Ecclestone gets jammed in Formula One gridlock

Formula One promises more action off the track than on, as the FIA decides who will control the broadcasting rights. Will it be Ecclestone or not?

Sometimes it is difficult to know which Bernie Ecclestone, the man who controls Formula One motor racing, prefers: the on-track high-speed racing where each Grand Prix is watched by a TV audience of 250 million people, or the behind-the-scenes manoeuvrings – known to only a handful of confidants.

In the past month, those behind-the-scenes deals have been exposed to unprecedented scrutiny. This means that as the 2001 season gets under way on Sunday with the Melbourne Grand Prix, there is as much interest in what Ecclestone will do next – and what that will mean for the business of F1 – as there is in who will win the World Championship.

This is partly because most people have already decided the outcome of the World Championship – either Michael Schumacher will retain the title he won for Ferrari last year or his close rival Mika Hakkinen will win it. There are few drivers who will challenge the duo – Juan Pablo Montoya racing for the BMW Williams team is the only ray of hope for those who believe in outside chances – unless both favourites crash out early in the season. In short, it is unlikely to be a vintage season on the track.

By contrast, since October – when Schumacher was crowned champion – there has been plenty of off-track action and intrigue to keep people entertained.The collapse of the German media group EM.TV has been at the centre of much of this intrigue.

A year ago, EM.TV paid $1.6bn (&£1.1bn) for a 50 per cent stake in Slec Holdings – which controls the commercial aspects of F1- with an option to buy a further 25 per cent. The rival German media group Kirch announced on Monday that it has the finance in place to engineer a rescue plan for EM.TV, which would include taking up the 25 per cent option and extending its stake in Slec Holdings to 75 per cent.

There are several parties opposing the Kirch move. These include existing F1 broadcasters, car manufacturers, team owners, sponsors and not least Ecclestone. Some have investigated taking greater financial stakes in the sport to safeguard their existing investments.

The car makers, for instance, have been talking about buying a stake in the sport for some time. They do not want to necessarily control it – EU rules would not allow them to do that anyway – but they do want to safeguard the near $100m (&£69.3m) a season they each invest in F1 and see taking even a minority stake better than waiting for a new owner to come along.

The problem is that the consortium of car makers, including Fiat (through Ferrari), Ford (Jaguar), Renault (Benetton) and DaimlerChrysler (Mercedes-McLaren) are among the most bitter rivals in the world and find it difficult to agree on anything. So the idea that they could come up with a scheme to pool resources and then make such an arrangement work seems like science fiction.

However, earlier this month it was revealed that the sport’s governing body, the Federation Internationale de l’Automobile (FIA), was set to open talks with some of the car makers to establish if they were interested in buying the sport’s broadcasting rights. Until that point, it had been believed that Ecclestone had struck an incredible deal last June, paying the FIA just $360m (&£249.5m) to extend his control over the broadcasting rights for 100 years from 2010. If you compare that with the &£1.11bn BSkyB paid for the rights to Premiership football for just three years from this summer you will see just how good a deal Ecclestone struck.

Ecclestone claims that he is on track to pay the initial $60m (&£41.5m) “deposit” that the contract demands. But the FIA said it needed to make “other arrangements” in case the initial payment – which it claimed was seven months overdue – was not paid before it next meets on March 22.

The FIA revelation was met with disbelief. Without the broadcasting rights, Ecclestone would lose control

of the sport. Some have seen the incident as the first sign that Ecclestone might be losing his grip on F1, while others put forward a more convincing argument that it is a conspiracy cooked up by Ecclestone and the FIA to deter potential bidders from chasing the EM.TV stake.

If that were true, the fact that Kirch now has the money in place to go ahead with its rescue plan for EM.TV – giving it control of Slec – could constitute a serious threat to Ecclestone. However, the confidential terms of what is known as the Concorde Agreement – which sets out all the commercial and financial relationships between the team owners, the FIA and Ecclestone – contain a trump card. Apparently any deal which is deemed “not in the best interest of the sport” could be vetoed by the FIA.

Behind all this intrigue is the impending battle for control of F1 once Ecclestone is no more. He is now 70 years old and, while he protests that he is not going anywhere, even Murray Walker is retiring this season aged 78.

The car manufacturers, team owners, broadcasters and sponsors are all preparing for a post-Ecclestone future and jockeying for position. None of them know when the puppet-master will depart, but one day depart he must and they want to be ready to exploit any opening. The uncertainty over the Slec stake has given them the opportunity much earlier than they perhaps anticipated and, in turn, added spice to this season’s contest.

Tom O’Sullivan is sports page editor of the Financial Times

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