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OCTOBER 15, 2001

Kirch making money on soccer World Cup

KIRCHGRUPPE, the German media company that has effective control of 75% of Formula 1's commercial holdings group SLEC, has been busy trying to finalize deals for one of its other interests - the soccer World Cup, taking place in summer 2002.

This is the biggest single sporting event in the world and Kirch has control of the TV rights for both 2002 and 2006 finals, but has put a good number of noses out of joint in the process with a price hike of up to 30 times the price of screening rights to national broadcasters than they last paid in 1998.

This week Kirch has finalized its deal with the South American broadcasters - for which the event is second to none in importance - for both the 2002 and 2006 soccer World Cups. The final price is understood to be US$800 million, which should go a long way towards balancing the books at KirchGruppe after its massive investment in the commercial interests of soccer, Formula 1, athletics and other major sports.

The $800 million deal is likely to increase Kirch's negotiating power in Formula 1 after it is believed that increasing pressure was brought to bear in recent months to sell a share of its Formula 1 stake to the consortium of manufacturers looking to buy in to the sport or break away to form a rival series.

The fact that Ferrari is prepared to lead the way out of F1 now seems to be the biggest incentive to getting Kirch back to the negotiating table as the value of the championship that has Ferrari will always be greater than that without - even if it is called Formula 1.

Meanwhile Kirch is about to go back to the negotiating table with Britain's domestic broadcasters BBC and ITV to try and rescue a deal for next year's World Cup. The British government insists that major sporting events are available on free-to-view TV, but whereas the fee for the 1998 World Cup was $18 million, for 2002 alone it is $117 million - a bill that the Brits are not able to meet.