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Last Updated: Monday, 6 December, 2004, 15:14 GMT
Behind the lines in battle for F1
By Andrew Benson
Motorsport editor

Bernie Ecclestone
Is Bernie Ecclestone's control of F1 under threat?
Three banks have won a High Court case that could have profound implications for the future of Formula One.

The banks have successfully challenged the right of F1 boss Bernie Ecclestone to appoint his own directors to the board of the company that controls the commercial side of the sport.

On the face of it, that could have a seismic impact on the way the sport is run. But do banks now run F1 or will Ecclestone - a renowned survivor - come out on top again?

BBC Sport gets behind the legal arguments to discover what this means for F1.

WHAT WAS THE BANKS' COMPLAINT?

A consortium of three investment banks - Bayerische Landesbank, Lehman Brothers and JP Morgan Chase - alleged that Ecclestone had taken improper control of the board of Formula One Holdings (FOH).

Their case was that Ecclestone had dubiously arranged the statutes of the web of companies involved in running F1 to ensure he had an FOH board of directors that would do what he wanted.

Michael Schumacher sprays champagne on the podium after winning the 2004 Italian Grand Prix
Who will be celebrating after Monday's court ruling?
FOH controls two of F1's crucial operating companies, Formula One Administration (FOA) and Formula One Management (FOM).

The judge backed the banks' claim that it was wrong for Ecclestone to control the board of FOH when he only owns 25% of it compared to the banks' 75%.

WHAT EFFECT WILL THE JUDGEMENT HAVE?

It means Ecclestone will no longer have ultimate control of FOH, F1's holding company.

And for the first time he will have to take the views of others into account when he makes decisions about the sport.

But it will have little immediate effect on the running of F1, because it does not have any impact on FOA and FOM, which are responsible for the day-to-day running of the sport.

Because of the way the business is set up, the banks would have to launch further legal actions to win control of those companies.

Things are likely to change, but it is difficult to predict how, or how quickly.

WHAT WILL THE BANKS DO NOW?

No-one knows - they have not given any indication to the teams or, as far as anyone can tell, to Ecclestone.

You can bet Bernie has an alternative plan up his sleeve that will leave him with all the crucial cards
Senior F1 insider
In theory, they could now try to remove Ecclestone as F1's chief executive. But that is thought unlikely for a number of reasons.

Firstly, no-one could hope to match Ecclestone's experience, knowledge and business acumen when it comes to running such a complicated sport. After all, the banks want to make money, and they are unlikely to want to disturb the workings of a business whose profit is more than 80% of its turnover.

Secondly, relations between Ecclestone and the banks on a personal level are said to be very cordial - the head of the consortium has attended many Grands Prix and spent a great deal of time with Ecclestone.

Finally, a man of Ecclestone's intelligence and influence could make life very difficult for the banks if they were to remove him. They may well decide to follow US President Lyndon Johnson's famous maxim: "It's better to have him inside the tent pissing out than outside pissing in."

WHAT WILL ECCLESTONE DO NEXT?

As many people who have tried to beat him in business will attest, that is always a very difficult question to answer. Unpredictability has been a cornerstone of his method for years.

The bottom line is that he wants to keep control of F1 and has doubtless been working hard behind the scenes to ensure he does.

As one veteran F1 insider told BBC Sport: "Bernie was not opposing this case, so you can bet he has an alternative plan up his sleeve that will leave him with all the crucial cards."

IS THIS PART OF A LARGER PICTURE?

Very much so. The banks want a bigger say because they want to protect their investment.

Rubens Barrichello, Kimi Raikkonen and Juan Pablo Montoya battle during the 2004 Brazilian Grand Prix
Ferrari, McLaren and Williams are all linked to a threatened breakaway series
At the moment, the future of F1 is uncertain because of a wider battle involving the teams and the car manufacturers involved in the sport.

They want a bigger share of F1's commercial income, more say in the running of the sport and greater transparency in F1's financial dealings.

Fiat, DaimlerChrysler, BMW and Renault - the car manufacturers linked to F1's four biggest teams - have threatened to set up a rival championship in 2008, after the contract that binds them to F1 - the Concorde Agreement - runs out.

If that happened, the banks' $1.6bn (824m) investment in F1 would be worthless - they would own the F1 world championship, but its most prestigious competitors would be racing elsewhere.

In the end, it all boils down to money - the teams and the car manufacturers want more of it, the banks want at least to recoup their investment, and Ecclestone wants to protect the sport and business he has built up and loves.

All parties know that the best way to do that is to come to some kind of arrangement where they all work together.

WILL THAT HAPPEN?

Even now, Ecclestone is behind the scenes trying to sort the problem out.

He is rumoured to be ready to present the teams with a new Concorde Agreement that more than doubles their share of F1's income.

If he can persuade them to sign that, everyone will be happy.

The threat of a rival series would be removed, the banks' investment would be secure for the foreseeable future, and, as the man who saved the sport, Ecclestone would remain - and be seen to remain - as powerful and influentional as ever.




SEE ALSO
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26 Oct 04 |  Motorsport
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BMW threatens to quit F1
28 Apr 04 |  Formula One
F1 split threat dismissed
24 Apr 04 |  Formula One


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