Cycle News - Archive Issues - 2000's

ln a move d€r ii now showing implicafiions for f,e future of Grand Prix motorcycle r#irE, ownership of Formula One passed irto new han& in lere November. That's when 7s-)€ar-old Fl supre- mo Bemie Ecclestone nominalt at least relinquished his 30.),ear control of Formula One car racing, as British prit€te equity finan- ciers CVC Capital Partners paid $l billion for the 72 percent oI F I 's holding company SLEC lleld by Gennan bank BayemLB and Ecclestone's family-controlled Bambino Trusc But, Ecclestone cleverly retains a si8niricant slke of the action as shareholder ol a company called Alpha Prema, a new company set up to run tle sport/business in which CVC will control 68 percent, with 38 percent owned by Bambino and another Ecclestone company - Formula One Hanagement. Eccle-ttone will be CEO of the new compary, and thus reain day-to-day running of the spon, CVC said. The mo/e brings to an end a period of financial uncerainty surrounding the pinnacle of four-wheeled competition, lollowin8 the collapse ofthe German media group Kirsch, which bought 75 percent of the F I 6LEC business {rom Ecclestone six yelrs ago, only to become insolvent in the wake of the purchase - for which they were considered at the time to have Srossly overpaid. Ki6ch'r demise saw its stake pass into th€ hands of Ba)€mLB and two U.S. bank, J-P MorSan and Lehmann Brothers. which had funded Kirsch's deal whh Ecclestone. There followed a protracted dispute over who really con- trolled Fl, whkh was eventually resolved with each of the American out tu holding 14.I75 percent oftle spor'Vbusiness, translating to 28.35 per.ent ol the company. However, neither o{ them currently has any voting rights in SLEC, since these w€re ne.ently lold to BayernLB - leaving the two banks hold- ing the shares simply in the hopes of making a prolit on selling them, which CVC is now likely to offer. The rest (71 .65 per- cent) is what is now beinS dMded up by the new Alpha Prema company, in which CVC holds a majority of the equity- Alpha Prema must now negotiate the purchase of these minorily stakes in SLEC held byJ.P HorSan and Lehman Brothe.s. But CVC saF that the firm's control of Fl is "a done deal" unaf- fected by the minority shareholders- Howevec CVC takes control of Fl at a diflicult time. SponsoBhip revenuei and TV audiences in Europ€ have been steadily fallin& while cash-rich Ferrari has consistentt blocked a range of measuaes aimed a( reduaing costs to the less- wealrhy panicipating teams, The task now facing CVC and Eaclestone is to broker a deal with the maior motor manufac- turers underwriting F I , to secure its future beyond the term of the current Concorde agreemem bindinS $e l0 teams presently participating in Formula One until 2007. CVC'S immediate task is to seek Lrrgent talk with the Grand Prix l"lanufacturers' Association, made (]p of five carmakers - BMW Daimler Chorsler, Renault, Honda and Toyota - which control Fl's top tearni, over their threat to start a breakewa), racinS series from 2008 ofiward under the GPMA banner. The teams are demandint a more equitable share of the considerable F I pro{its. as we,l as treater transparenay in how the sporvbusiness is governed, but cautiously welcomed the news of cVC's takeover by saying that the GPMA "looked for- ward to a constructive dialotue" wkh CVC, and warning that it will "aontinue preparation for the new series." GPMA wants changes in F I's corpomte structure and a bi8- ger slice of the revrenues, on the basis that a global blsiness such a5 Fl needa a prcper corporate structure, and mo6t importafitly a clear line of management succession post- Ecalestone. However, the williams Grand Prix team - now once again a |0O-percent free-a8ent private team after its divorce f.om former engine partner BMW - said that the CVC deal was "positive Ior the sport." And Donald Hackenzie, a CVC director also appointed to the board of Alpha Prema, said in a statementr "CVC has given its full support to the cur- rent discussions beNveen Formula One, the teams al|d manu- facturers to eflable a succesdul extension of the currem Concorde Agreement." So what has this to do with MotoGP? Only that CVC s acquisition of Formula One mean! that the British financial group is now the dominan! force in world motorsport, havinS owned the rights to Grand Prix motorcycle racing since 1998 - so that its purchase of SLEC means that GP racint on two and four vyheeli now comes under the same ownership umbrella. While much ir made - esp€cially b,, the Spanish press - of the fact that MotoGP is owned by Madrid-based Do.na, the Spanish lirm thd organizes and ma.Etes the commercial rights of the FIM Grand Prix series is in fa.t me.ely a wholly owned subsidiary of London-bared CVC, whi.h purchased it in June 1998. That's when Doma - which had been acquired by Spain's leading bank, Banco Santander, as part of its 1994 bailout of bankrupt rival Banesto - was sold to London-based CVC for $43 million, plus assumption of the debt owed by Doma to Banesto ol around $36 million. That was a deal that marked the con.,usion of a murlq chapter in 8aflesto's histo- ry which saw the bank's ,ormer president Mario Conde arrested and sentenced to a six-year iail term in 1997, after Spain's cemral bank uncovered a huge $5 billion black hole in Banesto's accounts back in I 993 . Doma, which by then owned the conu-ollin8 righB to Grand Prix racing Sranted to them by the FlM, was acquired by Banesto in 1990 from the Garcia Pardo brotherc, who'd found- ed it es an int€mational sporrs-management-and-marketing agency two yerrs effliei in a deal later cdticized by the Bank of Spain and a Spanhh government commksion as alleSedly form- ing part of Conde's s!,st€matic prooess of emb€rzlement and fraud. Specializing in perimeter advertising for maior socce. €lubs in Spain and England, as well as rna*eting TV transmission rights of spo.ting events, Doma lirst became invoked in GP motorcycle management in l99l as partners of - yes, that man again - Fl suprerno Bernie Ecclestone. ln November of that year, Ecclestone reached a deal with tlren-FlM president Jos Vaessen, the Dutdr bikint politician who is preseftly workin8 to succeed Francesco Zerbi in r€aining the presidenc/ of the {ed- eration in October 2006! Und€r it, Eccleston€ assumed cortrol oI GP bike racint vh his Two Wheels Promotions company - the first time that car and bike GP racing shared a common owner. But for reasons that w€re never made ctear. Ecclestone suddenly grew disen- chanted with his motorcycle investment and wkhdaew, ledrint Doma to assume sole conrol. ln due course, the firm's curent managemem team (head- ed by Carmelo Ezpeleta), which rcs.ued Doma from the aftermath of rhe Conde/Banesto connection, liquidated other interests to ,o

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