Car makers edge ever closer to a deal with Bernie

FEBRUARY 11, 2001

Car makers edge ever closer to a deal with Bernie

A consortium of the world's top car makers took another step closer to buying a stake in the Formula 1 business last Friday when the trustees of SLEC, the Ecclestone family trust which controls 50 per cent of F1, held a board meeting to consider such a sale.

The consortium is led by Fiat chief Paolo Cantarella on behalf of BMW, Ferrari, Jaguar, Mercedes and Renault, all of whom own part of or are involved with a current Grand Prix team. It is currently considering the purchase of 25 per cent of SLEC x although this could increase to 35 per cent if Ecclestone agrees to buy back some of the shares he sold last year to the debt-stricken German car maker EM.TV.

Ecclestone told the SUNDAY TIMES newspaper that the car makers were keen to buy in as partners to his trust and that they were currently conducting due diligence through their advisor, bankers Goldman Sachs.

"The trust is talking to the manufacturers and we will hear within a few weeks whether it will own 25 or 35 per cent," he said. "It depends on the outcome with EM.TV. Until that is settled, nobody knows."

EM.TV is currently in discussions about a possible sale to the German media group Kirch, but it is believed that Ecclestone and the competing F1 teams have reservations about this deal. They believe that there could be a potential conflict of interest if a cable TV provider like Kirch owned a stake in a business such as SLEC whose core business is negotiating deals with television companies.

However, Ecclestone is quoted as telling the SUNDAY TIMES that he doesn't care where the EM.TV stake will go. "Whatever happens will happen and I'll deal with it when it happens," he said. "They are discussing the amount as we speak. The manufacturers want to be on the inside to see what's going on.

"If they have a stake they will have a board position and as much say on things as anybody else. All I know is that people want me to stay here as long as I want, which I will do, and who owns the shares doesn't make a lot of difference to me. I couldn't care less."

There have been suggestions that motor racing's governing body, the FIA, has been attempting to derail the negotiations with the car buyers by claiming that Ecclestone has not yet paid the 40 million pound deposit for his extended TV rights from 2011. In reality, this is a trifling sum for Ecclestone and there is speculation that the so-called "feud" between him and FIA president Max Mosley is little more than a ruse to temporarily depress the market value of SLEC shares - further frustrating EM.TV boss Thomas Haffa and making it more likely that he will sell back his stake to Bernie for a much reduced price.

Meanwhile, the car companies' excitement at having a slice of the F1 action may be tempered by the longer term uncertainty of their own involvements. With DaimlerChrysler boss Jurgen Schrempp's career seemingly set to end spectacularly in a sea of debt, and Henry Ford's great grandson Billy possibly poised to mount a challenge to Ford chairman Jacques Nasser's position, there is always bound to be a question mark hanging over the continued commitment of the car makers to a business like F1.

The past 25 years have seen car makers come and go from the F1 stage, their departure usually prompted by a change of management determined to expunge all traces of their predecessors - or by nervous bean counters putting a red line through what, in motor industry terms, are relatively modest investments.

In that respect, nothing changes.

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