Carmakers Abandon Talks on F1 Future

Formula One faced the renewed threat of a damaging split on Friday after carmakers terminated an agreement with Bernie Ecclestone and the commercial rights holders.

"Basically, we're back to square one," said a source close to the negotiations.

GPWC Holdings, the company set up by five major carmakers to plan a rival series to start in 2008, said in a statement that they had terminated a Memorandum of Understanding with Ecclestone's SLEC holding company and Formula One Administration.

"Despite all reasonable efforts to implement the Memorandum Of Understanding between GPWC Holdings BV and the shareholders of SLEC Holdings, GPWC has decided to end negotiations on the future structure of Formula One," it said.

The statement added that this was due to SLEC shareholders' "failure to comply with key points agreed in the memorandum".

"When we realised that our commitment to implement the MOU was not met by the other parties, we had to make a decision in the best interest of the sport and end negotiations," said GPWC chairman Juergen Hubbert in the statement.

The GPWC groups Mercedes parent DaimlerChrysler, BMW, Renault, Ford and Ferrari. Ford own the Jaguar team.

SLEC is the holding company set up by Formula One supremo Ecclestone which is owned 75 percent by banks Bayerische Landesbank, JP Morgan and Lehman Brothers and controls the sport's commercial rights.

Sweeping Changes

The GPWC statement came on the same day that Formula One's governing body issued proposals for the most far-reaching changes in the sport's history.

The moves, designed to cut costs and put the drivers back in the limelight from 2008, included reducing engine capacity and turning the clock back by outlawing electronic driver aids such as traction control.

The carmakers, banks and Ecclestone announced last December that they had reached a breakthrough to secure the sport's future and end years of damaging talk of a split when the 'Concorde Agreement' that governs Formula One's commercial side expires in 2007.

The memorandum offered teams a far greater slice of Formula One's revenues while Ecclestone, who has built Formula One into a show generating an estimated annual income of around $400 million, would have continued 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 were also committed to listing the company in the short to medium term.

"The GPWC have said they are going to start a series in 2008, what we are doing is running the FIA Formula One World Championship in 2008 for which Bernie has a contract for the commercial rights," said International Automobile Federation (FIA) president Max Mosley on Friday.

"We have a contract to run that championship for 100 years and Bernie has the right to exploit it commercially. So we are going ahead on doing that. Of course if the GPWC did want to start a series it would be entirely up to them to do so, and if they ask us to sanction it we'd be happy to go ahead.

"But in the meantime we have to concentrate on the Formula One World Championship which will go ahead in 2008, no matter what."