AUGUST 8, 2006
In the overall scheme of things
Although there are still i's to be dotted and t's to be crossed, the basis of a deal over engines for 2007 and 2008 has now been struck between the FIA and the GPMA. This has still to go through the other non-aligned teams and it is possible that one or two might take the opportunity to demand more concessions. This would be a dangerous thing to do because of the many different kinds of payback that a small team could suffer in the years ahead but it might be something that a team like Midland, unsure of its own future, might do in an effort to get cheaper engines or chassis.
The problem is that CVC Capital Partners, the private equity firm that bought control of Formula One Management (FOM), is now beginning to get uppity at the delays in putting together a deal. CVC has seemingly done very little since it took control of the sport, leaving FOM's management to do the business, but recently there have been signs that CVC is becoming more closely involved and has been talking directly to teams and the GPMA about sorting out a deal. CVC wants to get the sport settled down so that it can issue a bond secured with the future revenues of the sport - as FOM previously did back in 1999. This means that CVC would immediately pay off its investment and any future revenues not needed to pay off the bond and the teams would be pure profit. That plan has always been dependent on a deal between FOM, the teams and the FIA. A commercial deal was struck in May but nothing could go ahead without a deal over the rules as well and the endless negotiations over engines have slowed down the process and meant that CVC has not been able to go to the bond markets.
The overall effect of this has been a clear weakening of the position of FOM and with the delays being caused by the FIA and the teams it is fair to speculate that the dragging of feet may have been deliberate as both have things to gain from reducing FOM's influence over the sport.
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