OCTOBER 17, 2002
EU clearance for Formula One deal
On September 2 the European Commission received notification that three banks: the Bayerische Landesbank, JP Morgan and Lehmann Brothers were planning to take control of SLEC Holdings, the Formula One group holding company. The Commission then conducted an enquiry into the transaction to see whether it could be cleared by the competition authorities and that clearance has now been given. This means that the banks have taken over shares in SLEC which were controlled by Kirch. The day-to-day running of the business remains in the hands of Bernie Ecclestone, who retains a 25% share of SLEC.
The clarification takes away one possible obstacle to a deal between SLEC and the automobile manufacturers, although the car makers continue to say that they are going ahead with their own plans to start a new World Championship in 2008. In recent weeks there have been increasing suggestions that the manufacturers may short circuit the need to start their own championship by winning control of the Formula 1 Commission, the ultimate decision-making body in Grand Prix racing. If that can be achieved they will, in effect, have carried out an internal takeover of F1 and will not need to start their own business. This will put them in a position to dictate terms to SLEC when the Concorde Agreement needs to be renegotiated.
The structure of the F1 Commission means that the teams vote as a block, based on what the majority believe. It does not matter how many teams there are. If they are split equally, so is their block of 12 votes. Otherwise the block goes with the majority. Only eight of the Commission's 26 votes are needed to reject a proposal so the teams are in a powerful position. If the manufacturers can muster six teams then they can dominate the voting. At the moment, however, the teams linked with the GPWC are McLaren, Ferrari, Jaguar Racing and Renault. Sauber votes with Ferrari. The independent teams are Williams, BAR, Jordan, Minardi and Arrows. Toyota does not get a vote. In other words everything is finely balanced between the teams and the 12 votes could go either way.
If the teams can get the blocking vote needed, no change will come but doing something positive is a different matter as the teams need an extra six votes to get proposals through. Four votes are easy enough to find as the two sponsors (Marlboro and Exxon Mobil), the tire manufacturer (Bridgestone) and the engine manufacturer (Ford) usually vote with the teams, creating a 16 vote grouping, but getting the other two is more difficult.
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