Thu, 24 May 2012 16:25:02 GMT

F1 warns shareholders about Ecclestone

Formula one is formally warning potential shareholders that a key to the sport's health is 81-year-old Bernie Ecclestone.


Bernie Ecclestone

Bernie Ecclestone, right, president and CEO of the Formula One Management, is flanked by Zayed Alzayani, chairman of the Bahrain International Circuit prior to the start of the Bahrain Formula One Grand Prix at the Formula One Bahrain International Circuit in Sakhir, Bahrain, Sunday, April 22, 2012.

Pre-marketing for F1's high profile Singapore floatation has begun, and a prospectus doing the rounds admitted the sport relies heavily on its diminutive chief executive.

The document, seen by the Financial Times, admitted Ecclestone is a suspect in the Gerhard Gribkowsky corruption scandal, and also the subject of civil proceedings relating to the sport's 2006 sale.

The Briton is also under investigation by Britain's tax authorities, the document admits.

"While we have a succession plan for Mr Ecclestone ... and contracted revenues which provide us stability in the near term, the loss of Mr Ecclestone could disrupt our operations and have a material adverse effect on our business and results of operation," said the circular.

The document also admitted the threat of key teams breaking away to race in their own series, and the potential for a fundamental shift in how the sport is broadcast.

"We may consider changing our (television) model and exploiting (internet streaming rights) independently in the future," it said.

Yet another potential problem is that Mercedes is yet to sign up to the new Concorde Agreement, with anonymous insiders continuing to insist the possibility the German carmaker will pull out.

Team boss Ross Brawn said the governing FIA also needs to get on board.

"So I think we'll see in the next few months clearly where the FIA stand on all of this," he is quoted by Reuters.

Ferrari president Luca di Montezemolo, however, welcomed the forthcoming flotation, amid news he might receive $25m in F1 shares as the board member representing F1's most historic team.

"We'll talk about it in Monte Carlo," Montezemolo is quoted by La Gazzetta dello Sport when asked about the floatation.

"It would be an advantage for the teams -- more stability and also more transparency."

Source: GMM

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