The power and the darkness

profile: Bernie Ecclestone: Is the enigmatic boss of Grand Prix racing on track to float the business? Dana Rubin reports

Turning the high-speed, glamorous world of Formula One motor racing, one of the world's most-watched television sports, into a publicly-traded company should have been a natural.

As sports coverage becomes a growing staple of global broadcasting, the lure of death-defying drivers aboard 220-mph racing cars should have been irresistible to investors.

So why has there been so much scepticism over the planned flotation of Formula One by its owner, Bernie Ecclestone? Why did the Lex column in the Financial Times essentially warn that if Mr Ecclestone was selling something, then investors should be wary about buying into it?

The trouble is that Ecclestone, Formula One's autocratic chief executive, is considered a crafty negotiator, one whose carefully orchestrated, chess- like moves are the focus of intense scrutiny in the supercharged world of motor racing.

So it stands to reason that when Ecclestone, 66, sets in motion something as high profile and potentially lucrative as the public offering of one of the world's largest, most popular sporting businesses, people begin to wonder what he's got up his sleeve.

Ecclestone's insistence late last week that the flotation remains on course - "It is definitely going ahead," he declared - did little to quell the speculation and scepticism that has circulated ever since word of the possible flotation first appeared in March in the form of a newspaper leak. If the flotation was for real, then where was the prospectus? Was the deal on or off?

"It's typical behaviour for Bernie," said one former Formula One employee who asked not to be named. "If he wants to do something that's quite radical, he will say something about it, then he will withdraw from it and look to see how the land lies. That's what he does."

The usually tight-lipped Ecclestone insisted that the deal was indeed on, that no hindering conflicts with the owners of the Grand Prix race teams remained. But the owners appear to disagree. And still, despite some carefully placed newspaper stories, no-one knows for sure when the prospectus will be published.

What is it exactly that a Formula One flotation would offer? How much is Ecclestone's empire worth?

Formula One motor racing consists of 11 teams each racing two cars in 17 Grand Prix races held roughly fortnightly from March to October. It is the third most-watched TV sport after the Olympics and the soccer World Cup, drawing billions in advertising revenues.

The first leaks on a possible Formula One flotation hinted at a valuation of between pounds 3bn and pounds 5bn. Insiders close to the deal now confirm that the underwriters will be seeking a lot less - between pounds 1.5bn and pounds 2bn on a business with expected sales this year of pounds 200m and a pre-tax profit of pounds 85m.

The low end of the valuation is a very generous 30 times after-tax earnings. Is the sexy nature of Formula One enough to justify that kind of ratio?

Ecclestone is offering a new company called Formula One Holdings. According to insiders, this essentially consists of a briefcase full of contracts with more than 60 broadcasters around the world. The majority are what is known as free-to-air contracts, but three or four are with pay-per- view operators such as Canal Plus and Kirch Group.

The future offers expansion of pay-per-view income. Technology has been developed that allows viewers to watch the races by switching at will among cameras positioned on the cars and around the track. Still not known, however, is whether the potential audience is big enough to make it pay off.

Ecclestone will float up to half the company. The Federation Internationale d'Automobile (FIA) will retain 10 per cent, and the teams an undisclosed amount. Exactly how much, insiders aren't saying. "There's been a lot of speculation that the team owners will get some. It's not determined," said one. "Don't know," Ecclestone says.

Ecclestone himself, or his family, will wind up with 30 per cent of the company, with a value of close to pounds 500m if the flotation goes as planned.

Ecclestone says he doesn't need the money, either for himself or for Formula One. He also says that the flotation will lead to a restructuring away from his hands-on involvement in every aspect of the business. He says he wants to retain control over the core - running the Grand Prix circuit - as he always has, and leave the parts that deal with the increasingly lucrative area of merchandising and commercialisation to professional managers.

This is not the first time Ecclestone's mercurial strategic moves and entrepreneurial muscle have blown up a storm of speculation. People are fascinated by him, not just by his power and wealth, but also by his reputation for getting his way.

The irony is that if and when the offering takes place, it will focus a spotlight on a man who has gone to extreme lengths to keep his company - actually, a complex labyrinth of companies - out of the public eye.

Ever since the early 1970s, when he elbowed his way to the leadership of the Formula One Constructors' Association (Foca), the racing team owners' group, Ecclestone has been assembling a Byzantine network of businesses linked to Formula One, all interconnected and shrouded in secrecy. A recent article in F1 Racing magazine listed 14 companies in which Ecclestone holds directorships.

Formula One's finances have been a closely-guarded secret until now. In fact, no-one outside Ecclestone's inner circle even knows how much is handed out in prize money. All the teams sign strict confidentiality clauses saying they won't disclose the details.

Ecclestone is probably the only person who understands it all, since he's the one who has made just about every meaningful decision in international motor sport in the past quarter century. This, after all, is a man who spends most of each race inside "The Kremlin", his opulent, silver-grey motorhome parked in the race paddock. Only rarely does he talk to the media. When he does, he spends more time making jokes and playing word games than delivering straightforward answers.

A large measure of his mystique comes from the breathtaking trajectory of his journey as the son of a Suffolk trawler skipper to his position as one of the wealthiest people in Britain. As a boy, he was attracted to fast cars and the racing world. At 21 he was running his own used motorcycle and car business in Bexley, south London. It is ironic, then, that the era over which he has presided has seen cool professionalism replace much of the romantic glamour of the race track.

Ecclestone is responsible for much of that. Last year, for instance, he brought in a draconian trackside security system that keeps out not only the riff-raff, but also the groupies and flashy hangers-on who used to lend a decadent air to the race scene.

How rich, especially when you consider that Ecclestone met his current wife Slavica, a former Armani model from Croatia, when she was modelling sports clothes at the Italian Grand Prix at Monza. He spoke no Italian. She spoke no English. She learned fast. They now have two young daughters, and Ecclestone has a grown-up daughter from a previous marriage.

Ecclestone maintains that it is concern for his wife that is central to his motivation for floating Formula One. He says his shares in Formula One are actually owned by his wife, and if he goes under the metaphorical bus - if he dies - he doesn't want her to have to deal with it. "She may say she doesn't want to do this," he said. "Or say she gets married to somebody else and the guy doesn't want it. It's much better to take it out of her hands."

The flotation, he said, will secure a stable management team that would continue to oversee the company without him.