The Weekly Grapevine

Bernie's new offer

Peace had been promised by Flavio Briatore and Bernie Ecclestone during the Bahrain Grand Prix weekend, yet four races and almost eight weeks later the warring factions are, on paper at least, further apart than at any stage during the last six months.

Will it ever break out, or is international motorsport seriously staring two series in the face?

The latest salvo has been fired by Ecclestone, who is said to have reduced his offer to the 'dissidents' by 10% to 50% of the sport's annual revenues unless the parent companies, in instances where the racing operations are separately registered subsidiaries of the main company, underwrite their Formula One satellites' commitment to his series from 2008 onwards.

Why the sudden change? Well, as we know, in CVC Partners Ecclestone has new majority share partners, and these did not acquire their wealth without fine tooth-combing every document which came across their desks.

So, in all likelihood Ecclestone has been advised that the five motor manufacturers could singly or collectively place those teams operating as entities separate from the holding companies into liquidation at any time during the agreement period, rendering their signatures worthless.

Bernie Ecclestone © LAT

Ford had, of course, been prepared to walk away from Formula One without as much as backward glance had it not found a buyer for its Milton Keynes-based operation, and clearly Ecclestone is aiming to prevent same by demanding the 'heaviest' signatures on his agreements.

This does, of course, raise rather interesting questions with regard to the 'weight' of the existing signatories - Ferrari, Red Bull Racing, Midland F1, Scuderia Toro Rosso and Super Aguri - and just why any possible liquidations by them should not adversely affect Formula One, whilst the possible withdrawal of a Grand Prix Manufacturers' Association member could.

Does there lurk a subliminal message in there that GPMA teams do, in fact, offer the sport intrinsically greater value than do the 'garagistes'? And are they on performance-related shares of 50 or 60% of revenues? So much for the transparency that had been promised.

As McLaren's Ron Dennis has regularly pointed out, money is not the (only) sticking point for GPMA members - BMW, Honda, Mercedes, Renault and Toyota - for, whilst it is high on their negotiating agenda, long-term regulatory stability and transparent governance are elevated well above the fiscal details.

So, will a 10% increase in the amount offered really cause the biggest cheeses in the five companies concerned to stretch for their gold-nibbed Mont Blancs? Hardly likely.

Consider: F1's revenues are reckoned to amount to $500m annually, with the payouts - to be shared amongst 12 teams, remember - being either $300 (60% of revenues) or $250m (50%).

Thus a maximum of $50m per annum is under discussion, or, on average, $4m per team per annum.

With GPMA member operating budgets said to be between $300 (Renault) and $500m (Honda and Toyota), the variance amounts to two percent or less.

Sounds like a pretty cheap insurance policy should the main board of the five decide to withdraw from the sport...

No sooner had this column brought news of Red Bull's plans to broadcast extreme sport footage to bars and clubs worldwide, than independent TV crews populated the drinks company's massive 720-cubic meter 'Energy Station' at Imola.

The piece certainly evoked comment from a source close to Red Bull Dietrich Mateschitz: not only was the company looking at moving into worldwide sports broadcasting as a sort of logical brand extension, but that the outright purchase of music station MTV was under serious consideration as broadcast vehicle.

These plans, though, pale into total insignificance when compared to the possible effects of news just in... Austria's Bundeswettbewerbsbehoerde (BWB, the country's Monopolies Commission) is investigating the purchase by a CVC Partners' subsidiary of Geneva-based Allsport, holder of Formula One Paddock Club and hospitality concessions, and Allsopp, Parker & Marsh (Ireland) Limited - the sport's track side advertising agent.

Just why would an Austrian state department be investigating the purchase of Swiss and Irish companies respectively by a London-based venture company operating mainly out of Luxembourg and Monaco for possible monopolistic infringements? Particularly when CVC does not even list a single office in the country on its website?

Bernie Ecclestone and Patrick McNally © LAT

What is known is that CVC Partners purchased its shares in SLEC via a vehicle entitled Beta Principal Limited, which controls Beta Topco 2 Limited via an entity known as CVC (Fund IV), which, in turn, implies that the funds utilized were not those of CVC partners. Instead, the venture capital group was acting on behalf of an investor who/which had placed the necessary resources into Fund IV.

None of which, though, explains why the Austrian Monopolies Commission is investigating the purchase.

Salient may be the fact that Red Bull is very much an Austrian-registered company, and Mateschitz is very much an Austrian citizen - and one of only three such countrymen officially classed as a billionaire.

Could it be that two teams, one of which runs Ferrari engines, the biggest hospitality unit ever seen in F1, and an in-house TV station are not enough for Mateschitz?

Could he be planning to take over F1's entire hospitality and marketing concessions, or, not inconceivably given his massive recent investments and the multi-billion margins returned annually by Red Bull, the whole sport via a fund created therefore by CVC?

The BWB has set a return date of fifteen days after 10 May. All should thus be clearer on that date.