SEPTEMBER 18, 2002
Bernie confirms that he might buy Ferrari
Ecclestone is famously wary of any arrangement in which he is a junior partner and has always steered cleared of such a situation, but if he has control he is happy - and it does not matter who owns the other shares. When SLEC was sold to EM.TV a year ago Ecclestone did a deal which left him with only 25% of the shares but with the controlling voice in the business.
The situation at Ferrari is not clear because there is no official figure at which shareholders have a say in the business. Most firms have statutes which mean that shareholders with a certain percentage of shares would be allowed to block decisions they do not like.
Ecclestone said that the Ferrari brand is a strong one but asked the same question that many before him have asked.
"Ferrari spends much of its profits from car sales on paying for its motor racing. If it didn't do that, would the cars sell?"
Luca di Montezemolo realised this some time ago and has been trying to diversify the company into finance, insurance and into being a fashion brand. He has plans for a Ferrari-themed hotel and a series of retail outlets. The aim, one must presume is to create profit. He has also expanded the business to include Maserati, which might help the balance books as they will sell without needing as much promotion.
Ecclestone is a man who is passionate about motor racing and about money, and one might see a situation in which he would buy into Ferrari even if it was not a great profit centre. But one cannot say the same about the hard-headed bankers - allies of Ecclestone - who are now buying Ferrari shares. There has to be something in it for them.
The only real explanation is that a structure has been found which would enable Ferrari to go on selling cars without having to put all its profits back into the sport. This would enable the banks to make money and for Ferrari to go on in racing. But who is going to pay? At the moment Ferrari has major sponsorship from Marlboro, Shell and Vodafone. These are big longterm deals but they do not cover the $200m budget which Ferrari is rumoured to have. If companies could be convinced to fund Ferrari as part of their normal every day business it would help. Investment banks often own other companies which they wish to promote before selling on.