MARCH 8, 2002
Ecclestone meets manufacturers in Geneva
FORMULA 1 boss Bernie Ecclestone met with automobile manufacturers at Geneva this week to discuss a deal over the commercial rights to Formula 1 racing. The manufacturers are threatening to start their own championship in 2008 if they are not offered a much better deal by Ecclestone and his partners in SLEC, the company which holds the commercial rights to Formula 1 racing.
Ecclestone's current partner Kirch is struggling to survive at the moment and there have been suggestions that Ecclestone and the car makers could get together to do a deal over the rights. Ecclestone is believed to have first option on the SLEC shares owned by Kirch and is rumored to be offering around $700m to Kirch. This suggestion has been rejected by a Kirch spokesman who indicated that it was not enough money. But Kirch's finances are in dire straits at the moment and in the end some money may be better than nothing.
Ecclestone met with Fiat's Paolo Cantarella, Ford's Wolfgang Reitzle and Mercedes-Benz's Jurgen Hubbert at the Autosalon in Geneva to see if there is any common ground on which to build. Doing a deal with Ecclestone would make sense as it would save the manufacturers a great deal of time and energy but if the financial terms are not satisfactory there is little point in doing a deal with Ecclestone.
The key to the future is Ferrari as it is widely accepted that the World Championship will be the series in which Ferrari.
Things are becoming more and more difficult for Kirch at the moment with the banks planning to get together within the next week or so to decide what to do. The most likely outcome is a carve-up of the company with the banks splitting the spoils between them. The only way that Ecclestone and the car manufacturers can influence that is to make a bid which is attractive enough to Kirch for the company to jump at the chance. Having said that $700m is not going to be enough to get Kirch out of trouble as the debts are at least $5bn and may be as high as $11bn.
It seems that Kirch's most likely move to avoid collapse is to cut back to its core businesses and off-load some of its sports rights, notably F1.
The Germans are keen to avoid Kirch crashing in a public way and it is thought likely that German banks will be encouraged to take Kirch assets to ensure that one of German's most powerful media groups does not fall into foreign hands.
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