Can Formula One Survive Without Bernie Ecclestone?
The 82-year-old "godfather" of F1 has built the motor sport into a billion-dollar business with a very Bernie-centric system. But bribery charges may force the sport to find a new formula.
MUNICH - Bernie Ecclestone's indictment by a Munich court last week on bribery charges marks a turning point for Formula One. After nearly four decades of tough-guy leadership, the 82-year-old former Ipswich tire dealer is most likely on his way out this year, even if he steadfastly continues to protest his innocence and refuses to step down.
Possibly as early as when the trial begins in September -- but at the very latest if he were to be convicted of paying $44 million in bribes to former Bayern LB bank Chief Risk Officer Gerhard Griboswky -- Ecclestone will become an unsustainable presence in a sector where major companies are faced with strict compliance rules.
"Within Formula One, contracts are not transparent and they are monopolized by Ecclestone. These days no business is organized like that," says Sylvia Schenk, senior advisor for sport at Transparency International (a NGO that monitors corporate and political corruption). And she’s not the only one to hold that opinion.
But the bigger question people are beginning to ask is: How can Formula One continue without Bernie Ecclestone?
Everyone agrees on one thing: Nobody can truly replace him. The diminutive figure (1.58 meters/5ft.3 tall) virtually single-handedly turned Formula One into a global player worth billions. To do that, over decades he built up a complicated structure of subsidiaries and a web of mutual dependencies.
There are subsidiaries in charge of contracts with the race courses, television rights, catering, and yet another that deals with legal ties to the FIA (International Automobile Federation).
Ecclestone even oversaw personally who got pit lane tickets. Over the years, the amounts of money that flowed through subsidiaries reached eight figures. Last year alone, Formula One turned over some 3 billion euros. This success led people to avoid thinking about who would one day take the place of the almighty Ecclestone.
"Maybe I’ll stop when I’m a hundred," Ecclestone liked to say when he was asked about retiring from Formula One. He is a workaholic who even at his age puts in 16-hour days and flies around the globe doing deals. For him, life without Formula One is unimaginable.
That a conviction could dash this plan 18 years before his 100th birthday has until now not been something he could wrap his brain around. Legally, the worst-case scenario could mean a ten-year prison sentence. And even he, the quintessential dealmaker, won’t be able to wangle his way out of prison time if he is sentenced.
When talks turn to potential successors, one of the names that often comes up is Justin King. However King -- who made his reputation in the corporate world as CEO of Sainsbury's supermarket chain – has no particular background in motorsport, even though his son Jordan is a Formula Two driver.
Two other names mentioned have similar corporate backgrounds, without any direct motor world experience. Donald Mackenzie -- boss of CVC Capital Partners investment company that owns a majority stake in Formula One, would on paper at least be a kind of logical successor to Ecclestone; and Nestlé Chairman Peter Brabeck-Letmathe, planned chairman of the Formula One corporation.
Whether the Formula One racing stables, split into numerous and in some cases hostile interest groups, would accept their leadership appears to be more than questionable. Fear of Ecclestone’s not always kosher maneuvers keeps them in line. When Ecclestone goes, Formula One will lose the glue that binds it together. The timing couldn’t be worse. The threat of an untimely power vacuum is very real.
The entity now faces its most important decisions in years. A listing on the stock exchange – a move that will supposedly generate billions -- had been foreseen for this fall. It’s supposed to cement Ecclestone’s legacy and pump fresh funds into the series that has been hit by the effects of the worldwide financial crisis.
The coffers of the small racing stables are empty, which is why in the past they’ve accepted -- without complaint – to race in authoritarian countries like Bahrain and China. A recent rule of thumb at F1 has been: If you show us the money, we’ll race.
However going onto the stock exchange is hardly imaginable if the world-famous F1 boss is sitting in the accused dock in a Munich courtroom.
Not least: a new Concorde Agreement -- the basic document in which the division of income among the teams is set down, along with the terms of the relationship to the FIA -- has yet to be signed. Many teams have been longing for the day when they can play by their own, and not Ecclestone’s, rules. But they still have to deliver proof that they’re capable of that without causing the series to implode.
In October, Bernie Ecclestone will turn 83. His financial overseers at CVC Capital Partners are all too aware of this. According to the British media, CVC hired a headhunter months ago to start looking for a replacement for "Mr. E." -- so far without success.