledge of the sport in financial circles. This would pave the way for a flotation of Ecclestone's Formula One Holdings Ltd. in two or three years.
The money raised may also be used to invest in FOH to develop the business further - possibly into other sports such as soccer. Ecclestone's advanced TV coverage facilities and experience are much in demand and it is cheaper for other sports to hire Ecclestone's services than to invest in it own equipment. Ecclestone may be planning to build four or five of his "Bakersville" mobile TV facilities and rent them out to other sports. Money may also be invested to speed up the development of "virtual advertising" which will allow signs at race tracks to be electronically-altered depending on the country in which the TV coverage is being shown.
The bond issue follows the cancellation of the original FOH flotation in late 1997 after backers pulled out in the face of an investigation into the company by the European Commission and a dispute between Ecclestone and the F1 teams over the Concorde Agreement. The fight over the Concorde Agreement has now been settled and Ecclestone and the EU are getting closer to a settlement.
Ecclestone controls all commercial rights to F1 until the year 2010 and this is what caused the problem with the EU. There has been progress in the talks with the EU in recent weeks although the EU continues its investigation into the operation ofÊtheÊFIA. EU Competition Commissioner Karel Van Miert is arguing that the FIA is a monopoly and its rules abuse that position. The FIA has since agreed to allow some championships to organize their own promotion but has retained the rights to F1, the World Rally Championship, the World GT series and Formula 3000.
The EU is expected to make a statement about its investigations within the next two months.
Last week Van Miert admitted that the Commission does not fully understand the economics of sport and launched a review of its policies to clarify the rules and to ensure that once in place the rules are supported by the member states of the Commission. Several countries feel that the EU should leave sport alone.