APRIL 30, 2007
Bernie goes to Brands Hatch
Bernie Ecclestone turned up at Brands Hatch over the weekend to take a look at the A1 Grand Prix Series, sparking speculation that the F1 enterpreneur may be considering getting involved with the struggling championship. The suggestion being put about is that A1 GP might be merged into a new Asian GP2 series for the winter months, thus creating a new feeder series for Formula 1.
A1 GP knows that its chances of survival are slight if Ecclestone (or whoever) launches a winter GP2 series in opposition to its activities and thus the urge to merge is probably coming entirely from A1. Traditionally Ecclestone only involves himself in businesses in which he has complete control (be that in terms of share ownership or by way of shareholder agreements). Bernie is also unlikely to invest in something that is more expensive than starting his own championship, which would be a very small investment as an organisation already exists that could simply expand its operations into the winter months. At the moment the series runs from April 13 to October 30, leaving five months of relative inactivity. The big question is whether or not Ecclestone - and whichever partners he has onboard - can find a way of making serious money from the series. With GP2 there is TV coverage that comes with F1 but stand-alone races are not as easy. GP2 teams pay for the cars (and the spares) and this generates decent profits for whoever owns the business. They pay out prize money but it is nothing in comparison to the profits being made. The value of A1 would be in the existing contracts with race promoters and TV companies and Ecclestone is in a good position to expand this side of the business but it is unlikely that the World Cup format would be retained as the nation-against-nation concept is not really catching the attention of fans.
The A1 Grand Prix series is owned by a hedge fund called RAB Capital plc, which spent $200m to acquire 80% of the business. The series lost $240m in the course of its 2005-2006 season and is still struggling to make a major impact. The 2006-2007 season has just finished and while the financial results may be better (or perhaps less bad), the series is still nowhere close to making a big profit. Plans to float A1 have been shelved and it could be that RAB Capital would be happy to offload the investment for next to nothing in order to save its reputation as a successful investment house.
The other question is whether there is enough money in the world to fund two GP2 series. At the moment several of the teams are kept afloat with money from Asia and if that cash was to switch to an Asian series, it might be more difficult for the European series.
Having said that Ecclestone will no doubt be assessing whether he thinks an Asian GP2 would be good for bringing on new drivers, sponsors, teams and TV comapnies from Asia which might one day prove useful for F1.
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