With his victory court in last week, Bernie Ecclestone might have won the battle in a British civil suit, but the ruling may cost him the legal war.
The diminutive Formula One Management president and CEO walked away from a $140-million (U.S.) lawsuit filed by Constantin Medien, which claimed it lost truckloads of cash when its stake in the sport was sold to private equity company CVC Partners in 2005. The German media group contended Ecclestone undervalued F1 when the deal was completed with CVC.
Central to the case was a $44-million payment to German banker Gerhard Gribkowsky, who sold Bayern Landesbank's share of the sport to CVC. In 2012, Gribkowsky was convicted in a German court of accepting a bribe from Ecclestone and is now serving an eight-and-a-half-year sentence. Although the British court ruled in Ecclestone's favour because it did not find a direct link between the payment and the undervaluing of the shares, the judge presiding over the case had some tough things to say in his written decision.
“The payments were a bribe,” Justice Guy Newey wrote. “They were made because Mr. Ecclestone had entered into a corrupt agreement with Dr. Gribkowsky on May, 2005, under which Dr. Gribkowsky was to be rewarded for facilitating the sale of BLB's shares in the F1 Group to a buyer acceptable to Mr. Ecclestone.
“Mr Ecclestone's aim was to be rid of the banks. He was strongly averse to their involvement in the F1 Group and was keen that their shares should be transferred to someone more congenial to him.”
The F1 boss has alleged that Gribkowsky extorted the cash payment by threatening to make false claims to British tax authorities related to the Ecclestone family trust. That position is thought to be the defence he'll use in his German bribery trial set to begin in April.
Justice Newey fired a broadside, insisting that even “making allowances for the lapse of time and Mr Ecclestone's age, I am afraid that I find it impossible to regard him as a reliable or truthful witness.”
Ecclestone has stepped down from his director seat at Delta Topco, the holding company that runs F1 for its investors, including CVC, and he can no longer sign contracts for the sport. The F1 boss denied rumours last week that Justin King would replace him at the head of Formula One Management.
King is the outgoing chief executive of British grocery giant Sainsbury's. Court cases and grocers aside, the biggest threat to Ecclestone's reign may be from a completely different source, after news earlier this month had Liberty Media chairman John Malone discussing the purchase of CVC Capital Partners' 35-per-cent share of the sport. Should that happen, Ecclestone's approach of tightly controlling everything F1 may clash with a strategy that would push into areas F1 hasn't really touched or exploited, such as social media.
Since it took control of the sport in 2006, CVC has made about $3.3-billion from its investment in F1. That amount represents a 165-per-cent return on the original investment, although more than two-thirds of its take from the sport came from selling shares in F1 to other investors. CVC now holds a 35-per-cent stake in F1, which is valued somewhere around $4 billion.
Under CVC's watch and Ecclestone's guidance, F1 continued to move into new markets and increase its take from sanctioning fees. New markets included UAE, Singapore, India and South Korea, although the latter two have been dropped from the schedule. This helped increase profits and sweeten the prize money pot for the teams, but F1 remains in crisis as almost all the teams except the top four — Ferrari, McLaren, Mercedes and Red Bull — face an uncertain financial future.
By the numbers
F1 hopes to increase the cars on the grid to 24 next season with an application process already under way to find the lucky entrant. The 12th spot was left open when the HRT outfit folded following the 2012 season after the financially challenged team could not find a buyer.
HRT was awarded its place in the paddock for 2010, after an application process that chose three teams out of 15 prospective entrants. The other two were Virgin Racing (now Marussia) and USF1. Lotus Racing (now Caterham) got a spot later when BMW announced it would exit the sport.
Although USF1 was full of bluster about its operations, it seemed to be a figment of the founders' imaginations from the start. It folded officially soon after the start of the 2010 season without ever building a car. In addition to the three teams in 2010, Super Aguri entered the sport in 2006, but ceased operations four races into the 2008 season.
In the past seven years, being awarded an F1 franchise hasn't exactly been a safe investment. Only two of the four teams that have made it to a grand prix continue to operate (Caterham and Marussia), giving new teams a 50-50 chance of survival.
Quote of the week
Nine years ago, Ecclestone compared women with household appliances when asked about then-IndyCar driver Danica Patrick's fourth-place performance at the 2005 Indianapolis 500. In 2009, he praised Adolf Hitler as someone who was “able to get things done.” Add the gay, lesbian, bisexual and transgender community to the list of groups who may not be pleased with Ecclestone after he came out in support of Russian president Vladimir Putin's anti-gay stance in an interview with CNN last week.
“He hasn't said he doesn't agree [with homosexuality] just that he doesn't want these things publicized to an audience under the age of 18,” Ecclestone said. “I completely agree with those sentiments and if you took a world census you'd find 90 per cent of the world agree with it as well. I've great admiration for him and his courage to say what he says. It may upset a few people but that's how the world is. It's how he sees [the world] and I think he's completely right.”
Tony Stewart may have inadvertently painted his driver Danica Patrick into a corner last week, and things can only turn out badly for her now. Speaking to the Performance Racing Network, Stewart challenged NASCAR legend Richard Petty to back up his criticism of Patrick by racing her in equal cars. Stewart owns the team where Patrick races.
The 200 race winner and seven-time NASCAR champion Petty said earlier this month that Patrick would only win a Sprint Cup race “if everybody else stayed home.” But he also put his money where his mouth is on Friday and accepted Stewart's challenge in a Fox and Friends interview.
Petty's positive response to Stewart's gauntlet puts Patrick, 31, in a lose-lose situation. If she beats Petty, it will be seen as a hollow victory over a 76-year-old who hasn't driven competitively in a quarter century. If she loses a match race to someone pushing 80, her already shaky credibility will plunge to about zero.
The last word
NASCAR fans watching the marathon Daytona 500 may have noticed a new In the Driver's Seat segment on TSN featuring Canadian veteran racer Ron Fellows and Canadian Tire vice-president of automotive, Andrew Davies. Although the spots hosted by Kate Beirness were geared more toward promoting Fellows' sponsor Canadian Tire, fans should start calling, sending e-mails, tweets and Facebook messages to urge TSN to expand the show and include commentary and analysis of the NASCAR race at hand.
Fellows is arguably this country's most successful driver in cars with a roof and his ability to offer penetrating insight into racing is unmatched in Canada. TSN would be well-advised to use his encyclopedic knowledge and wide-ranging racing experience to enhance its coverage of NASCAR events. Fellows has been In the Driver's Seat too many times to let this opportunity go to waste.
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