FOM financials hint at F1 future

The Formula One Management company has filed its financial returns for 2003, revealing a number of interesting developments. The most notable of these is that while profits have increased by $31m to $158m, the company's turnover dropped from $643m in 2002 to $562m. This seems to have been due to the closure of the FOM digital TV service in December 2002.

Also interesting is the fact that Bernie Ecclestone's salary tripled to $4.1m.

The documents reveal that the teams are currently considering an offer to buy SLEC, the Formula One Group holding company, from Ecclestone and the banks for $900m, which would be financed by a new bond issue.

The documents also reveal that at the end of 2003 (18 months ago) FOM has paid off half of the original $1.4bn bond. In 2003 $232m was paid leaving $716m to be settled. The aim appears to be to finish paying off the bond by the end of 2006. This will be four years ahead of the original plan to pay off the 10-year bond by November 2010 and opens up the possibility of various forms of refinancing to get the banks out of the business. It is interesting that the teams are involved in this and one would presume that it could end up with a situation in which some form of trust fund would own Formula 1 on behalf of the teams, while the sport would be run by an operating company. If this turns out to be the case, it would be a huge step forward for the sport.

It is also worth noting that the documents revealed that Williams and McLaren are taking law firms Linklaters and Baker & McKenzie to court, alleging that they acted negligently in negotiating and preparing contracts in 1998 in which they each believed they had secured rights to receive a $35m windfall from a flotation or sale of the company. After the flotation was abandoned, Ecclestone sold the business but did not have to pay the two teams because of contractual details.

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