Murdoch v Ecclestone: the fight to win control of Formula One racing

To judge by the denials, nobody is interested in buying control of Formula One motor racing, even though it is one of the world's most lucrative sporting circuses.

But in reality, a battle is brewing between two of the world's richest – and most ruthless – businessmen to seize the wheel of a multibillion-pound industry.

First there is Bernie Ecclestone, who still exerts day-to-day control over Formula One despite selling more than half the company he created to the German media group Kirch a year ago. Buying it back for a fraction of what he got for it would be the sort of deal he thrives on.

Then there is Rupert Murdoch. His News Corporation media conglomerate is owed £1bn by Kirch, which is having to sell the stake to tackle its parlous financial position. By helping out Kirch, the Sun king would be helping himself – always his first instinct.

Both are denying their interest – but nobody is fooled.

The signs have been there for days as the problems grew for Kirch, which is being hounded by its bankers to reduce its €6.4bn (£3.9bn) debt.

At a private lunch last week, Max Mosley, president of the FIA, motor racing's governing body, told those present that Mr Ecclestone had no interest in buying back the £800m stake in Formula One that he had sold to Kirch little more than a year ago. "That told us that Bernie definitely was interested," said one diner.

Yesterday Mr Ecclestone reiterated his lack of interest. "I have not been offered the shares ... and I have not made any offer," he wrote in a fax. But Mr Mosley's lunch guest said: "When Bernie said he wasn't interested, we took that to mean he certainly was."

And if you believe that Mr Ecclestone's lack of interest means the opposite, then what should one make of the comment yesterday afternoon from sources inside News Corporation? Apparently Mr Murdoch isn't interested in buying the stake either; he just wants to recoup the investment made last year in Kirch's Premiere pay-TV company. The source said: "At the moment, News Corp just wants its money back." And later, the company said officially: "News Corp has made a firm and final decision not to make any further investment in either Premiere or the Kirch Group." The money in question is in effect a loan of €1.3bn (£800m) plus interest, which becomes payable in October if Kirch has not by then floated its loss-making Premiere business – in which News Corp has a 22.6 per cent stake. Kirch simply doesn't have that sort of money, and has zero chance of being able to float the company.

But it could offer its stake in SLEC, the company that owns the enormously valuable Formula One broadcasting and marketing rights. Kirch paid about $1.6bn (£1bn) for that stake a year ago. Now, forced into a sale, it might be obliged to offer it for far less simply to appease the twin demands of Mr Murdoch and its creditors among Germany's banks. And of course if Mr Murdoch accepted those shares, it wouldn't count as an investment in Kirch or Premiere.

Mr Ecclestone's family (in the form of his 6ft 2in ex-model wife, Slavica, who is 11in taller than him) officially owns 42 per cent of SLEC, though Mr Ecclestone actually controls it from day to day.

The irony is that for all three players, the sale of Kirch's stake in Formula One to Mr Murdoch would be the least satisfactory outcome.

The sale has been forced because 75-year-old Leo Kirch, another hugely influential media mogul who heads the Kirch Gruppe, has been told by his bankers to cut his companies' debts.

Neither Mr Ecclestone nor Mr Murdoch is a pushover. And both have something to prove to the other. One industry insider, who insisted on anonymity, said yesterday: "Never forget about Bernie that he started off as a car trader. He loves Formula One, loves doing deals, loves being the powerbroker. He loves the whole mentality of it. People worry that he wants to take it all with him – but it's just that he doesn't want to see all that he's worked for taken away from him."

Mr Ecclestone has a legendary ability to spot weakness on the part of opponents and enemies – and friends. His gift of £1m to the Labour Party left Tony Blair critically weakened in its plans to ban tobacco advertising (a primary sponsor of Formula One) during its first term. After the public outcry, Labour handed the money back; yet a ban on tobacco sponsorship of Formula One is many years away because of a special exemption. From Mr Ecclestone's point of view, it turned out to be a rather valuable short-term loan.

His deal-making ability is what people respect. He built up Formula One from the ground, arriving 50 years ago when gentleman drivers were the rule; he began driving in Formula Three, but an accident ended his career on the track. He turned to management and excelled, buying the Connaught Formula One team in 1958. That gave him a seat on the Formula One Constructors Association (FOCA) board; he organised it so that the race teams, instead of the race tracks, held the whip hand.

Now he is FOCA's president, and the sport is worth $1bn (£625m) annually, seen in 200 countries by 350 million people who lap up 27,000 hours of Grand Prix TV.

Working out how much he is worth is almost impossible, because much of it lies in offshore trusts (owned, again, by his wife). But it surely runs into hundreds of millions.

For Mr Murdoch, getting his hands on Formula One could prove a blessing. He is 71 next month, a recent father, but last year was a frustrating one; in October he narrowly lost in a $20bn (£12.5bn) bid for the US satellite TV company DirecTV to Echostar, an American rival.

News Corp remains one of the largest entertainment companies in the world, with powerful film studios cranking out content for a variety of broadcast, cable and satellite channels across America, Europe and Asia. Adding Formula One to the mix, as he surely would given the chance, could strengthen his stranglehold on content around the world. One industry observer said: "There's no question that Murdoch would like to get his hands on SLEC.

"But Bernie is far too shrewd to have done a deal without strings attached." Indeed, he appears to have a veto on the buyer of any SLEC shares. For Mr Ecclestone, the collapse of Kirch into bankruptcy (which remains an outside chance) might be the best of all worlds: its shares would in effect revert to him, and he would have both the company and the money. Seeing Mr Murdoch buy them would be a bitter pill to swallow.

The irony is that both Mr Murdoch and Mr Ecclestone have Mr Kirch over a barrel – though different ones. All Mr Kirch can hope for is that at some stage in the bidding, the desire of each to keep the other out will force them to start bidding properly.

As for Mr Ecclestone, "I think he'll die in harness," says another industry observer. "He'll be in charge for another five years – unless God decides otherwise. But of course with Bernie around, there's some dispute there about exactly who is God."

ON THE GRID: THE BILLIONAIRES BIDDING FOR GRAND PRIX RIGHTS

BERNIE ECCLESTONE

Job: Seventy-one-year-old former Formula One "supremo", "ringmaster" and "emperor", now seeking to buy back control at a fraction of the price for which he soild it.

Road to success: After a chemical engineering degree at Woolwich Polytechnic in south-east London, he set up a car and motorcycle dealership in Bexley. Established the Brabham racing team, and tried his hand at driving before a crash forced him off the track.

Horsepower: Personal fortune, £3.2bn. Sold a 25 per cent stake in Formula One to Kirch and its German partner EM.TV last year for £700m. The year before, sold 50 per cent of his holding company, SLEC, to EM.TV for £1.1bn. Assets include private jet and super yacht.

High-octane connections: Popular in Labour circles when he gave them £1m before the 1997 election – just weeks before the Government announced that Formula One would be exempt from a ban on tobacco sponsorship. Resulting furore soured the friendship to the extent that Labour sent back the cheque.

Family: Second wife, Croatian-born Slavica. They have two daughters, Tamara and Petra.

Ecclestone on Ecclestone: "If you ask anyone in Formula One who does business with me, you will know that the sport is safe with me. I have enough money not to be corrupt."

A critic's view: "He is a workaholic and always has been. He has become more family-orientated since his children were born, but he still puts in six days a week. For him, a good business deal is like good sex." Ecclestone biographer Terry Lovell.

RUPERT MURDOCH

Job: Seventy-year-old chairman and chief executive of the global media empire News Corp.

Road to success: Started by inheriting the Adelaide News from his father and over 30 years expanded from small-town Australia to become world's most powerful media mogul.

Horsepower: Mega-rich. The Murdoch family's holdings in News Corp are worth an estimated £4bn, but the total value of News Corp's interests has been put at £45bn.

High-octane connections: Was famously close to Margaret Thatcher, and was pictured entering Downing Street after Tony Blair took power. Counts members of the Bush administration among his circle.

Family: Married to his third wife, Wendi Deng, and proved his continuing virility last year when the couple had a daughter. The whole family was officially said to be "overjoyed" about the new arrival but a new rival for the succession increased tensions within the clan. His ex-wife Anna gave an angry interview about the divorce, and Matthew Freud, married to Mr Murdoch's daughter Elisabeth, attacked the tycoon in print.

Murdoch on Murdoch: "[My] responsibility is to tell the truth. To spread the truth as far as you can and all the facts you can, as objectively and as fairly as you can," to American TV.

A critic's view: "I'd shoot the bastard. No man is more responsible for polluting the press and, in turn, polluting political life," said the late playwright Dennis Potter, who named his pancreatic tumour "Rupert".