FEBRUARY 23, 2003
Bernie and the banks
There have been a rash of stories arising for a report in The Sunday Times suggesting that Bernie Ecclestone is willing to buy back the Formula One group from the banks which currently own the 75% which the Ecclestones do not control. This is not news. The big question is the price that he is willing to pay and which the banks are willing to accept. The latest report does however have the interesting suggestion that Ecclestone will only do the deal if the teams agree to commit to the World Championship until 2015. If this was the case the current Concorde Agreement would presumably be cancelled and another arrangement entered into. The manufacturers are still talking about setting up their own championship but behind closed doors the situation seems to be rather diffferent with most accepting that the GPWC going it alone is not a viable option. To this end they have appointed Goldman Sachs to work with Ecclestone and the banks to try to find a solution to the problem. They are also reported to have begun a search for someone to run the resulting company.
If Ecclestone does buy back the shares from the banks he will be in a position to build up the business and will then look to sell it again, perhaps in the form of a stock market flotation. This was his original aim but plans were changed because of the economic uncertainties at the time and disputes with some of the teams.
The manufacturers continue to say that they want to control the F1 revenues. Ron Dennis says that the teams currently get only 23% of the money flowing into the sport. The problem is that Ecclestone does not own the commercial rights to F1, he leases them from the FIA and the federation retains the right to cancel the deal if a "change of control" takes place and it is not satisfied with the new management. As long as Ecclestone remains in charge all is well but if he goes the FIA may not allow a manufacturer nominee to take over. If however everyone is willing to compromise there is probably a way forward without the need for a rival series or endless bickering over every detail.
Until that deal is done the manufacturers say that they are continuing to push ahead wsith plans for a new series but in doing so it is still risking the wrath of the FIA which was deeply upset when the suggestion was made that the GPWC run a non-FIA regulated series. This is not a very practical idea given the FIA's political strength.
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