MARCH 20, 2002
Waiting for a decision on Kirch... or are we?
AS Kirch faces a liquidity crisis in the next few weeks, reports from Germany saying that an additional $500m needs to be found in the days ahead, the future of the Kirch's shares in SLEC (the company which controls the commercial rights in F1) remains unclear.
The automobile manufacturers continue to say that they will do their own thing with the GPWC organization, established in December with the aim of starting a completely new World Championship in 2008 when the current Concorde Agreement runs out. This determination means that any investor in SLEC is going to want to have an agreement with the teams and manufacturers before paying out vast sums for the SLEC shares. And, as long as the car companies continue to decline interest in doing a deal with SLEC, it is hard to see how the shares can be sold unless someone is willing to take a huge risk or a bank is willing to take the shares rather than wait for Kirch to pay off debts. Thus the business could pass into the hands of a consortium of banks and they would then have to figure out a deal with the car manufacturers. This would be easier than it might appear as most of the car companies are either part-owned or dependent on banking organizations.
However the Formula 1 team owners seem to be remarkably confident that a solution will come along which will avoid the commercial side of F1 falling into chaos - and this is largely due to the fact that Bernie Ecclestone remains in complete control of the business for the next few years (thanks to a shareholders agreement between Ecclestone and Kirch). The length of this deal is not currently clear but it is believed to at least another three years.
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