APRIL 25, 2006
A settlement for F1
The ever-excitable Formula 1 Internet media - most of whom have never set foot in a Formula 1 paddock and make it up as they go along by putting their own spin on other people's stories - decided over the weekend that a deal was close between the GPMA teams and CVC Capital Partners, the F1 commercial rights holders.
That was ill-informed wishful thinking. The teams and CVC did spend some time discussing the current situation because they do not apparently agree on a percentage figure. An early agreement was blown out of the water back in Bahrain. Since then GPMA percentage seems to have gone up as CVC's has gone down, a clear sign that the two sides are taking up positions from which in the end they will move back to a sensible number. The conversations at Imola, however, were not about this number but rather about what incentives there are for teams to promote the championship when the rights holder is not doing much in this respect.
Flavio Briatore from Renault seems to be very keen on a deal happening and made a point of telling some pressmen that a deal was close but it is a measure of Briatore's political power in F1 nothing happened. Renault is committed to the other GPMA manufacturers and if the French car company breaks the agreement, it is going to cost if not a lot of money certainly any trust that might have existed and probably some serious legal bills as well.
Briatore does have some good ideas about the World Championship but he is not able to move mountains.
If the GPMA maintains its current position - and the signs are that it will - the pressure will move on to CVC. It has paid up a large sum of money to buy the Formula One group and Allsport Management and now it wishes to reduce its exposure and issue a bond to get its money out of F1, securing the loan on the future revenues of the sport. In order to get a bond, however, CVC needs a deal with the teams: five years would be a start but 10 years would be better. However in order to get a 10-year deal, the revenue split is going to have to change significantly. CVC could hold out and hope that the manufacturers will disappear but the status of F1 - and its economic power - will take a big hit if the car manufacturers walk away so compromise is the obvious way forward.
However, in addition to the financial disputes there is still the problem of Max Mosley's rules and regulations for 2008 which have been causing a fair amount of grief to the car manufacturers. The problem for Mosley is that there is unlikely to be a deal over the rules until there is a deal over money but he needs to have his rules set in stone by the end of June. If Mosley decides to go it alone without the commercial deal in place he might drive away manufacturers and if that happens, CVC will be affected.
In other words, some serious compromising needs to be done between now and the end of June although the big question is not what needs to be done but rather who needs to do it.
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