Why Bernie may eventually buy Champ Car
If Ecclestone’s control of the board of the holding company does end in court, the banks are likely to start talks with the GPWC — the breakaway group formed by Ferrari, Renault, Mercedes and BMW, which is threatening to launch a rival series to Formula One — to heal the rift and set up a new financial structure with a fairer share of profits for the teams. The GPWC refuses to negotiate with Ecclestone and says that its rival series will go ahead with 80 per cent of revenues paid to the teams.
As the judgment is delivered in the High Court, Ecclestone will be facing Formula One’s ten team principals to explain why he has still not signed a contract with Silverstone to save the British Grand Prix. The meeting is likely to be an uncomfortable affair, the last act of a “will it, won’t it" plot worthy of a Christmas pantomime. Even though the teams put together a £40 million rescue package to empower Ecclestone and Silverstone to conclude a deal that would guarantee the race’s survival, there is still no contract. Instead, Silverstone has been drawn into the complex political web being spun by Ecclestone as he attempts to cling on to control of what is arguably the world’s richest sport. The row over the British Grand Prix stopped being about money months ago and is now part of Ecclestone’s defense mechanism against the twin threats from his own shareholders and GPWC.
It emerged last night that GPWC has met executives from the world’s leading race circuits, including five Formula One tracks — Silverstone, Monza, Imola, Hockenheim and the Nürburgring. Alain Prost, the four-times Formula One world champion, led the presentation last week and his approval of the manufacturers’ group lends weight to its claims that it will be ready to stage its own championship within three years. George Taylor, the man who will be Ecclestone’s equivalent as commercial director of the new group, is in London networking with key figures as the GPWC accelerates its plans. Key to those plans is securing leading venues, with Silverstone top of the list. More….
12/04/04 Our sources in Europe tell us that Bernie Ecclestone is extremely concerned that he will soon get very bad news and lose the court case with the banks and they will gain control of FOM by appointing the majority of board members to the organization. If that happens it is anticipated that the banks will align FOM with the manufacturers and Bernie will lose complete control of F1. The question now is who owns the F1 name, Bernie or FOM? If Bernie, he can simply buy Champ Car and resume the business of the F1 World Championship. If FOM owns it and sells the name to the GPWC, Bernie is toast. He will then have to decide whether to get out of the sport, or get involved with other motorsports, such as Champ Car. We maintain that F1 under the leadership of the manufacturers will eventually fail, but that could take five years or more. 11/24/04 A reader writes, Dear AutoRacing1.com, I find this speculation about Bernie buying Champ Car quite intriguing. I just can't see Bernie walking away quietly if he is forced out of F1. I don't think he has the stomach to start a whole new series from scratch using the F1 name he owns, but I do see him buying into Champ Car as a way to kick start his "new" F1 series. Whether you like Bernie or not, you have to admit that what he has done with F1 is nothing short of phenomenal. His influence and relationships in racing are far reaching. Just having his name associated with Champ Car will have companies and race promoters banging down Champ Car's door. Because it appears inevitable that the manufacturers will take control of the existing F1 teams (the teams are beholden to them via their huge financial backing) with their GPWC series, if I were OWRS I would be talking to Bernie now about a strategy on how to outsmart the manufacturers. Rest assured, the GPWC series won't be around along. Many a race series has died when manufacturers influence became too great. I cherish the thought of Ecclestone, Kalkhoven, Forsythe and Gentilozzi working together to make Champ Car the No. 1 form of motorsports in the world. I predict they will do it within three years of the day Bernie gets involved. Joel Richardson, San Diego, CA. 11/24/04 While the world awaits the judges decision on who gets to control F1, a couple of key points must be remembered. Let's speculate using some of information from this FT.com article. Under the terms of the original sale of the SLEC stake to Kirch Mr. Ecclestone retained management control through FOA and FOM. The banks have had no say in running the F1 business itself. That would not be such a problem except that a dispute between Mr. Ecclestone and the carmakers taking part in F1 has led to the possibility of the manufacturers breaking away from Mr. Ecclestone and starting their own championship. Such a move could leave the banks' stake in SLEC virtually worthless – hence their desire now to wrest management control from Mr. Ecclestone.
The carmakers have long since become exasperated by what they regard as the outdated, dictatorial manner in which Mr. Ecclestone runs F1 as a personal fiefdom and the unfair share of F1 revenues received by the businesses he founded. Three years ago five carmakers – DaimlerChrysler, Fiat, Renault, BMW and Ford (no longer part of F1 after the sale of Jaguar Racing) – took the first step towards establishing what they insist will be a successful rival world championship. Scheduled to start in 2008, the "Grand Prix World Championship" series would guarantee that a much larger proportion of revenues went to the competing teams.
Offered such a substantial financial carrot, most of F1's teams have already signed up to the new championship in principle, even though it would not be able to use the term Formula One: Mr. Ecclestone bought 100-year rights to the name for $350m several years ago. Hence, if he loses this court case and buys Champ Car, he can rename Champ Car F1 and carry on. He also owns all the contracts with the race tracks. Where would GPWC race if Bernie's new F1 series is racing there?
Victory for the banks in the current court case would almost certainly lead them to forge an alliance with the big carmakers taking part in F1 and concede demands for a bigger share of income to be directed immediately towards the teams – potentially leaving Mr. Ecclestone sidelined. Bernie sidelined?
It is a stance rejected outright by Mr. Ecclestone. F1's commercial rights, he insists, are owned not by SLEC but FOA and FOM. "The banks don't have anything – no rights whatsoever. The banks are shareholders of SLEC, and SLEC has no rights. "I am the CEO of Formula One Management and Formula One Administration, which runs the business in F1. From this point of view, I own F1." Therein lies the dispute that the judge will rule on.
In spite of turning 74 last month Mr. Ecclestone shows not a shred of willingness to hand over the reins of a sport in which he has demanded high standards from all participants, even ensuring personally that team trucks are lined up inch-perfectly in the paddock. But the time is approaching when he may have no choice. Some see him as now facing a lose-lose situation. Even if he wins the action coming to court in London on Monday the car manufacturers in F1 will only accelerate their plans for a new championship in which Ecclestone would play no part.
The banks would not look to Bernie for a deal now; but if he made an offer maybe they would reconsider. But I doubt it will happen because he is so bitter. So bitter in fact that if he were to lose the business he built, would he go off and show the manufacturers what he could do without some of them? Would he indeed buy Champ Car from Messrs Kalkhoven, Forsythe and Gentilozzi and give them a big return on their investment far sooner than they expected?
Only Bernie knows for sure. We don't see Bernie taking orders from the banks or the manufacturers. He did after all, almost buy Champ Car two short years ago, so anything is possible. Mark C.