Some thoughts on Formula One and Eddie George

`Until we see the elusive prospectus it is impossible to make any kind of investment judgement on this float. But you have to wonder about a company whose rights of ownership and worth are as fluid as they appear to be'

Wouldn't it be nice to have some real business stories to write about for a change, rather than all those public policy issues that New Labour with its hectic schedule of announcements is forcing on to the business pages day in day out?

I'm being flippant, of course, but actually there's only been one business story this week entirely divorced from the goings on at numbers 10 and 11 Downing Street deserving of more than passing interest - the flotation, or perhaps non-flotation, of Bernie Ecclestone's Formula One.

On the face of it, this is a share issue to kill for - fast cars, glamour, exotic locations, a monopoly hold on the sport, the prospect of huge pay- per-view TV revenues, merchandising, famous names, powerful egos. It is hard to imagine a stock market flotation more guaranteed to capture the City's imagination, and like BSkyB before it, it should be roaring away from the starting grid with the acceleration of a Williams or McLaren.

Unfortunately for Salomon, the sponsoring investment bank, this is also a flotation not without its problems. The most obvious of these is the question of who actually owns Formula One. Is it Mr Ecclestone, the mercurial facilitator of this extraordinary sport, the FIA, the sport's governing body, or the teams, without which there would be no sport at all.

As far as Mr Ecclestone is concerned, there is no room for doubt; he owns it lock stock and barrel and to the extent that the teams are cut in on the float, it is in his gift. Our story earlier this week that the teams were threatening to scupper the float unless given a bigger share of the action was dismissed by Mr Ecclestone as, "irrelevant", and then rather less eloquently as "crap". Well maybe, but that is not what Williams and McLaren think and until they sign the Concorde agreement on how the TV rights are carved up, it is hard to see how Salomon can issue a prospectus.

In other words, it is they, not Mr Ecclestone, who hold the whip hand in all this.

Until we see that elusive prospectus it is impossible to make any kind of investment judgement on this float. But you have to wonder about a company whose rights of ownership and worth are as fluid as they appear to be. Take merchandising. In theory it's worth a packet, but it is not going to be up to much without the teams and their drivers, most of whom are taking their own independent advice on how best to exploit these rights in their own interests.

Furthermore, the prospective ban on tobacco advertising and sponsorship in Britain and elsewhere poses a very real threat to the economics of the sport. The gap in revenue for the teams is going to have to be plugged in some way or other.

All these difficulties can no doubt be overcome. Certainly that is what Mr Ecclestone will be telling the massed ranks of City media analysts and underwriters flown out to Barcelona at Formula One's expense to watch the Spanish Grand Prix this weekend. But he'll probably have to cede a rather greater share of the cake to Williams and others to get the float away. Ultimately, it may not be possible.

Back to public policy, I'm afraid. Wake up Mr Mandelson. Your troops are out of control - witness the whispering campaign to destabilise and undermine poor old Eddie George, Governor of the Bank of England. Lamentably, I have not been on the receiving end of this foolish and ill considered attempt at spin doctory. However, this does at least allow me to speculate on the source of it all.

Just to recap, Eddie hit the roof, as he is sometimes prone to, on hearing that the new Chancellor, Gordon Brown, was stripping the Bank of England of its supervisory powers. On this occasion he was more than usually justified, for the announcement was sprung on him without warning after the Chancellor had pointedly said that reform of City regulation could wait for another time. Was this a deliberate attempt to push Eddie into resignation, so the Government could install its own man, Gavyn Davies of Goldman Sachs, without having to wait until July next year, when Eddie's five-year term of office comes to an end?

Probably not, is the answer, for even a Government as filled with crusading zeal as this one couldn't have been so stupidly arrogant. As we have already observed in these columns, the new Government needs the resignation of the Governor of the Bank of England in its first month of office like a hole in the head. It would both undermine the credibility of the reforms and provide a focus for City opposition. So who was the Government "source" who told the FT, as near as damn it, that this was the purpose, that they wanted Eddie out, and that he had "played into our hands" by cutting up rough about it all?

Gordon Brown? Surely not. And certainly not the Treasury press office, says an indignant Jill Rutter, press secretary. How about Alistair Darling, Financial Secretary, then? Just about possible, but then again why should he want to ruffle feathers when the task of selling all this to the City is his. Or Charlie Wheelan, the Chancellor's personal press secretary? Absolutely not. I'm furious about it all, he says. Er, Ed Balls then, special adviser to Gordon Brown and the man credited with dreaming up the supervision policy? Possible but unlikely. What about Sue Nye, wife to Gavyn Davies, who just happens to work for Mr Brown? Come, come. But then all sorts of things go through your mind at times like these, as Eddie George might remark.

Whoever the source, whether one of these or another part of the Government entirely, it was a silly thing to have done. Far from playing into the hands of Eddie George's enemies, the affair has rather had the opposite effect, strengthening his resolve to stay and cementing his many supporters. Eddie has been despicably treated, was the general view in the City. He's a terrific fellow and should be given a second term, Mr Brown's new friend, Martin Taylor, chief executive of Barclays Bank, will be telling the Chancellor. Others are saying, you can't appoint Gavyn now. He'll be seen as your stooge. Only Eddie will do as a truly independent Governor. And so on and so forth.

Well actually they can, and probably still will appoint Mr Davies, initially as deputy Governor, then eventually as Governor. Provided the other appointments to the Bank's new monetary committee, expected to be announced any day now, are sensible ones, there should still be no credibility problems with the markets, notwithstanding this week's fracas.

But whichever way you look at it, the Government came perilously close to stepping on a nasty banana skin there. Mr Mandelson will be hoping everyone has learnt from the experience.

PROMOTED VIDEO
Arts and Entertainment
From Mean Girls to Mamet: Lindsay Lohan
theatre
Sport
Nathaniel Clyne (No 2) drives home his side's second goal past Arsenal’s David Ospina at the Emirates
footballArsenal 1 Southampton 2: Arsène Wenger pays the price for picking reserve side in Capital One Cup
News
Mike Tyson has led an appalling and sad life, but are we not a country that gives second chances?
peopleFormer boxer 'watched over' crash victim until ambulance arrived
Arts and Entertainment
Geena Davis, founder and chair of the Geena Davis Institute on Gender in Media
tv
News
i100
Travel
travelGallery And yes, it is indoors
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
tech
Arts and Entertainment
The Tiger Who Came To Tea
booksJudith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed'
News
i100
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
News
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

IT Project manager - Web E-commerce

£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Syria air strikes: ‘Peace President’ Obama had to take stronger action against Isis after beheadings

Robert Fisk on Syria air strikes

‘Peace President’ Obama had to take stronger action against Isis after beheadings
Will Lindsay Lohan's West End debut be a turnaround moment for her career?

Lindsay Lohan's West End debut

Will this be a turnaround moment for her career?
'The Crocodile Under the Bed': Judith Kerr's follow-up to 'The Tiger Who Came to Tea'

The follow-up to 'The Tiger Who Came to Tea'

Judith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed' - which has taken 46 years to get into print
BBC Television Centre: A nostalgic wander through the sets, studios and ghosts of programmes past

BBC Television Centre

A nostalgic wander through the sets, studios and ghosts of programmes past
Lonesome George: Custody battle in Galapagos over tortoise remains

My George!

Custody battle in Galapagos over tortoise remains
10 best rucksacks for backpackers

Pack up your troubles: 10 best rucksacks for backpackers

Off on an intrepid trip? Experts from student trip specialists Real Gap and Quest Overseas recommend luggage for travellers on the move
Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world