Carmakers, Banks Hail Breakthrough on F1 Future

Formula One's carmakers and commercial rights holders hailed a breakthrough deal on Thursday that looked likely to end the threat of a breakaway championship.

The carmakers, represented by the GPWC Holdings company who had threatened to form their own series, said in a statement that they had made significant progress in a meeting with banks and Formula One supremo Bernie Ecclestone.

It said the participants had agreed to prepare a Memorandum of Understanding before the end of the year "regarding the future structure of Formula One".

Gerhard Gribkowsky, representing the banks, GPWC chairman Juergen Hubbert and Ecclestone jointly declared: "We are very happy that today we reached a breakthrough in our negotiations about the future of Formula One. The outcome is in the best interests of Formula One and the millions of its fans around the world."

No details of the "breakthrough" were immediately available but a source close to the negotiations told Reuters: "This is a win-win for all concerned, the banks for Bernie and the carmakers. There is certainly no more threat of a breakaway series."

The source said the banks had effectively agreed to sell their shares to the carmakers and the next stage was for the transaction to be finalised.

"Bernie, the banks and the carmakers shook hands and agreed that they had a deal," added the source, who did not want to be identified.

Greater Share

The GPWC - which groups carmakers BMW, DaimlerChrysler, Ferrari, Ford and Renault - wants a far greater share of Formula One's revenues and last July set a year-end deadline for a deal over the sport's future.

"If we do not come to an agreement at the end of this year, we will focus all efforts on setting up the new series," Ford's Richard Parry-Jones, director of GPWC, had said.

Ford own Jaguar and provide engines to Jordan and Minardi while BMW are engine partners with Williams and DaimlerChrysler own a stake in McLaren.

Formula One teams earlier this year signed their own memorandum of understanding to work with the GPWC on plans for a new Grand Prix Championship from 2008 when the existing 'Concorde Agreement' expires.

The sport's commercial rights are controlled by the holding company SLEC, set up by Bernie Ecclestone.

The Briton's family-owned Bambino Trust owns 25 percent and the remainder are controlled by banks - Bayerische Landesbank, JP Morgan and Lehman Brothers - after the collapse of Germany's Kirch media company.

The banks, who were owed $1.6 billion by Kirch, have been holding out for a deal that limits their losses. But the threat of a breakaway series risked leaving them, in the words of Ferrari boss Luca di Montezemolo, owning "100 percent of nothing".

Ecclestone, a former team owner himself, has a 100-year deal with the governing International Automobile Federation (FIA) for the commercial rights but the Concorde Agreement with teams expires in 2007.

Revenues from Formula One are worth several hundred million dollars a year.