Formula One flotation plans stalled

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The Independent Online
Bernie Ecclestone has postponed plans to float his Formula One Grand Prix motor racing business in London and New York this summer and has instructed his advisers to examine the alternative of a private sale.

There are also doubts about the pounds 2.5bn price tag put on the business when the flotation plans first surfaced two months ago. The sale, if it happens, is expected to put a significantly lower value on Formula One. Mr Ecclestone does not intend to dispose of a controlling stake in the business.

The odds on Formula One being sold this calendar year are now reckoned to be even. Although flotation is still a candidate, the odds are said to be no more than 50:50 on a public offering as opposed to a public sale.

Part of the problem is timing and part of the problem is the fierce resistance to a flotation being encountered among a handful of the Grand Prix constructors, led by the Williams team.

Mr Ecclestone owns Formula One, which has the television rights to the 16 grand prix held each year and beamed to an audience of 400 million viewers. But the teams point out that Formula One would be nothing without their participation and are said to be pressing for a large slice of the action when Mr Ecclestone cashes up.

Were flotation to remain an option this side of the summer break, then Mr Ecclestone and his financial advisers, the US investment bank Salomons, would need to press the button in the next week for there to be time to brief analysts, get research reports written and circulated, publish a prospectus and take Formula One on a roadshow of institutional investors on both sides of the Atlantic.

That means a flotation is now unlikely to take place until the autumn at the earliest. Meanwhile, the option of a trade sale is being given serious consideration. Large numbers of interested parties, ranging from media companies to wealthy individuals, have expressed an interest in buying a stake in Formula One.

Mr Ecclestone is thought to have repaired the rift with the three teams yet to sign up to the so-called Concorde agreement under which the constructors get a share of the television revenues generated by Formula One. Williams, Benetton and Tyrell had been refusing to agree terms but Mr Ecclestone is thought to have offered them more money without disadvantaging the other teams who have signed up.

However, they remain deeply unhappy at theprospect of Mr Ecclestone becoming a billionaire from any flotation.

Constructors are thought to be insisting they should emerge with the bulk of the share after the float.

"They are unhappy with the set-up, full stop. They just think the balance is all wrong here. No one is disputing Bernie's contribution to raising Formula One's public image, but that does not give him the right to to come away with most of the spoils," said one observer.

Formula One is one of several Ecclestone companies connected with the sport and earns huge, though undisclosed, revenues from the 16 yearly televised races. These are set to rise dramatically with the advent of digital pay-television.

In Germany, Mr Ecclestone's company has already done a rights deal with the DF1 channel which will enable viewers to select their own camera angle from the cars, using equipment which is manufactured by another Ecclestone company, Formula One Promotions.

The prize, expected to be confirmed later this year, will be a formal pay-per-view alliance with BSkyB.

Mr Ecclestone began to exert his influence on Grand Prix racing in the late 1970s buying the now defunct Brabham team.

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