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Behind the scenes intrigues set path towards a new Formula 1
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Darren Heath
Posted By: James Allen  |  09 Nov 2011   |  11:18 am GMT  |  59 comments

Behind the scenes in F1 at the moment there is movement everywhere as things start to click into gear in a process which will ultimately lead to a change of ownership of the sport and a new way of operating it.

Today and tomorrow in Munich, Formula 1′s commercial boss Bernie Ecclestone will give evidence in the fraud trial of Gerhard Gribkowsky, a former banker and chairman of F1′s holding company. Clearing up this matter and getting to the bottom of what happened when CVC bought the sport from Gribkwosky’s bank Bayern LB, is crucial to the hopes of CVC, the sport’s current commercial rights holders, getting its assets in a position to sell and exit the sport with a large profit.

Also vital to this process is getting the Formula 1 teams, including Ferrari, to sign a new Concorde Agreement and this weekend, in Abu Dhabi, the teams will reconvene to discuss the best way forward for FOTA, the teams’ association. It is passing through a delicate moment, struggling to balance the diverse needs of its members within the cost saving RRA framework it established in the teeth of the financial crisis of 2008/9. There are outside and inside forces at work trying to pull that group apart, but all members know that to get a satisfactory outcome to the negotiations over the Concorde Agreement, they must stick together.

Meanwhile behind the scenes in the wider business world, stories are emerging from Bloomberg and colleagues elsewhere in the business media that the interest of NewsCorp and the Agnelli family investment firm Exor in buying the sport is still very much alive. James Murdoch, son of NewsCorp scion Rupert, is very sidetracked at the moment as he prepares to give further evidence before a British parliament select committee into phone hacking at the News of the World. But sources insist the F1 dossier is open and work is going on.

It is a tangled web of separate but ultimately connected threads and over the course of the next 18 months, as these threads resolve themselves, we will see emerging the Formula 1 of the future.

Trying to second guess the outcome is hard, but what I see at the moment are some trends and patterns beginning to emerge.


With Ecclestone fighting several fires at once, the Gribkwosky trial and possible resulting investigations by the UK Inland revenue into his family trust, it is the moment for the teams and the FIA to find all kinds of reasons why an alliance would be in both of their interests.

The FIA owns the sport, the teams participate in it and both sides want more of the revenues which spring from it and which are currently contracted to, and exploited by, Ecclestone and CVC. The teams and FIA have a lot in common and working together they would provide a formidable competitive challenge to Ecclestone. Some F1 team insiders believe that the only way that they will be able to get a satisfactory outcome to the negotiations is by presenting a game changing united front with the FIA.

As for NewsCorp/Exor, there are many competitive challenges to them taking over the sport, perhaps they are there to create a market and boost the price. Because there are a few serious potential buyers out there.

Qatar is getting closer to the sport via Williams and has put itself on a world sporting stage by winning a bid to host the World Cup. Acquriring sports rights like F1 would fit perfectly with that strategy.


But I’ve always believed that the most likely buyers for F1 are the people who will host this weekend’s Grand Prix – Abu Dhabi.

They understand the sport, they have a stake in it as a race promoter, as a shareholder in the Mercedes team and as a sponsor of Toro Rosso. Their influence is growing and through ownership of Manchester City football club the Executive Affairs Authority, which manages all their major projects like F1 and football, is learning a great deal about the global exploitation of sporting rights.

There are many twists and turns ahead, but it feels like we are now on a trajectory towards a new Formula 1.

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59 Comments
  1. Paul Wilson says:

    It should be interesting to see how it all unfolds but surely the top 4 teams (RBR, McLaren, Ferrari & Mercedes)hold the real power, with the threat of forming or joining a breakaway series if it looks like going the wrong way for them. I know they have said this in the past as a negotiation point and it has had its success in establishing rule changes. It could now be used as the ultimate veto over a new F1-Circus Owner.
    This may also be a good time for Bernie to retire and retreat to an island in the sun.

    1. wayne says:

      The trouble it is has been most likely to be RBR (if anyone), from what I have read, that will pull FOTA apart. From a purely outsider’s point of view it feels as though a combination of naivety and ruthless self-interest is allowing RBR to be seduced by Bernie – Ferrari was always BE’s target for this strategy in the past. RBR have the advantage at the moment and it feels as though they are prepared to do anything to maintain it, even if it means the implosion of FOTA who, in my opinion, have largely been a force for good in F1 since they got their act together (the terrible, disgraceful hypocrisy of their capitulation for money surrounding SKY deal not withstanding).

      RBR will hopefully realise that they will not always be in top and that watering down the RRA (which appears to be their major bone of contention) will not work to their advantage when the cycle turns as it always does.

      It is too easy and simplistic to try and explain away RBR’s current dominance by scare stories about illegal body parts and breaking the RRA, but there is rarely smoke without a fire. Certainly it feels as though RBR routinely break the ‘spirit’ of some select rules – but if others have not done so as well it is only because they did not think of it first!

      1. Herewegoagain says:

        How one can change this topic to ‘RBR is cheating so Bernie is backing them get rid of FOTA’ is beyond any reason.

        It makes no sense whatsoever.

      2. wayne says:

        [mod] I specifically said “It is too easy and simplistic to try and explain away RBR’s current dominance by scare stories about illegal body parts and breaking the RRA” and suggested that they break the spirit of the rules here and there. I further said that this is something that all the teams do.

        Furthermore, if you are not aware of Bernei’s courting of RBR and RBR’s comments about the usefullness of FOTA, you have not been paying attention.

        [mod]

  2. Lez Martin says:

    It is about time that Bernie left the sport, as for all the good I feel he has done, he seems now be heading the sport into a downward spiral, new money is needed, and a fresh perspective, to keep the sport growing.
    In My opinion, News Corp is not the option, in my eyes they are now tainted, especially so if any of the Murdoch family has anything to do with it, and if News Corp do get it, then it wont be long until you will need a TV subscription to watch every race, (live or highlights).
    Yes anyone that buys into F1, will ultimately be there to make money, but they have to balance that with what is good for the sport, and what the spectators / Tv viewers want, as without the fans, then there is no sport, as advertisers will not want to get behind something that no one is watching.
    F1 has changed a lot since I started watching it in the 70s, any changes that are made should be in the best interests of everybody, and be made for the better, whilst keeping it fresh and exciting, I know the BBC/SKY argument may have gone a bit stale now, but that is not a change for the better.
    If there is corruption it needs to be ousted out, the teams want to carry on doing what they do best and the fans want to carry on watching the excitement…and if they are watching it on Tv, then they want it for free…

    1. wayne says:

      I agree wholeheartedly that News Corp are not the option. However, in my personal and uninformed opinion, News Corp are morally destitute so they would be an ideal partner for F1 at times!

      I do hope that global sport does not continue the current trend towards ‘sport entertainment’ that prevades in the USA. Where some sports are now largely a pantomime, and participants are expected or induced to take part in increasingly ridiculous and sometimes dangerous events for gross marketing ploys. I get this information partly from observation and partly from firnds in the USA itself so I do not believe that I am being unjustifiably negative about some sport among our American cousins! No offense is meant.

      1. James Allen says:

        Max Mosley has won a legal action against NOTW in France this week.

      2. franed says:

        It was a bit of a pyrrhic victory for Max as he did not get the €100m damages he asked for but only €7k plus costs of €10k. I wonder if he is now going to sue in every other country that ran the stories as well.
        But lets be fair, he has done a fantastic amount to rise the safety standards in F1. Also he filled the role of being the man we love to hate for many years, he was blamed for everything, now with Todt almost underground we have to blame Bernie!
        RE my post below, “it has been reported in a national daily” that documents produced at the trail suggest reasons other than Bernie’s previously stated ones for paying Gribkowski.

      3. Wayne says:

        Good for him. Some of Moseley’s act in F1 were questionable and he definitely had a personal agenda but what the guy gets up to in his bedroom (as long as it is not illegal – and it wasn’t) in no-one’s business but his own.

    2. Herewegoagain says:

      I think when Bernie is gone, people will him to come back after they see what the new guy will do with it.

      It seems most F1 fans don’t realize most of the changes for the worse haveothing to do with Bernie, but the FIA. Bernie does not control the FIA.

      In fact most times Bernie is protesting against those bad changes.

      1. wayne says:

        Have you heard some of BE’s insane schemes like split junctions, medals and sprinklers? Actually introdcuing a dangerous element or motivation into the races to appeal to the casual, ‘crashes are the best bit’, so called fans.

      2. Dave says:

        And yet none of those plans ever see the light of day. It’s almost as if he deliberately floats contraversial ideas to generate headlines and get people talking.

        (See also Ryanair’s boss, with his constant stream of “ideas” like paying to pee, passengers standing in the ailes, or pay-per-view adult films on his flights. All nonsense, but the media lap up his every word).

      3. Herewegoagain says:

        None of those have been introduced and he says that to play around with the FIA and create headlines for F1.

        Again, he is not the one who has the authority to introduce anything into F1 regulations, the FIA has. Bernie is not FIA. Bernie does the commercial side, not the race regulations.

        Yet everyone whines to Bernie about those regulations. He has nothing to do with them.

        He opposes most of the bad ideas of the FIA like smaller engines, KERS and more. So you are way off.

        [mod]

      4. wayne says:

        Herewegoagain, BE’s unnoficial authority over the world of F1 is ‘more powerful than you can possibly imagine’ :)

    3. VicWeir says:

      Completely agree.

      We have some interesting new teams, we (mostly) have a new generation of team managers, we have a great bunch of drivers.

      It’s time, with all due respect, for a change at the top, so that the sport can thrive. It has to be the right people, of course. I’m hoping that FOTA will contribute significantly to those discussions.

      F1′s surely more popular than it’s ever been, thanks to some excellent broadcasting coverage. The prospect of this aspect of F1 falling into the hands of certain non free to air companies is very depressing.

  3. Owen says:

    Why can’t the FIA and the teams pool their resources and buy the F1 brand/company to control their own future?

    1. Bec says:

      The FIA were forced to sell the commercial rights to F1 by the EU, I doubt the EU would allow them to take those rights back.

      1. K says:

        Ooo interesting, never heard of this.
        Any articles or links on this please? =)

      2. Bec says:

        The EU Commissioner responsible for competition, Mr Karel Van Miert, ordered that under EU law the FIA were required to terminate their restrictive agreements, (Article 24 of the International Sporting Code and the associated general prescription Article 27), and also the Commission took the view that as the FIA ‘abusively acquired’ the broadcasting rights and it could not validly assign these rights to FOA and ISC, as the FIA had infringed Articles 81 and 82 of the EC Treaty (formerly Articles 85 and Article 86).

        New EU Competition Commissioner Mario Monti, found the FIA had agreed to modify its rules to bring them into line with EU law, selling the commercial rights to a third party and therefore ‘having no influence over the commercial exploitation of the Formula One World Championship.’

        Max Mosely argued that ‘Formula One is currently available on terrestrial television throughout Europe, but a change in broadcasting rules would leave fans having to go through pay-per-view channels to watch races.’

        How ironic that the EU have facilitated the Sky deal, where F1 will be largely hidden behind a pay-wall in the UK, at a combined loss to the 141 F1 sponsors, of an estimated (using 2010 figures) of £3.4 million worth of brand exposure per race.

  4. franed says:

    Well as far as I can see, Bernie now has every right to ask Gribkowski for his money back, though Gribkowski will say that the kept his word and it was Bernie himself who opened his mouth and stuck his foot in it. However we now know that HMRC are open to doing deals with big business as they have been castigated over this in parliament only a day or so back,, so maybe Bernie will have a few pennies pension left after all.

    The likelihood of News International being part of F1 is now so offensive as to be totally unacceptable, to the uk public. With new revelations about NoW having not only celebrities followed and investigated, but their lawyers too we now understand why the newspaper was shut down so quickly, with hints of not having scratched the surface yet.

    Will a Middle East ownership of the sport, which generates huge profits sit well with the country’s strict Wahabi based religion which forbids taking profit on business deals. Or have I got that wrong? Please correct me.

    1. Rob Newman says:

      You can take profit but not ‘interest’ such as in savings accounts.

    2. Parisian Bob says:

      I believe profit is ok provided it is honestly come by.
      we would do well to look at these folks’ ethics.

    3. young slinger says:

      Offensive to the UK, but what about the rest of the world – do they care about NOTW’s disgraceful conduct? Would we care about a foreign newspaper’s conduct? Just a thought…!

  5. Andrew Cumbria says:

    Interesting times, however I think the ownership of the sport by those taking part in it is a recipe for disaster whether that be a team or a venue.

    Whilst on the whole Bernie has been good for the sport its time someone else took on his role and that the revenue is split more equitably between the teams first (evenly amongst them all, not Ferrari getting more as they do now), the FiA second and lastly the rights holder.

    Given the debacle over the TV rights in the UK I can also see opposition to Sky too, but F1 is a money driven game, and those with the deepest pockets are likely to win.

    James, is this positioning regarding the new Concorde Agreement down to getting a competitive advantage via political influence in determining technical rules as the racing moves to smaller engines etc etc

    1. Brukay says:

      Andrew you should be aware why Ferrari always received more apart from being in the sport since world champioships started ie(1950) they were and still do build the complete car including engine which does cost much more than just building chassis ie mclaren williams etc remember for many years most of engines were built by cosworth with ford money also there was also BRM and at different times honda renault and other engine only suppliers.

  6. Rob Newman says:

    Bernie has done a fantastic job so far by taking the sport into different markets. I don’t think anyone could negotiate a deal like Bernie does.

    FOTA doesn’t seem to be united. If FOTA is going to continue squabbling, then Bernie will be the winner.

    I am not sure how Abu Dhabi can manage F1 in case they manage to buy. We all know what happened to A1 Grand Prix.

    1. Rob Newman says:

      Btw James, I can’t see the faces of people on the 2nd photo. Is it censored for some reason or should we call it ‘modern photography’? Also, whenever I submit my comments the time shows one hour ahead.

      1. James Allen says:

        It’s a Darren Heath special!

      2. Merlinghnd says:

        [mod]
        Interesting article James, we can read it in a year or twos time with added interest.

  7. coefficient says:

    This is a worry. As we saw with the economic crisis, big business decisions are never made with the end user in mind. The super powerful super rich tend to merrily run rough shod over whatever it takes to make profit regardless of the outcome/effect on the end user. Like him or not Bernie has made F1 great and without him I fear it will enter a decline. This new era of F1 will be one of buy and sell seeing this great sport being sold on and on and on for rapid profit until it implodes. Dodgy business deal after dodgy business deal will be investigated until the sport is devoid of credibility.

    Bernie is as much a part of the history of the sport as Enzo Ferrari, it will certainly lose some mystique and ambience when it becomes owned by people who don’t really care about it, seeing it purely as a profit centre.

    1. Andrew Carter says:

      And thats different to today how?

      1. Liam in Sydney says:

        @ Andrew:- Although Bernie is clearly motivated by profit, I can’t see how you could also be inferring that Bernie either does not care about the sport or doesn’t care what happens to it. How could a person who has been involved for almost his entire life not care about what happens to the sport he himself helped build into a global brand and empire? Although if you said you comment was simply sarcasm, well fair ’nuff. :)

      2. coefficient says:

        this comment shows a lack of knowledge.

      3. Andrew Carter says:

        With respect, I think you’ve both forgotten that Bernie works for CVC now, who are purely in F1 to milk it for every penny its worth and make a hefty profit before selling it off to someone else to do the same thing. Yes, Bernie is very much a racer, but I get the feeling his bosses dont care as long as he makes them a lot of money. Which is why we fly off to places that largely dont give a damn about F1, exept that their governments would like to pay Bernie £50mil a time for the braging rights of holding a race, and we end up with farces like the whole Bahrain saga.

  8. Sebee says:

    He can try to cloud the water, but it’s clear that the simplest story is true. This was a bribe to stay in power and to keep the F1 valuation low.

    Lucky Mr. Ecclestone has Mr. Mosley as close ally – who is a genius at surviving scandals of the highest degree. I believe Mr. Mosley is and will be the only individual ever to stay in power after such scandals. Which should illustrate to everyone the authority and skill possessed.

    1. Bec says:

      How could it have been to keep the valuation low when the highest bid was accepted?

      Hutchison Whampoa and Clearbrook Capital were not prepared to pay Bayern as much as CVC, and Bayern have said they got an excellent price for their shares, so it clearly cannot have been undervalued.

      1. Sebee says:

        CVC wanted Bernie in control. So he had little concern if CVC was buying. Which is what the bribe likely ensured. Which means other offers were likely discounted or certain bid price is accepted. I don’t know of course – just shooting a guess. But don’t people usually pay someone in power to ensure they get something cheap?

      2. Bec says:

        On the contract it clearly states that Ecclestone will remain in charge, so no ‘bribe’ was needed to facilitate this.

        CVC offered the most money to Bayern for their shares, Hutchison Whampoa and Clearbrook Capital offered less, Bayern went with the biggest offer, Bayern later said “That their F1 shares were clearly sold above the book value,” meaning they got more money than they were expecting, and that CVC (in Bayern’s eyes) paid over the odds, and that maybe Hutchison Whampoa and Clearbrook Capital had valued F1 correctly, at a lower price.

    2. HFEVO2 says:

      ” I believe Mr. Mosley is and will be the only individual ever to stay in power after such scandals”.

      Aren’t you forgetting a certain elderly man who is still charge of World Football !

  9. Bob says:

    It would be in the best interest of the sport if it was owned by the teams in so far as they receive a majority of he income like in most other sports, but this is hard to achieve within the current structure.

    Much of what is wrong originates in the relationship of the FIA. As necessary they are an independent governing body but they have grown too large and political an more importantly lack any kind of real transparency (FIFA is the same).

    It might be best for the teams to break away and create a new series where the teams are the beneficiaries of the sports profits. This might ensure that all teams would have money available to at least match the resource limitations in place. This could possible lead to a overall more evenly matched field .

    Of course it would be better if all current partners could agree an a joint future, but that will not happen.

    At the moment f1 is giving us a great show with what re effectively tires that are engineered to underperform which has returned some of the unpredictability of the 70s and 80s. But DRS should be killed whatever happens.

    1. F1_Fan says:

      Teams running the series themselfs has already been tried, It was called CART & part of what helped its downfall was that the teams all did what suited themselfs & the series ultimately tore itself apart.

      A breakaway series while an ok idea in theory would do nothing but harm the sport as a whole & the teams know this which is why they havn’t done it despite having opportunities several times in the past.

      F1 as it is now is far stronger than what it would be if there was a split.

  10. No Bernie – no problem.

  11. gonzeche says:

    Teams and FIA just don’t have the money. So at the end of the day all options get down to the same thing, which will be accountants taking over the sport. Goodbye passion.

    1. Tim. says:

      They could pay for it over time, not one chunk….food for thought

  12. Ali says:

    I’m not keen on F1 being owned by a country/ruling family that has such an undemocratic governance. As this year has shown, being allied to these sort of regimes is going to end up turning on you and biting you back.

    I think F1 has lost a lot of credibility by refusing to abandon the Bahrain GP and the teams have been shamefully silent on the manner. Criticizing News International (however justified) whilst still supporting these countries smells a tad of hypocrisy.

    Is there no one without tainted money willing to enter the sport?

  13. Tim Parry says:

    And we thought the halls of the U. N. were the ultimate Byzantine rabbit hole…

  14. Parisian Bob says:

    James, Santander have ploughed a lot of money into F1. They thought they were hedging their bets by sponsoring both the teams that [they thought] were likeliest to win titles. Seb Vettel has ensured it was money burnt, which is very unfortunate for Santander. have you noticed they just recently demoted Lewis and Jensen for top golfer Rory Mac?
    They are still featuring the McLaren duo but Rory seems to have no1 billing.
    How many years of non-winning will they put up with? esp after paying Kimi £45m to stay home last year

    1. Cliff says:

      Ferrari, Mclaren, JB & LH are just a part of the Santander marketing stategy. As long as Santander enjoys the global exposure it gets from F1 it will be money well spent. Rory Mcilroy is a great golfer, and great to see on tv, but the exposure that golf recieves is not in the same league as F1.

      1. Parisian Bob says:

        Ferrari
        one win 2009 without santander sponsorship
        one win 2011 with santander sponsorship
        someone in the bank must be thinking twice

  15. Doug says:

    In business, money is always involved. When negotiations over money get tough, a Mexican standoff occurs. This is a confrontation that neither side can foreseeably win.

    In popular culture, the Mexican standoff is usually portrayed as two or more opponents with guns drawn and ready, creating a tense situation. Neither side is willing to shoot for fear of being shot in return, yet neither side wants to relinquish their weapons for fear that their opponents will shoot them. This situation forces the participants to resolve the situation either by diplomacy (Martin Whitmarsh), surrender (Tony Fernandes’), or a pre-emptive strike (Luca di Montezemolo).

    As much as I like to think that F1 is all about passion, the money argument always remains. On a positive note, if you consider the shear mass of money involved in F1, the battle will continue on and off the track. Entertainment for all!

  16. jmv says:

    three parties in the equation:
    FIA
    Teams
    Bernie

    so far it has always been:
    FIA + Bernie vs Teams

    Now we see a changed dynamic:
    Teams + FIA vs Bernie

    Todt and Bernie is not like wind and sail. Has never been.

    Bernie seems to going to lose this time around. He will lose against the Teams, against Todt, and he might end up losing his F1.

    What a disgraceful end it would be.

    1. Ted the Mechanic says:

      At 81 he will also lose against Father Time but if anyone has invented an elixir of youth then I’ll bet Bernie has got shares in the company.

  17. Dave_F1 says:

    Some of the issues within FOTA right now are just what I predicted would happen when FOTA was 1st formed.

    Each team wants whats good for them & are pushing/pulling things in that direction. This has caused disagreements & basically the teams are struggling to agree on anything.

    Same thing happened with CART which was a series run by the teams (CART = Championship Auto Racing Teams). In the end CART imploded & I woudn’t be surprised if within the next 5 years the same happens to FOTA.

  18. verstappen says:

    Bernie will win one last time.

  19. Jeff says:

    If Murdoch got hold of the sport I would end my 28 year interest. Murdoch stands for so much that I despise, right wing, biased media, self interest above all else.

    It would just be over for me, just like that.
    The negatives out way the positives. I would look back fondly at the past and move on.

  20. Ted the Mechanic says:

    Obviously the TV rights are what generated all this wealth in the first place, so it makes sense for an entity like Newscorp to own the business (or part of) because by the time they take into account the money they would spend each year paying for their right to broadcast (if they didn’t own it) and then selling the rights to all the other broadcasters around the world (if they did own it) then their investment would have to start paying for itself quite nicely.

    And as regards Bernie’s powers of persuasion and negotiating skill – I’m sure the Murdochs’ can hold their own on that score.

    Of course, like you say, this little matter of NOTW needs to be resloved first.

  21. Snowy says:

    It’ll be great to see the suits at CVC pocket another few hundred million, to add to the billion or so they’ve already piled up – they’ve done SO MUCH for the sport and the fans. And with such passionate commitment ………

  22. AMSG says:

    James
    Any chance of a story behing the troubles that could change the landscape next year. A lot going on with the Kingfisher (Force India) business back home. Looks very likely the airline will close or be closed due to pure lack of funds. We all know Force India is very bad at paying it’s bills anywhere near on time (ie months late) here in the UK.

  23. tim says:

    Is there a rule that would make using an engine-driven air compressor to blow air onto/over/around the diffuser illegal? If this brings such a huge spike in performance, surely there is a loophole that would allow a device to blow air to the diffuser instead of using the exhaust gasses? Anyone know the answer?

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