08/03/2009
NEWS STORY
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Bernie Ecclestone has been called a lot of things by the media but generous is one term which isn't used that often to describe the billionaire F1 boss. Recent events paint a very different picture.
"I tried to help with the management buy-out. They should have taken what I offered. It was a very good offer for everybody concerned," Ecclestone said last month about his efforts to help save the former Honda team. According to some sources a £100m offer from Ecclestone was snubbed by the bosses of the team now known as Brawn GP.
Others have been less hesitant as revealed by the news earlier this year that Williams accepted a prize money advance of £14.5m from Ecclestone which has helped the team to stay on track. It's not only the teams which have benefited from Bernie's benevolence.
The Canadian GP promoter reportedly missed payments to F1's rightsholder for three years but Bernie let the race stay on the calendar regardless until he finally snapped last year. Then there's the promoter of the German GP at Hockeneheim which lost £4.6m ($6.6m) last year and is now looking for bail outs to continue hosting the race. "We'll look after them," Ecclestone said earlier this week. Whatever next - Bernie lending money to keep the British GP on the calendar? Don't hold your breath for that though.
But this isn't being pointed out for the purpose of conducting an armchair character analysis of Ecclestone. Pitpass hears that F1's revenue is likely to take a hit this year and apparently the powers that be are even speaking out about it. Of course Pitpass will bring readers this news as it breaks but in the meantime it raises the question of whether Ecclestone can keep up his benevolence and, more importantly, what would happen if he wasn't able to continue handing out the cash. The conclusion is pretty surprising.
Brawn GP has been able to get going without Bernie's £100m but time will tell how long it lasts. And it isn't possible to say whether Williams would have hit the wall without Bernie's advance since the Grove-based team took the money with open arms.
However, we mustn't forget that Bernie doesn't own F1's rightsholder - he has just 5.3% of it. The majority is in the hands of finance firm CVC and their main aim is ensuring that the company has enough money coming in to pay the £185m ($260m) annual repayments on the loan it got out to buy F1. So what revenue would CVC actually lose if Williams went under or if Renault, Toyota or any of the other teams followed it? The answer is nothing.
F1's teams directly give no revenue to F1's rightsholder but they get 50% of its profit amounting to a whopping £354m ($500m) annually. True, there would be no F1 if it wasn't for all the teams going racing but that same argument applies to the circuits. After all, if there are no circuits to host Grand Prix that is just as bad as having no teams to race. But whilst the teams get 50% of F1's profits despite providing no money to the rightsholder, the circuits get no share in the profits even though they supply a third of F1's revenue.
It's little wonder that Canada and France have left F1's calendar this year and although Abu Dhabi has joined, it has not been a direct replacement since this would take several years to arrange. You wouldn't believe it given the blanket media coverage about Honda's pull out from F1 but in the last 12 months F1 has lost more Grands Prix than teams. Given that they are F1's biggest cash cow they may need more than a bit of generosity.