A letter to Bernie Ecclestone

Dear Bernie

As you may know, it was this time last year that I had a brief chat with Donald Mackenzie, founding partner and co-chairman of CVC Capital Partners, your employer. During our discourse, Donald suggested that I wrote "a lot of bullshit".

He was clearly referring to the fact that I constantly criticised Formula 1's financial and governance structures. I won't belabour the discussion as it was revealed here in an open letter to the man half the paddock consider to be your boss - although, I hasten to add, an equal number believe you to be master of F1.

Open letters seem in vogue right now, what with the GPDA last week addressing rather hard-hitting critiques of the same points I have been banging on about since 2012 to F1's players. Hence I thought I would repeat last year's exercise, but make you the recipient - particularly as I noted your response to the GPDA was essentially the same as my take, namely that they had tabled opinions, but no solutions. In fact, I detected distinct political overtones in their letter.

However, this got me thinking, for I guess over the years I may have been guilty of the same malfeasance, namely hurling rocks left, right and centre, yet not offering any viable alternatives to the way in which F1 is run. So I sat down with a blank sheet and jotted down the major issues I identified over the years. In no particular order these are:

* A Strategy Group that is now in its third year, yet has failed to come up with a single sustainable alternative to the existing structures, and empowers six teams to out-vote you or the sport's governing body, the FIA, unless you and Jean Todt - with whom you have long enjoyed an arms-length relationship - bandy together even on the many issues you don't see eye-to-eye

* A dysfunctional governance structure that at Formula 1 Commission level grants signage sponsors such as Rolex the same clout as Mercedes or FOM or the FIA, yet permits Ferrari to veto decisions it considers to be counter to its own interests

* Inequitable financial covenants such that Ferrari could retire both cars at the first corner of every race throughout a season, yet cream more in FOM revenues than would Williams even if Sir Frank's team won both titles

* No executive succession planning, despite the CEO of this multi-billion dollar global business, who alone knows all its commercial secrets and operations, being 20 years beyond bus pass age. I am sure, Bernie, we don't need to belabour your admission that you established Bambino Trust after suffering a major health scare in 1999 - and am thus somewhat surprised you have not taken similar measures to secure the sport you profess to love

* Control of F1's commercial rights by a consortium of funds, some of whom have so little interest that they forsake executive powers beyond remaining as investors provided returns-on-investment exceed expectation. Those that exercise control despite 35.5 per cent ownership have so little "feel" for this complex sport that its slide can be traced directly back to their acquisition.

I analysed the above points with an earnest desire to make constructive proposals based on a love for a sport I have followed with an overriding passion for over 50 years now. True, you have been involved - indeed, make that "committed" - for longer than I have, but I doubt you feel the same hurt as do we unadulterated fans about F1's slide. You have, after all, plenty of compensations.

The more I sought solutions, the more disheartened I got, simply as I see no way out of the mess that has been created since 2006, when the deal for CVC Capital Partners to acquire 63.4 per cent of F1's commercial rights from a bunch of bankers who, in turn, acquired after loans went sour, was approved at EU Commission level.

However, this criticism of CVC and its cohorts is rather unfair, for the owners and partners are doing none other than demanded by their share- and fund-holders - and laid by their respective articles of incorporation - namely to maximise the short-term.

That they succeeded admirably - indeed, way beyond expectation - is borne out by the eye-watering amounts these number crunchers "syphoned" from F1. None of this has been re-invested in F1 - but instead left the sport by way of via share sales, dividends and/or loan and interest repayments over the years.

Apparently Haas has no commercial deal - despite FOM using its IP in broadcasts - because the funds required to strike a deal are not liquid; ditto battlers Sauber and Force India (and others), whose operations are in dire need of equitable funding, are short-changed - which CVC refuses to (cannot?) budge on.

I won't push the point, but let's assume F1's fragmented ownership changed hands tomorrow at the value ($10bn according to reports) placed upon it by its majority owner, an initial investment of around $1.6bn reaps a six-fold return. The problem is perceived value and market price are two different animals, and so CVC keeps trying to add value by whatever means.

We can, though, take heart from the fact that CVC's plans to list on Singapore's stock exchange failed dismally, for the current owners now sit with exactly the mess they figured had been bundled sufficiently neatly to shift to investors.

I find it rather churlish that teams, who have, after all, made by far the largest "hard" collective investments in F1 - other than, possibly, race promoters, who have alternatives, but are now also flexing their muscles - stand accused of self-interest simply for standing up for their rights, which are, let us not forget, enshrined in the bilateral contracts you initiated in 2012 on behalf of CVC, with a lapse date of 2020.

I fear that is not the end of it, either. If a bird is to believed, Renault accepted a back-loaded commercial deal that runs to 2024, which suggests a continuation of bilateral contracts, despite the EU Commission possibly stepping in as a result of festering unhappiness at the lower end of the grid about such deals.

Now comes news that Sky TV will hold exclusive British broadcast rights from 2019. This is equally perturbing for it means by far F1's most loyal market, one that hosts 80 per cent of teams, will receive free-to-air live broadcasts once per annum for six years - if, that is, F1's oldest round does not go the way Italy's race could if your recent comment are a guide. Talking of which, what happened to the Imola option?

In a nutshell, it comes down to contracts that were devised for entirely the wrong reasons. F1 is no normal commodity such as luggage - CVC's listing of Samsonite on Hong Kong's stock exchange provides a case study - or service industry (Belgium's post office, majority acquired and floated by CVC), but all-consuming passion - as you discovered as teenager.

True, there are hangovers from bygone days, such as Ferrari's veto, but, again, you agreed to its request for what Todt refers to as "a loaded gun" when you and your long-standing chum Max Mosley engineered the first Concorde Agreement back in the eighties.

You held the power to rescind the veto in 1997 when you offered Ferrari a preferential commercial deal upon acquiring F1's commercial rights - at that stage for 10 years - and again in 2009/2012. Only you, Bernie, know why it continued in place- and now F1 is stuck with it until 2020.

However, F1's wrongs - as you have correctly indicated, there are many, from self-interest through F1's governance and technicalities, plus many you and CVC shy away from - are not the cause, but symptomatic of a deeper problem: that you were granted the 113-years commercial rights to the sport, effectively to do as you wish and sell to whom you desire.

At the time (mid-1990s) Mosley, the former barrister who then headed the FIA, regularly alluded to a "Don King" clause over change of ownership, yet in his memoirs makes no mention of the alleged veto.

This "Don King" talk occurred before the FIA/FOM deal was inexplicably extended by 103 years without the former deriving additional income - indeed, the body lost due to certain clauses not being incorporated in revised documents.

So F1 finds itself saddled with a watertight contract that was not envisaged in the first instance, then dropped into place for all the wrong reasons, yet permits the commercial rights holder (and successors) to act with virtual impunity for another 100 years without fear of sanction. Said document was (allegedly) forensically audited for loopholes - with none found.

It is this 113-year deal that lies at the root of all that is wrong in F1 at present, and not the existing bilateral contracts, for they are simply symptomatic, not the cause. Rip them up by all means, Bernie - if, that is, the enfranchised teams permit you to - but I bet my house that any replacement will again be tilted in favour of the commercial rights holder, and therefore away from F1.

It has long been said that you are sport's best-ever salesman; that you single-handedly created one of the greatest annual sporting spectacle, possibly the greatest - and that is surely a deserving accolade. But, Bernie, I fear your legacy will be tarnished by F1's current malaise - and that there is no way back.

Unless, that is, you persuade CVC to relinquish its grip on a 113-year contract that has no rational reason for existing, regardless of subtle legalities. Then F1 could be handed back to its rightful owners, namely the FIA, which could lease the rights in 10-year blocks, as it does with World Rally Championship and World Endurance Championship where, if promoters (as they are dubbed, for they truly promote their genre) do not deliver, they are out at contract end.

Talking of which, please give serious thought to your succession: I know you are not an arrogant individual, so must surely realise that somewhere amongst seven billion humans on earth, there must be at least one who could do a half decent job of running F1. That person simply needs to be given the keys to the safe and all its secrets. You could do worse than knock on Ross Brawn's door, as I suggested in October 2013.

Manage that, and you will go down in history not only as the man who saved F1 from self-inflicted demise, but as the greatest salesman the world has ever known. Now, that would be a fitting epitaph for Bernard Charles Ecclestone.

Yours in F1,

Dieter Rencken