Formula One float back on track

Bernie Ecclestone's hopes of floating Formula One Holdings, his motor racing promotional empire, have been boosted by a breakthrough in the row over television rights with leading Grand Prix teams. Chris Godsmark, Business Correspondent, examines the remaining obstacles on the road to a pounds 1.5bn share bonanza.

Sources close to the top teams said Mr Ecclestone, who has more control over the sport than anyone else, had almost concluded a deal over the share of television revenues. It means the flotation is finally likely to emerge from the starting grid, though not until next year.

Three teams, Williams, McLaren and Tyrrell, had refused to sign the Concorde Agreement, which divided up revenues from the televising of Grand Prix races between the constructors. The uncertainty had blighted the flotation, originally planned to coincide with the British Grand Prix in July, and gave the teams a valuable bargaining tool in negotiations.

It emerged yesterday that Tyrrell have recently signed up to Concorde, while the two much bigger teams, Williams and McLaren, are now "80 per cent" of the way to an agreement, after Mr Ecclestone offered significant concessions. Previously sources said they had been only half-way towards a deal with Mr Ecclestone, whose company was given control over the lucrative rights by the sport's governing body, the FIA.

The Arrows team is also understood to have settled its dispute over Concorde. Arrows, which parted company with former world champion Damon Hill at the end of the season, was also thought to be attempting to contest the agreement, despite having previously signed.

Details of the division of revenues have always been a closely guarded secret in motor racing. Mr Ecclestone last year pulled off a deal thought to be worth pounds 70m with ITV, giving the network exclusive rights over racing coverage. It is projections of earnings from interactive digital TV which have fuelled the ambitious valuation suggestion by Salomon Brothers, Mr Ecclestone's adviser.

Another barrier to the float was also removed this week, when the Government said it would not force teams to ditch tobacco advertising. Top teams can net more than pounds 20m from individual cigarette sponsors.

The biggest obstacle to the float is now an investigation by the European Commission into whether Mr Ecclestone can claim ownership of television rights. The Commission is questioning whether contracts signed by broadcasters and teams breached competition rules.