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JULY 20, 2000

F1 teams could be boxed into a financial corner

RUMBLINGS of discontent amongst F1 teams regarding Bernie Ecclestone's increasing stranglehold on the FIA World Championship look set to be silenced if five of the world's major motor manufacturers eventually decide to purchase a one-third stake in Bernie Ecclestone's SLEC empire.

THE DAILY TELEGRAPH business news pages were today led by an article which suggests that Ford, DaimlerChrysler and Toyota - plus two others, presumably including Ferrari's owners Fiat - are keen to buy a stake in SLEC from EM.TV, the German media company which purchased a 50 per cent stake in SLEC earlier this year.

It is being speculated that if the major motor companies buy a stake in F1 they will not only become locked in for a long period, but that fact in itself will prevent anybody from even contemplating a rival series - something which has been muttered about by some F1 entrants if they fail to cut a financial deal more beneficial to themselves when it comes to re-negotiating the Concorde agreement which expires in 2007.

This development comes on the back of the decision by the FIA to lease Ecclestone the commercial rights attached to the F1 World Championship for another 100 years beyond the current expiry of his present arrangement in 2011.

Nick Samengo-Turner - who heads Cambridge Capital Partners, an investment banking boutique specializing in the motor industry and whose family backed the Parnell Racing F1 team in the early 1960s - commented; "The important issue is, will the teams go along with signing the new TV rights agreement?"

Another F1 insider commented wryly; "A deal like this would tie the elephants and clowns down so they cannot leave the circus."

In October 1999, Ecclestone sold 12.5 per cent of SLEC for £235m to Morgan Grenfell Private Equity, a venture capital arm of Deustche Bank. They tried to syndicate another 37.5 per cent of SLEC to other investors, but instead the American venture capital firm Hellman & Friedman snapped up the stake in February 2000.

A month later the German media company EM.TV, whose previous claim to fame was that it owned the muppets, bought the stakes off the two venture capitalists for a total of 1.3 billion pounds - which ensured that Hellman & Friedman had doubled its money in four weeks.