Alan Henry MOTOR RACING
When the Formula One (F1) paddock reconvenes in Melbourne this week, the main topic of conversation will for once not surround the future of a particular driver or team. Rather it is the very future of the sport which is of paramount concern after the recent revelation that its commercial controller Bernie Ecclestone, who last year sold 12,5% of his Formula One Holdings empire to Morgan Grenfell, had sold a further 37,5% to a San Francisco investment firm, Hellman & Friedman.
Ecclestone has held an ever tightening grip on Formula One over the past 20 years. No deal, big or small, happens without his knowledge; he controls the television rights to the sport for the next 10 years (an agreement which is coming under increasing scrutiny from the European Union); he even keeps a firm check on who is allotted paddock passes at every race.
In turn, the Formula One paddock views him as the school headmaster, with a tidy mixture of respect and fear. People visibly straighten when he makes one of his regular promenades through the paddock, running a beady eye over it to ensure no one is stepping out of line. And woe betide anyone who does.
At Monaco in 1997 Jackie Stewart was indignant to find that his team’s motorhome had been moved to an extremely unsuitable position, almost outside the paddock. His team interpreted this as a move by Ecclestone gently to remind the high- profile Scot just who ran F1. “I just thought he would like to be a little closer to the royal palace,” said a tongue-in- cheek Ecclestone, “knowing how well- connected he is.”
The team owners may grumble about Ecclestone’s inflexible manner but they are aware that without him they would not have reaped such rewards from what is, thanks largely to his efforts, the biggest regularly televised global sport. With the maximum of 12 teams now in place (Toyota will fill the final berth from next season), even Giancarlo Minardi at the back of the grid is sitting on a mint. Each team takes between 6-million and 15-million a season in television money from Ecclestone no matter what profit or loss he makes from selling the rights to TV stations.
However, there are signs that Ecclestone’s domination of the sport may not last much longer. His 430-million share sale to Hellman & Friedman means he has now released half of his financial interest in F1, and the paddock is braced for further announcements. Ecclestone is 69-years old and, though he has taken on a new lease of life since undergoing a triple heart bypass operation, his enthusiasm for the sport is reckoned to have diminished in recent years.
“The teams want to know what happens if Bernie dies … or runs away,” Ecclestone said with a smile recently. “That’s really why I got involved [in the sell-off]. It means instead of there being a free-for-all with everyone trying to grab shares from my family, it will be stable.”
Most of the money from the sale will be used to benefit family trusts set up for his wife Slavica and daughters Tamara and Petra, and to pay the interest on a 1,2- billion bond which he launched last May to fund the anticipated expansion of digital television grand prix coverage – which is still waiting to take off. But Ecclestone dismisses suggestions that he is about to depart the scene completely. “I intend to run F1 until I die,” he says.
Yet this most recent sale represents the first staging post on a journey to a full stock exchange flotation of Ecclestone’s empire. Formula One Holdings promises to be a good investment, but analysts firmly believe that Ecclestone’s autocratic, hands-on management style will need to be supplemented by a highly qualified management board capable of relating grand prix matters to City institutions.
If Ecclestone is the headmaster of F1, then his deputy is Max Mosley, the president of motorsport’s governing body, the FIA. (Ecclestone is only an FIA vice- president, but in F1 he rules supreme.) Mosley, a long-time friend of Ecclestone’s, says no single person will emerge to run F1’s commercial activities in Ecclestone’s place.
“We have developed quite a delicate ecosystem in F1 in which everybody is interdependent on everybody else,” he says. “Bernie’s recent sale represents another move towards a full flotation. He knows it can no longer purely be a one- man operation, and that realisation represents the transition from the entrepreneurial to the managerial phase of the business. Bernie will continue to take a leading role but he will have assistance.”
So what will be the effect of this dilution of Ecclestone’s control? McLaren’s managing director Ron Dennis reflects the view of many team owners when he predicts that any fundamental change to the structure of Formula One Holdings could briefly have an adverse effect on the sport.
“When Bernie moves out of the sport I believe there will be a short-term financial dip,” Dennis says. “There will undoubtedly be some commercial pain. However, I am comfortable Bernie cares enough about F1 that whatever mechanism or structure he leaves behind, it will ultimately provide for the commercial continuity of the sport.
‘At one stage or another the vast majority of teams have been the recipient of Bernie’s help. This and other elements of his style conceal a softer side to his personality. Over the many years I’ve known Bernie he has been cautious about giving commitments and promises. However, when given they can be relied upon even though there is sometimes an impish twist to achieve a small edge in his favour.”
By any standards Ecclestone is a fascinating character. He is a ruthless negotiator, deploying a brainpower and intellect few can rival in any business sphere. In the early 1970s he had the foresight to get the teams lined up into a single, cohesive negotiating unit. Soon he would be striking deals on their behalf with the race organisers and later with the television networks.
“I wasn’t originally really thinking in terms of television coverage when I bought the Brabham team in 1971,” Ecclestone later reflected. “It was only when I began to get fully involved in the whole scene that I realised just how fragmented the TV coverage had been. Some TV companies showed some races, others just a handful and some none at all. I thought that we ought to get the whole business grouped together in an effort to get some decent overall coverage.”
“When I look upon the last 20 years,” Dennis says, “I have mixed views about some of the outcomes of the political infighting which is an inevitable part of F1. Normally the issues are very complex and Bernie is a master of the divide-and- rule strategy.
“That said, it is his consistent drive to improve the promotional standards and image of grand prix racing, and driving a hard bargain in securing extremely good commercial terms for television, that has seen the sport rise to the dizzy heights of fortnightly audiences of half-a- billion.”
Even Ecclestone concedes that his style of rule may have to change – slightly. “I am going to stand back more, perhaps go to fewer races. The trouble is, when teacher is there, people are frightened to mess it up; they are nervous of making decisions. I don’t mind people messing it up just so long as they make a decision.”
Yet no matter how smoothly the transition is engineered, the time is coming when Ecclestone will take more of a back seat in the motor racing business than even he is prepared to admit. If he is going to enhance his position as probably the richest man in Britain he needs to get out when Ferrari are still doing well: Ferrari winning races means more television exposure and more interest for any potential buyers when Formula One Holdings goes public.
Most people in grand prix racing find the concept of life without Bernie almost incomprehensible, never having known anything else. His legacy to the sport will be that he dragged F1 kicking and screaming into the commercial era, and made everybody involved richer than they could have ever dreamt of. Himself included.