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MAY 23, 2008

Ecclestone writes to the FIA members

Bernie Ecclestone has written to the presidents of the FIA national clubs, replying to Max Mosley's recent letter. Ecclestone said that Mosley's statements "could lead to misunderstandings and inaccurate conclusions being drawn".

Ecclestone said that Formula One supports the FIA and recognises that it is the sole governing body for international motorsport.

"We recognise the obligation conferred upon the FIA by you, its membership, to safeguard its authority over all safety, sporting and technical matters relating to the championship, as well as its traditional values."

The letter adds that "we support and concur with the requirement of the European Commission that regulatory functions relating to international motor sport be separate from the associated commercial interests and that the FIA's role in Formula 1 should be that of the sporting regulator, uninvolved in its commercial exploitation. We believe it is to the benefit of Formula 1 that the FIA should have a transparent and robust governance structure and that it should discharge its regulatory responsibilities in a fair, impartial and non-discriminatory manner, without external influence or interference, led by a credible and respected President (who should be chosen by the FIA's membership only). We intend to continue to manage exclusively the commercial exploitation of Formula 1 within the established frameworks of the existing FIA Formula 1 Commercial Agreement and, in due course, the 100 year agreements."

Ecclestone went on to give details about the 100 year deal which the FIA and SLEC Holdings Ltd entered into April 2001, saying that the agreements are "valid and binding on the parties and will in all material respects become operative in 2011. They do not need to be altered or renegotiated unless both parties wish to do so."

Ecclestone admitted that "there are some ambiguities in the drafting of these agreements, however, and we have sought discussions with the FIA President to clarify these points and to avoid unintended consequences. We have also raised with him a number of other issues which we considered would improve the agreements without damaging the FIA' s interests, but we accept that is a matter for the FIA to judge, it is not obliged to make those concessions to us and should it consider it is against its interests to do so, we would be content to the leave the agreements in their present form and when the time comes, to operate within their existing scope, without amendments."

Ecclestone denied that the Formula One group wants to control the F1 regulations.

"We believe that the Formula 1 regulations should be drawn up by the Formula 1Technical and Sporting Working Groups, subject to the approval of the FIA Formula 1 Commission and the FIA World Motor Sport Council. To the extent any changes to the Formula 1 regulations may have a material commercial impact on the commercial rights holder and its interests, such changes should be discussed and agreed with us. Imprudent changes to the Formula 1 regulations, if adopted, could have a dramatic adverse impact on the attractiveness of the sport, to promoters, to broadcasters, to sponsors and to the fans; they could add significantly to the cost of participating in the championship at a competitive level; they could also undermine or depart from the championship's traditional values.

"We believe that a clear regulatory framework would minimise the risk of such problems. The FIA should be solely responsible for policing and enforcing the Formula 1 regulations fairly, transparently and without bias."

Ecclestone went on to say that the Formula One group wants to Concorde Agreement to be renewed, "not as a way for the commercial rights holder to exercise control over the sport, but because it will provide the financial and regulatory stability desired by the F1 teams and the motor manufacturers who sponsor and invest significantly in them. The commercial and financial arrangements, including the distribution of the annual prize fund, have been agreed between the commercial rights holder and the Formula 1 teams, with the full knowledge of the FIA."

Ecclestone said that the Formula One group is "willing to sign immediately a new Concorde Agreement substantially based upon and containing the same regulatory provisions as the previous Concorde Agreement, amended only to reflect the commercial and financial arrangements agreed with the teams."

He went on to say that Mosley's claim that F1 is in a financial crisis is not correct.

"Formula 1 is in robust health," he said. "It enjoys the support of most of the world's leading automotive manufacturers and is sponsored by many of the world's other most prestigious brands. Revenues continue to grow, television ratings are high and demand from countries to promote a new Grand Prix continues to exceed the number of places on the calendar."

He added, however, that the cost of operating a successful F1 team has risen to "an unsustainable level and this is being addressed.The Formula 1 teams have agreed upon some cost-cutting measures, making it more viable to participate at a competitive level and with a robust and stable regulatory framework, further efficiencies should be possible".

He said that the Formula One group will continue to support such initiatives.

He added that the FIA derives "in excess of $25m each year from Formula 1 (not including fines, which are often substantial sums) which subsidises other aspects of the sport. The FIA Foundation was founded with the substantial sum paid to the FIA for the 100 year agreement.

"We have no reason to undermine the FIA or its President, on the contrary we believe a strong FIA led by a respected president is good for all key constituents of Formula 1: the fans, the teams, the sponsors and suppliers,the promoters, the media companies and us.

"You may be assured that whatever decision you should make on June 3, we look forward to continuing our long-standingand constructive relationship with the FIA and its President in pursuit of a stable and successful Formula 1."