It seems that former Diageo boss Paul Walsh has decided that he does not want to be the chairman of the Formula One group. This will inevitably be seen as a victory for Bernie Ecclestone, who wants the job to go to his longtime legal advisor Sacha Woodward Hill. It is a blow for the company owner, CVC Capital Partners, which is trying to find someone to take over from Nestlé chairman Peter Brabeck-Letmathe, who is standing down.
What is clear is that in these difficult times, the sport needs a chairman with energy and vision, rather than a safe pair of hands. There is much that could be done to solve the sport’s complex problems and drive revenues forward, by means other than simply squeezing more money from existing customers and trying to add more and more races. Ecclestone is a master at doing the kind of deals that he does, but there are other areas of the business that are underdeveloped. It seems that CVC does not have the gumption (or perhaps the ability) to move Ecclestone aside, more than it already has, despite the fact that he has even admitted that he cannot fix the problems. One wonders if anyone can without breaking the current system completely.
The FIA has removed itself from any right to a voice (and any real relevance beyond safety and policing) by accepting money in exchange for concessions in terms of governance. In essence, therefore, one can view the business as something of a runaway train in search of a Casey Jones.
Ecclestone is trying to fix the problems with proposals to return to how things used to be, but this is unlikely to work either way. Going back to find a future is never a good policy and getting an agreement on the idea will be tough.
The agreements in place limit Ecclestone’s power but he is obviously keen to have a chairman who will not make his life any more difficult than it is. The fact that it is proving difficult to find a suitable candidate willing to do the job is in itself worrying, although it is understandable that no-one wants to go into a job that will inevitably put them into conflict with the man who built the business and clearly has no desire to stop and on the surface at least seems to be healthy.
CVC also seems to be having trouble finding a buyer (at the right price) but it also knows that any stock exchange is going to be wary of a company led by a man with Ecclestone’s record, his distaste for the transparency and the lack of a clear succession plan. In any case, The IPO is not likely to get off the ground with the European Commission sniffing around the business.
This means that CVC is stuck unless it is willing to make some hard choices, which currently does not seem to be the case.
It is hard to imagine that CVC will find much sympathy within the F1 business as its activities, stacking the business with debt and not taking decisive action mean that the teams see it as taking more than it deserves but yet having no real teeth.
joeblogsf1 
I may not be the first to say this but wouldn’t you be perfect for the job Joe?
You know the sport inside out obviously you are very outspoken on your opinions and you are never afraid to speak out against beanie.
I’m surprised you haven’t already had a call… Unless you have?
LOL
I suspect Joe also has the sanity of mind of not wanting that particular headache on one’s plate.
Imo… our host has been around long enough to be considered part of the status quo that needs to be replaced.
Jeez, you are a class act…
Surely if BCE can delay long enough and play hard ball his plan must be to buy CVC out on the cheap.It would , were this the case, be in his best interest to delay and obfuscate as long as possible-doesn’t do much for F1in the meantime though.
If as I understand CVC has sold some chunks of F1 to major CVC players at big money-such that they can’t get out without making a loss BCE holds all the cards.
Going by the distribution of shares as shown in Joe’s piece a few weeks ago:
For Bernie to achieve majority shareholding he would need to buy 15.7% of the holding from CVC. This would give him 21% versus the next highest holding of Waddell & Reed who have 20.9%.
However this would leave 19.8% with CVC so a further amount would be needed to stop any of the other shareholders buying this or part of it from CVC. The only safe way would be to buy all of the CVC holding, so he would be looking to find $ 2.55 Bn. or if the business was run down maybe half of that or less. (it already has $2-2.5Bn of debt) Although he has the money personally, he would obviously invent yet another another Jersey holding company.
But I don’t think he will do it, its all going Pete Tong and I reckon he will be looking for exits that allow his lifestyle to continue.
He was apparently re-appointed to the positions he gave up for the German court case. Bluewaters are possibly going to take legal action in the UK or a European court, there was at one point a Swiss action too. His life is certainly not dull.
Another day, another shambles. You’d think CVC would have the gumption to make sure its candidate was likely to actually accept the job before floating his name all over the place. Or maybe this is another of Bernie’s machinations, to make them look bad or reinforce that he’s not to be easily pushed aside.
I’m not sure that it’s a job any sane person would want! The term ‘replacement’ seems likely to be innaccurate, more like ‘figurehead’ or ‘puppet’ – with Bernie looking over your shoulder all the time and somehow preventing anything that you do that he doesn’t like. A real poison chalice. Given all his history, can we really expect him to refrain from meddling – even if he was suposedly ‘retired’?
Actually, I would imagine it is the other way round. The chairman would be looking over BE’s shoulder.
Perhaps, but it does rather remind me a bit of a small family owned business I did some work for years ago – the ‘old man’ had retired and handed over control to his eldest son … but couldn’t seem to resist the temptation to come in every day and undermine pretty much everything his son tried to do! The son had the position, the authority and the legal control whereas the old man was only a minor shareholder and non-exec director. There was never any doubt in my mind which one had ‘the power’ though … Maybe a forty year old habit is hard to break!
Ha ha! That reminds me of a company I used to work for. ET?
What exactly does the chairman do? (Not in corporate structures in general, but in this particular instance.)
And how does the chairman’s role compare to Bernie’s? If the chairman says “up” and Bernie says “down”, then what?
I guess the chairman has the power
good assumption sir. however, based on my experience as a director in Southern Maine U.S.A. anyway…, …, …, this position is a token figure head unless a rigourous and effective venting process takes place by the silent equity partners like the Canadian Pension Plan who invested over six hundred ( 600 ) miilion canadian dollars way back in 2011 believing a road show that promissed ” Tier One ( 1 ) ” bond status and whose Chair monsieur Wiseman said ” it’s enough so that we can lose it all ” to pacify those of us auditors who knew better in my professional opinion. okay?
au revoir.
It’s really down to the articles of association. A president may have the power, or a CEO, or any title you care for, if they are duly elected and given those powers. In America, often boards are quite token, whereas we like to think, especially post “Cadbury Code” that we have it all neat and tidy, for “corporate governance”. It is true, that rotating boards that are difficult to deselect, are a bit more common in the US, and it form my experience and observation, often is that there’s the CEO, and then there’s the board’s vote, and that’s the hub of it. But nothing says it has to be a certain way, even though some states, such as Delaware, have far better “rules”, those rules for Delaware are rather more set out by effective legislature providing a good forum, than they are in statute. Owners can, necessarily, do what they want with their assets, and that’s how one has to think aboriginally.
In the event of a conflict between the CEO and the chairman, the only power the chairman has is to fire the CEO and replace him/her.
The whole point is that CVC is deathly afraid of losing Bernie as CEO as they are concerned he is the man with all of the relationships and all of the knowlege, i.e., they see high risk the business value will erode w/o Bernie at the helm. As a result the Chairman of FOM would have little power over Bernie-as-CEO as the Board is not going to fire him.
Presumably what they do in the corporate world – eat lots, drink lots, smile lots, make a few speeches and take the credit whilst the CEO looks more tired than an end of harvest mule.
Do you think Sacha Woodward Hill is up to the job?
I suspect it depends on what CVC want done…
Is she well regarded buy the top level people in F1?
The same response
From a fan’s point view of course why should anyone care? People like us who read your blog are naturally interested, it’s fascinating, but the wider audience wouldn’t be aware. Most people believe BE runs F1, full stop. The wider implications of F1 politics are only seen at the venues (ticket prices, car specs, facilities and so forth) and on TV. It’s a tall order for anyone these days to ‘run’ F1 when everyone is pulling in different directions but whoever is chosen needs, at least, to have some charisma. Good luck to him or her.
PS I don’t know where you are now Joe but I hope your return trip here with Mrs Joe fares/fared better!
Because it makes a difference to what you pay…
In what sense Joe? That would be a first.
Given the size of the annual gouge of cash they take out of F1, is it possible that CVC aren’t that unhappy with the current situation? Soon they will have taken out their original purchase cost and still own F1. Is there any indication of the level of their unhappiness?
Didn’t even know FOM had a Chairman! Do we ever see him at races or giving interviews? The appointment of Sasha Woodward Hill seems a sensible decision; a known face with stability.
Once CVC are out of the way you have your own personal fiefdom, you just need a plan to buy their shares at the right price, cheap… 😉
Why is it that you always want the status quo?
Because the current system works. Yes it does require fine tuning in certain areas such as engaging with social media and self promotion, but what’s needed is continuity and the continued confidence of all the stakeholders.
That may lead to terminal decline… New ideas are useful to shake the business from its utopian reverie…
Some really fear losing the utopia and being left only with reverie …
In a utopian world of Formula One the teams should elect their next representative, after all it’s they who put on the show. Or is this just a fanciful notion, manifest delusional…
“it just works”. Ouch. That sentiment isn’t one I can be comfortable with, even if things were perfect.
Why would Walsh want the job? He has a good reputation and will have made decent money from Diageo.
This is a very high profile appointment into an incredibly messy situation. Practicable solutions to the sport’s problems are not easy to spot and the stakeholders are divided and dysfunctional!
Hear, hear!
I guess people aren’t exactly beating down CVCs door because:
TRACK/PROMOTER
•Government subsidy – get as much as possible – favours undemocratic places
•Ticket sales – less relevant because of cost and need for subsidy
•Title sponsorship – nice to have but competing with teams and rights holder
•Food and beverage – small beer (literally)
RIGHTS HOLDER
•Payments from promoter – try to get as much as possible with escalator
•Trackside advertising* – taken from promoter and track, central deals
•Hospitality sales* – taken from promoter and track, subsidiary company
•Series sponsorship – cannibalising efforts by teams and promoters
•Brand licensing – underdone – motives not aligned with sponsors
•Digital rights – underdone – motives not aligned with sponsors
•TV rights – focusing on PPV, motives not aligned with sponsors
TEAMS
•Payments from rights holder – negotiate for special deal (divide and conquer)
•Prize money – negotiate for special deal (divide and conquer)
•Team Sponsorship – vs other teams and rights holder – reputational issues
•Parent company cash injections – over dependency due to cost of competing
•Driver payments – over dependency here due to cost of competing
•Merchandise sales – underdone, small relative to cost of competing, so not aligned with sponsor motives
Nice summary, I’d also add:
Ticket sales/TV rights – declining attendances/audiences due to spectator disenfranchisement and increased competition from other sports
Series sponsorship – declining value (see Ticket Sales/TV rights)
Team Sponsorship – declining value (see Ticket Sales/TV rights)
Merchandise sales – declining value (see Ticket Sales/TV rights)
“Going back to find a future is never a good policy and getting an agreement on the idea will be tough.”
-So, are we still to understand that there’s a big meeting tomorrow, Thursday, between the teams and the Boss of Everyone?
Maybe they will make it through a couple of items on the agenda
Sorry, Joe. This isn’t how it works
If you look at any 20th century business that was driven by charismatic, possessed founders (Apple, Motorola, Hewlett-Packard come to mind), you’ll notice that the second-generation CEOs that step in inevitably falter. Without the crazy drive and passion of the founders, and without a historical context of what made the company great, the second CEO often ends up listening a lot to existing lieutenants, or taking a lot of guidance from the Board of Directors that they deal with once a month or so. You end up with a jumbled management-by-committee, MBA-led ‘group consciousness’ that will be very effective at its absolute best, and rudderless wandering at its worst. But never as laser sharp as the founder’s leadership in their heyday.
Some chairmen can double as acting CEOs, others are content to sit on the board and offer trite praise or condemnation of the CEO’s future plans at regular intervals. Who knows which type CVC are looking for?
As a second-generation leader, especially into a company that is outwardly so top-driven with no visible succession plan, you know you will not leave with the same reputation with which you entered.
Without a strong passion for motorsport, you would be crazy to step into this situation – especially if you don’t need to suffer the angst anymore…
Ok, I think I have a reasonable grasp on this situation now:
CVC wants Bernie out of FOM – But seemingly they can’t oust him because, presumably, somewhere in the depths of all of the intertwined secret contracts, secret agreements, secret letters of understanding and secret handshakes, Bernie has a golden share, right of veto, smoking gun or an as yet unknown link to the secret ‘area 51 in Roswell’ (Lets face it, he’s always claimed to have made his money in ‘property’ and he doesn’t look or act human) – that somehow gives him the defacto final say on who does what, when, to whom, how, and crucially, for how much.
The FIA want’s FOM out of F1 because they realise they assigned the commercial rights to their major asset too cheaply and for far too long without any meaningful recurring revenue stream – They’ve adopted a rather unusual approach to achieve their aims; They’ve said nothing, to anyone and went to lunch, where they proceeded to give themselves awards for things which may or may not mean anything, to anyone.
The EU is keen to take a strong stand against any abuse of market position, and will therefore bring it’s huge weight behind an investigation that will take years to conclude but will eventually force a resolution amongst the parties that will prevent any further abuse from occurring. We don’t officially know if this has started yet as, like the FIA, everyone is saying nothing. But we can be assured that if and when this process has concluded then that will definitely be the end of the matter as we’ve already been through this process once before… Oh dear.
The IOC recognise the validity of the FIA and can surely be relied upon to ensure fair governance of the sport and would never allow any actions that may appear to bring the sport into disrepute. Once the chaps from the FIA are back from lunch maybe they could send a delegation to see how FIFA manage to run such a tight ship.
Meanwhile a man sits in a German jail having been convicted of accepting a bribe that the German prosecutors now appear happy to accept was never paid.
Excellent grasp!
Yep, it’s a harsh result for Grib. I don’t think he should be there. I wonder what he really knows. Or what he is waiting for, on release. Is he eligible for parole, as some are in the UK, at half way?
I find it fascinating that Bernie Ecclestone has been leaking so much through BBC Sport’s new editor Dan Roan.
Roan is currently receiving a repeated pasting in Private Eye for reporting Blatter’s, er, cow excrement, verbatim. Obviously Bernie’s been paying attention!
Woodward-Hill was the pair of hands that extricated Bernie from his German Problem. No wonder he wants her on board.
I don’t think Woodward Hill was involved in Germany.
Joe,
Is it all possible that the FIA may be ‘removing’ itself in order to get all the rights back?
Meaning are they positioning the Formula 1 Group/CVC in a way that they can actually say they broke the contract and therefore the long term deal is off? Especially if a EU inquiry takes place.
Or has the FIA really castrated themselves so much that this is very much unrealistic?
It is possible but I am not sure they are that clever.
So… re: the notion that Todt is biding his time and sharpening his knives… has your confidence/hope/expectation in that vein weakened?
Yes.
Getting involved in F1 right now at a senior level is risky. The sport is owned by one organization, but run by an authoritarian octogenarian who is forever in court and seems to be increasingly out of touch with the sport’s fan base. The business of F1 is tarnished by the loss of teams, sponsors, and the fall in TV viewership, not to mention the secret and unsavoury aspects of the various financial arrangements, including the fact that the “regulator” – the FIA – seem to have sold their powers to regulate back to FOM and the teams. The company that owns most of F1 – CVC – appear to be happy for Bernie to carry on with his dodgy deals even though the EU could launch an investigation into anti-competitive practices. The idea of floating F1 is surely impossible right now. Who would buy in to such an opaque structure, with such uncertain outcome?
No one from industry or politics would take the chair unless they have a clear mandate to reform the sport/business, and that looks all but impossible while BE is in charge.
I predict a scandal.
“It seems that former Diageo boss Paul Walsh has decided that he does not want to be the chairman of the Formula One group.”
Paul Walsh was an executive at Diageo, which meant that he made decisions. He bought and sold brands, determined how they were promoted.
Had he become chairman of the Formula One group (whatever all that means), he would have overseen decisions made by other people. Paul Walsh determined that he wasn’t happy about that job description. There may be something better in the future.
“With a hand on the throttle and a hand on the brake…” Your Casey Jones analogy is perfect but doesn’t he die in a train wreck at the end of the song?
I think the Garcia-Hunter Casey Jones is more apt than the Seibert-Newton version.
with every generation that passes by with this bullsht going on only makes the F1 brand less and less valuable.