Rediff.com  » Sports » Carmakers and banks sign deal on F1 future

Carmakers and banks sign deal on F1 future

December 20, 2003 11:32 IST
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Formula One carmakers and commercial rights holders have promised to pay teams far more money and to retain Bernie Ecclestone as ringmaster in a restructuring of the sport.

A joint statement by Ecclestone's Formula One Administration (FOA), commercial rights holders SLEC and European carmakers on Friday said they had signed a memorandum of understanding on Formula One's future structure.

The agreement lifted the threat of a rival world championship in the future, ended years of wrangling between the banks and carmakers, and promised to make life easier for cash-strapped teams.

The statement gave no financial details, promising more information at a news conference to be held in mid-January, but five main points were agreed.

Team would be allocated significantly more of the revenues and the carmakers would be represented by three directors on the board of the SLEC holding company that has a 100-year deal for Formula One's commercial rights.

Gerhard Gribkowsky, representing SLEC shareholders, said the memorandum created "a stable and long-term platform for all constituents of (Formula One), most importantly the teams.

"At the same time we have secured the commercial basis for the financial stability of Formula One."

The GPWC is comprised of DaimlerChrysler, BMW, Ford, FIAT-owned Ferrari and Renault who between them own or provide engines to eight of the teams. The others are Toyota and Honda-powered

BAR.

SLEC shareholdings, with 75 percent controlled by Bayerische Landesbank, JP Morgan and Lehman Brothers were not expected to change significantly. The three banks would continue to own a majority of SLEC shares.

GLOBAL SHOW

Ecclestone, who has built Formula One into the cash-generating spectacle that now commands global attention and generates an estimated annual income of around $400 million, will continue to run the company.

The 73-year-old Briton controls 25 percent of SLEC, named after his wife Slavica, through family trust Bambino Holdings.

All the signatories also committed to listing the company in the short to medium term.

The teams, Ecclestone and governing FIA will negotiate an extension of the confidential and wide-ranging Concorde Agreement that covers both commercial and competition aspects of the sport and which expires in 2007.

In the absence of a deal with the rights holders, the carmakers had threatened their own series from 2008 as a way of increasing their revenues.

"Obviously my main interest has always been to secure the long-term future of Formula One," said Ecclestone in the statement.

"With an amended and extended Concorde Agreement about to be signed, and a general consensus on the key issues, I am very optimistic."

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