Ecclestone put on back foot
Bernie Ecclestone’s high court defeat this month left most of the formula one (F1) community feeling like passengers on an airliner that had just passed through a particularly bruising spell of clear-air turbulence.
It all seemed very worrying and uncomfortable, but ultimately you knew you could not do very much more than grin and bear it.
You just did not quite know how it all would end.
Yet as the dust settled it was clear that Ecclestone had suffered a rare defeat. “Whatever he might say, Bernie has been very seriously and decisively beaten,” said one senior team member who preferred to remain anonymous.
Yet if the three banks who have taken on Ecclestone and apparently won feel they will have an easy ride from this point onwards then they have learned precious little about the dapper, white-shirted businessman who made F1 the biggest leisure business on the planet.
To ensure an easy and predictable business partnership with Ecclestone in the future will be their priority. Ecclestone’s grip on the levers of F1 power may have been loosened, but he is not about to vanish.
The stark truth is that the three banks involved in the legal action against Ecclestone are not battling against him for the good of their health. A spokesperson for one, Bayerische Landesbank, was noncommital beyond wanting positions on the boards of Ecclestone’s controlling companies.
“We should have a say in the boards and who sits on the boards. [We want] an influence which reflects our shareholding.”
The banks do not necessarily want to get rid of Ecclestone. They just want him to do as he is told.
This is not an easy ambition to realise, perhaps, in relation to a man who has always been his own boss, but it is their immediate priority none the less.
The banks want the F1 business to prosper in order that they may recoup their unwilling $1,6-billion investment in the sport and it may be that they ultimately conclude that Ecclestone knows every twist and turn on the commercial road so well that he might be the best man to be left behind the wheel.
Meanwhile, the competing F1 teams are keen that the matters are resolved as satisfactorily as possible. They acknowledge Ecclestone’s matchless entrepreneurial flair but have been frustrated by his unwillingness to give ground when it comes to giving them the bigger slice of the F1 cake they believe they deserve.
“The reality of this situation is that all the F1 teams are little more than spectators, albeit interested spectators,” said Martin Whitmarsh, the McLaren CEO.
“This is all about the control and influence of Mr Ecclestone’s company. We certainly have a vested interest in the outcome. The teams all recognise the contribution to F1 which Bernie has made over the years. This is a judgement over the control of his companies. It is not an action to remove Bernie, merely to get the point across to him that they [the banks] have certain rights as 75% shareholders in his business.”
However, Ecclestone is shrewd enough to appreciate that the banks know just how strong his position remains. It was Ecclestone who negotiated the 100-year lease to exploit F1’s commercial rights from the sport’s governing body, the International Automobile Federation (FIA), paying Â£161,5-million for the privilege—a little less than half the reputed commercial rights income generated by the sport in a single year.
Ecclestone also knows that the FIA, under the presidency of Max Mosley, has a clause in that commercial rights agreement whereby the deal could be technically revoked if control of those rights passed into the hands of any organisation regarded as “unsuitable” by the FIA.
There is, of course, no suggestion that the banks who control Ecclestone’s company would fall into such a doubtful category, but it is certainly a technicality that provides some food for thought. In the background there is also the prospect of an alliance between the banks and GPWC, the partnership of car makers that is threatening its own series from 2008 unless Ecclestone comes to heel and gives more of the sport’s commercial rights income to the teams.
If that materialises, then Ecclestone has genuine and tangible problems. He may own the rights to exploit the offical “FIA F1 world championship” but the car makers, emboldened by his defeat in the high court, are pressing ahead with plans for their own separate series with renewed confidence.
Yet the reality is that F1 will not see a breakaway series in the style of the split between Champcars and the Indy Racing League, which seriously damaged single-seater racing in the United States, even though Ecclestone may respond with threats of starting his own separate series to pre-empt the car makers.
Ultimately the banks’ success in the courts may put the brakes on Ecclestone’s ambitions, but they will not stop his brinksmanship or poker playing.
At the end of the day they still have to face him down in the battle, not
for the control of F1, but who can run it best on a day-to-day basis. — Â