© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
January 23, 2009 11:20 pm
Bernie Ecclestone, Formula One commercial director, has revealed that he advanced the struggling Williams team £14.5m after it committed to stay in the sport, write Christian Sylt and Caroline Reid.
Williams has made a loss of £50m over the past two years but the boost from Mr Ecclestone has helped the team get its budget in place until the end of 2010.
A total of £130m has been set aside as an incentive for F1’s nine teams to sign the Concorde Agreement, the contract that binds them to race in F1 but which expired at the end of 2007.
The teams now race in F1 under a Memorandum of Understanding (MOU) agreed in 2006 with CVC, the private equity group that has majority control of F1, but this is not legally binding.
The MOU increased the teams’ annual prize money from 25 per cent to 50 per cent of the sport’s underlying profits and these payments began last year. But the teams have not signed a new contract, prompting Mr Ecclestone to say: “We have no contract and no invoice so why are we paying them?”
CVC offered the teams a signing bonus, comprising the difference between the old and the increased prize money backdated from 2004-07 and estimated at £130m, subject to the signing of a new Concorde Agreement, which CVC needs if it wants to withdraw from the business.
Williams, however, has already received its share of the money from 2006 and 2007. “It’s a prepayment,” says Mr Ecclestone. “They are entitled to some back-payments only due for payment when they sign the Concorde . . . we said to them we will pay you now.”
The back-dated payments represent about 20 per cent of Williams’ revenues and will have helped the team get its budget in place in spite of losing sponsors.
Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.