The case is settled – not the succession
Such a model was planned for F1 before the poor health of the global economy, and the uncertainty surrounding the court case, put the brakes on the whole process. CVC ended up selling off half of its original 66 per cent. Crucially, though, it retains overall control. When offered the chance by prosecutors, Ecclestone availed himself of Section 153a of Germany’s criminal procedure, which lets accused parties settle cases in exchange for a fee paid to the state and/or a recognised charity, subject to the judge and prosecution agreeing. Under this procedure, which exists to ease the administrative burden on the court system and bring to a swifter conclusion cases where judgment is difficult, the sum is decided based on the severity of the alleged offences and the accused’s means - hence the headline-grabbing gure of £60million, with £600,000 going to a child hospice foundation and the balance to the Bavarian state. Thousands of cases are settled thus every year, though this one sets a record.
So Ecclestone remains at the helm of Formula One Management. CVC had undertaken to sack him if, in the words of cofounder and chairman Donald Mackenzie, it had been “proven that Mr Ecclestone has done
“F1 will still be be run by an octogenarian with no intention of handing over the reins”
anything criminally wrong”. The settlement closes the door on this, and, while a court statement made clear civil action could not be excluded, Judge Peter Noll’s parting shot to Ecclestone was, “I assume we will only see one another again on television.”
The trial had been held for two days a week since April to enable Ecclestone to continue to discharge his duties, and within hours of the settlement he was back at his desk in London. While Ecclestone’s stamina is remarkable, surely the lesson of this lengthy and expensive court case, in which an 83-year-old with a history of heart disease faced the prospect of a jail term if found guilty, is that CVC need to devise some form of succession planning. And they must announce that plan to appease the anxieties of the governing body, teams, partners, sponsors, broadcasters, promoters, and that oft-forgotten group – the fans.
There was universal fear in the paddock about F1’s future should Judge Noll pronounce Ecclestone guilty with no suitable replacement in sight, for the sport faces cash-strapped teams, disappearing spectators, diminishing TV audiences and dwindling sponsorship revenues across the board. Yet CVC appeared to have no contingency plan to deal with these challenges. When Ecclestone was rst charged, a deputy was not appointed to manage the business – instead, decisions and agreements were escalated to Mackenzie’s office. This surely points to a succession vacuum. CVC have enjoyed an estimated 500 per cent return on their original investment, and have approached the markets for a billion-dollar loan to pay shareholder dividends. That loads F1’s debt pile, a move observers fear spells a phased exit, possibly as soon as late 2015.
The route could be via the sale of CVC’s remaining 35 per cent, or an IPO [Initial Public Offering], likely in Singapore. After two aborted attempts – one of which stalled at the blocks – the money markets are sceptical, which does not bode well for a otation.
Either way, F1 will still be overburdened by debt. And it will still be run by an octogenarian with no intention of handing over the reins. From that perspective, the Munich settlement has not changed anything.
Bernie Ecclestone with his lawyer, Norbert Scharf, in Munich. Ecclestone has settled his bribery case for a record £60million