Bernie Ecclestone is the master political player in Formula 1 – and he has been for the last 40 years, although Max Mosley and Luca di Montezemolo have both had their moments as well. As the end of the current Concorde Agreement approaches in December 2012, the search for a new solution is just beginning to ramp up now.
The problem is that in order to cash in again, CVC Capital Partners (which owns the Formula One group of companies) needs a stable structure inside the sport if it is to find a suitable buyer for the business. No-one in F1 really cares whether CVC stays or goes and there is a certain amount of resistance to the idea that the men in suits will get yet another pay-off before they depart. The sport thinks that the financiers have had enough money out of the business – and have given nothing back, which seems a fair assessment. They have used the sport as a cash cow – and they have milked it. In order to sell the business in these circumstances there needs to be a better deal for all concerned (which cuts the value of the business as a whole) or the teams need to be bullied into line. The teams have started working together more and more, in order to avoid being divided and conquered. The logical step forward from that position, is for them to find the money to buy out CVC, at a sensible price. That would require risk and so some teams are averse to that, but that would give them the control over the commercial rights that they think they ought to have. At the same time the FIA might also go down the same path as letting the rights go meant that the federation did not make the most of them. A drop in the perceived value of the sport is no bad thing at the moment for all concerned as it makes it easier for all those looking to find the money.
The background is thus rather complex but, so too, are the possible developments.
Bernie was forced to accept certain terms during the last round of negotiation in 2009 which means that he is restricted in what he can do in the immediate future. This is not public information but we believe, for example, that Ecclestone can make no offers to any teams before the end of December 2011, unless the same terms apply to all the teams. The best that Ecclestone can do until the end of the year is thus to keep people guessing what he is up to.
It is interesting therefore that he recently called a meeting of a number of the F1 teams – but not all of them – and told them that a new Concorde Agreement is needed, despite the fact that for the last few months he has been saying that the sport can survive without one. We believe that the Formula One Teams’ Association has since told Mr E that the organisation would welcome a proposal for an agreement, on the basis that everyone gets the same deal.
There is an element of risk in all if this for Mr E because his position relies (on paper) on CVC vesting all of its power as a shareholder in him, on the basis that he is best-suited to find a solution. If the finance folk decide that someone else might do the job better, they might try to change the current structure (although there may be articles of association and shareholder agreements that stop that happening).
The man that might be called upon is Formula One group non-executive director Sir Martin Sorrell, who is a very savvy operator in the world of media, although his way of doing business and the way Ecclestone runs the empire would be very different. And, reputedly, the two do not get on…