Would FOM wel­come EU in­ter­fer­ence?

F1 Racing - - DIETER RENCKEN - DI­ETER RENCKEN

FIA. Other teams don’t get a look-in un­less a mo­tion passes said Strat­egy Group, and even then they are gen­er­ally out­voted.

So skewed is F1’s cur­rent rev­enue struc­ture that Fer­rari will an­nu­ally be guar­an­teed larger slices of F1 rev­enues than Lo­tus, even if both red cars were to re­tire in the rst cor­ner of the open­ing lap of ev­ery round through to 2020, and the black/gold team were to win both ti­tles for six straight years.

In other words, if McLaren-Honda fail to score a podium this sea­son – as could be the case go­ing off cur­rent per­for­mance – and Sauber bags one ev­ery time of ask­ing, Wok­ing will still top Hin­wil in the money stakes. Non-CCB teams sus­pect th­ese ar­range­ments to be in (po­ten­tial) breach of EU com­pe­ti­tion/ mo­nop­oly laws, while other sources sug­gest ex-FIA pres­i­dent Max Mosley, said to be rather dis­il­lu­sioned about the gov­ern­ing body’s man­age­ment of F1, has shown a keen in­ter­est in the sit­u­a­tion. In­deed, some sus­pect the for­mer bar­ris­ter, pushed aside in 2009 dur­ing a teams’ re­volt, to be the or­ches­tra­tor… Why, though, is our man so adamant that CVC – or, for that mat­ter, FOM’s ul­tra­se­cre­tive CEO Bernie Ec­cle­stone – would wel­come an in­ves­ti­ga­tion? All logic dic­tates that the ven­ture fund should har­ness its con­sid­er­able pow­ers to pre­vent Brussels bu­reau­crats delv­ing into its in­ner­most se­crets.

The an­swer lies in Sin­ga­pore, or once did. It is fact that CVC ac­quired F1’s com­mer­cial rights in 2005/06 with a view to oat­ing FOM – as per their modus operandi, whether with their Sam­sonite lug­gage in­vest­ment, or Bel­gium’s postal ser­vice. At the time F1’s num­bers were buoy­ant, with CVC later plac­ing (rather op­ti­mistic) val­u­a­tions of $10bn, or ve times the mainly lever­aged pur­chase tag.

To boost F1’s IPO value CVC des­per­ately needed long-term sta­bil­ity – par­tic­u­larly af­ter man­u­fac­turer teams de­parted in droves in 2008/09 – and when the 2013-20 Con­corde Agree­ment was ne­go­ti­ated in early 2012, FOM of­fered sub­stan­tial pre­mi­ums to CCB teams in ex­change for their com­mit­ment through to 2020. Once they had been snared, the rest had no choice but to ac­cept mea­gre pick­ings.

“We were given the FIFO op­tion – ‘Fit in or fuck off’,” is how one non-CCB team boss de­scribed the process.

All this, though, was be­fore the in­fa­mous ‘Mu­nich Mat­ter’: Ec­cle­stone paid $60m to set­tle bribery and em­bez­zle­ment charges, which tainted the of­fer­ing. In ad­di­tion, F1’s de­mo­graph­ics plum­meted: De­spite preota­tion claims of 25 races per sea­son, FOM bat­tles to main­tain 20-round cham­pi­onships, with TV view­er­ship drop­ping 30 per cent over ve years. Live au­di­ences? Ask Ger­many…

So CVC’s IPO plans were shat­tered, leav­ing them no op­tion but to di­lute their 67 per cent hold­ing in FOM – half their shares have been sold to in­sti­tu­tional in­vestors. Yet, in terms of the CCBs, FOM shell out $150m a year to them while un­able to im­pose their reg­u­la­tory will. Equally, so high are loan re­pay­ments that FOM can­not in­crease dis­burse­ments to be­lea­guered mid- and back-grid­ders.

Thus, says our source, CVC will wel­come an in­ves­ti­ga­tion that nds F1’s struc­tures to be in breach, for that would force the CCBs to waive pre­mi­ums on the ba­sis of an EU di­rec­tive – leav­ing them with­out re­course – and en­abling FOM to in­crease dis­burse­ments to Sauber, Force In­dia and Lo­tus.

Should all this get too much for pub­lic­ity-shy CVC, their own­ers may elect to dump F1 – hav­ing made a cool $3bn over eight years in the process – and hand con­trol back to Ec­cle­stone, who would no doubt rope in his old mate Max Mosley to re­vise F1’s gov­er­nance...

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