Last updated: July 8, 2011 10:49 pm

Critical stage of the race for future of F1

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Is Bernie Ecclestone foreshadowing the end of his tenure at Formula One?

“If I’m gone, or rather when I’m gone, somebody will emerge,” the 81-year-old commercial supremo of the motorsport told the Financial Times ahead of this weekend’s British Grand Prix at Silverstone. “We’ve got a good enough group around us that would run things without any problems.”

Formula-one-graphic

Formula-one-graphic

The future of Mr Ecclestone, who has dominated the sport for five decades, and the succession issue are the main talking points in F1. Compared with the rather predictable events on the track, where the Red Bull team and its all-conquering driver Sebastian Vettel have turned the season into a procession, the politics of the sport are reaching a critical juncture and are about to get rather lively.

In between the racing, the season thus far has already been dominated by the prospective sale of F1 by owners CVC Capital Partners, the private equity group. Any sale could depend partly on whether or not Mr Ecclestone remains in his post.

Over the years, Mr Ecclestone has almost single-handedly cut the broadcast deals, negotiated with the teams, and signed the contracts with suppliers. “It’s one of those things, we’ve grown together,” he says.

CVC bought F1 more than five years ago for $1.7bn, so it is hardly surprising that it might be considering an exit strategy. News Corp, the media empire of Rupert Murdoch, may have more pressing matters to attend to at the moment, but its stated interest in buying F1 is said not to have dimmed.

CVC revealed last month that James Murdoch, the presumed heir to News Corp, had made an approach about buying F1, as part of a wide-ranging consortium. But could CVC sell the business without Mr Ecclestone, its chief architect, at the helm or is he too important to CVC’s sale prospects?

The man himself, who agrees to the description of being a “benevolent dictator”, says: “I used to control more than I do at the moment because we’ve let things go a little, but to other people we’ve become too democratic. I still think that if I wasn’t around you’d need someone who was going to run things a little bit like I run things.”

Who eventually succeeds Mr Ecclestone is pressing not just because of his age. Prosecutors in Germany, investigating an alleged bribe of $50m paid to Gerhard Gribkowsky, a banker who facilitated the sale of F1 to CVC in 2005, are expected to announce in the coming weeks what charges, if any, they will file.

According to German media, the Munich prosecutors’ interest lighted upon a €67m ($95m) commission paid to Mr Ecclestone and Bambino Holding, an Ecclestone family trust entity.

That commission was said to have been paid by BayernLB – the German bank where Mr Gribkowsky was chief risk officer and which was the majority shareholder of F1 when it was sold to CVC – and part of this money was then transferred to Mr Gribkowsky. Mr Ecclestone, who has been interviewed by the prosecutors, declined to talk about the German investigation. In the past, he has said he was confident of being cleared of any wrongdoing. German prosecutors and Mr Gribkowsky’s lawyers declined to comment.

Across F1, teams, regulators and rights holders await the outcome of the German investigation, knowing that until there is clarity out of Munich the issues that will shape the sport’s medium and long-term future cannot be sorted.

These issues include the renegotiation of the Concorde Agreement, the tripartite deal between the teams, F1’s management company and the Fédération Internationale de l’Automobile, F1’s governing body.

The agreement, negotiated every five years, determines how the annual revenues of F1 are shared out. Although the agreement does not need to be finalised until the end of 2012, behind-the-scenes discussions are said to have begun. Their outcome is also relevant to the timing of any sale CVC might be planning, since CVC would want to eliminate any risk in the business in order to gain the best price.

Mr Ecclestone’s control over F1, mainly through his ability to outfox the teams, shows at present no sign of slipping. “People think [the Concorde Agreement] is a magic document. It isn’t. The important thing in that document is what the teams get paid,” he says. “All the other things are dealt with by the rules and regulations. So really there is no need to have a Concorde Agreement.”

An alliance between the FIA and the teams over the Concorde negotiations would be difficult for Mr Ecclestone. The FIA has hailed the teams’ support for F1 to switch to a new V6 turbo engine from 2014, a decision opposed by Mr Ecclestone.

“There is a consensus in F1 to move forward together on the way to sustainability, and all the things that come from it,” the FIA said.

That does not mean the teams’ interests are entirely aligned with the FIA. Nor does it mean that the teams themselves are as unified as they were two years ago, when they forced former FIA president Max Mosley to step down earlier than planned over his demands to restrict teams’ spending. Some F1 observers believe four teams – Mercedes, Ferrari, Red Bull and McLaren – have more issues in common than the other eight teams, and meet regularly among themselves. News Corp is thought to have made contact with some of the teams about its buy-out plans. Ferrari already has a seat at the table because one of News Corp’s consortium partners is Exor, the investment company of the Agnelli family, which owns the Italian team.

Martin Whitmarsh, team principal at McLaren, says: “There’s speculation surrounding News Corp’s interest in the sport and let’s be clear: the teams are working together and this sport isn’t going anywhere without the teams. If we stay together, we can control the direction of this sport and we’re not trying to do that for any other reason than what’s in the best interests of the sport.”

But the complications about a media company such as News Corp buying F1, whose broadcast deals are with free-to-air providers, are numerous. While he is still around, Mr Ecclestone is determined to have his say in the sport’s future ownership. “Most of the people that are involved in F1 think that it would be wrong to have something as strong as the Murdoch group involved,” he says. “We built the business up through free-to-air TV and I think the minute we moved away from that we might find ourselves in trouble.”

Additional reporting by Chris Bryant

The long road to get Silverstone on track

One of Bernie Ecclestone’s bugbears over the past 20 years has been the Silverstone circuit, the home of the British Grand Prix, writes James Allen at Silverstone. The circuit is owned by the British Racing Drivers Club, one of whose members once dismissed Mr Ecclestone in a meeting as a “second-hand car dealer”.

Mr Ecclestone never forgot the slight and took every opportunity to talk the place down, saying that he was embarrassed to send prospective promoters from overseas to visit the facility because it was not up to F1’s standards.

That has all changed now, with £40m ($64m) of investment by the BRDC and its bankers, Lloyds, spent on improving the circuit and building state-of-the-art facilities, designed by London architects Populous, who worked on Arsenal’s Emirates stadium, the Ascot racecourse and London’s O2 Centre. Silverstone is now a match for any F1 circuit in the world. Underpinning all of this investment is a new 17-year contract for Silverstone to host the British Grand Prix, which at times looked as if it might never happen. However, determined negotiations, along with an intervention from F1’s owners, CVC Capital Partners, secured the deal.

But the BRDC also has a long-term diversification plan, for which it is seeking investors, to make Silverstone a stronger and more sustainable business outside of its F1 activity.

The board wants to establish Silverstone as a centre for engineering, technology and learning as well as developing “Motor City” – a centre for the motor industry to have hands-on showrooms, where customers will be able to try out cars, rather than simply kicking the tyres.

Already, Porsche and Lotus have a strong presence. Richard Phillips, managing director of Silverstone Circuits, says that Audi and Bentley are also in talks about establishing a base at the venue.

There is also a plan to develop hotels on the grounds, with planning permission for 400 rooms, as part of a drive to increase the number of events held at the circuit and thus the footfall into the venue.

For the Grand Prix, Silverstone will this weekend welcome more than 300,000 people. The event was sold out before the weekend.

Mr Ecclestone is more than happy with progress. “Ten years ago it couldn’t happen,” he said. “They could never do what we wanted. But they’ve made a very, very good job of it. I’m delighted.

“It’s just a pity it’s taken 10 years to get there.”

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