12/05/2013
NEWS STORY
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For the past year a battle has been brewing behind the scenes in Formula One. It pitted two of the sport’s titans against each other: its boss Bernie Ecclestone and Daimler, the German car manufacturer which owns the Mercedes F1 team.
The dispute was about Ecclestone's involvement in a bribery scandal and control over F1 which he has handed to Mercedes' main rivals. The stand-off became so severe that Mercedes was reportedly considering pulling out of F1. However, at last both sides seem to have made peace as Ecclestone has appointed Daimler's Chief Financial Officer (CFO) to the board of F1. Interestingly, he joined on 1 January this year but Ecclestone, Mercedes and Daimler have kept it quiet and it has only now come to light thanks to a report in the Sunday Telegraph by Pitpass' business editor Christian Sylt.
Documents released by Daimler earlier this week show that its CFO Bodo Uebber became a director of F1's Jersey-based parent company Delta Topco on 1 January 2013. He joins a board of over 15 directors including Ecclestone, Ferrari's chairman Luca di Montezemolo and F1's non-executive chairman Peter Brabeck-Letmathe, who is also chairman of food company Nestle.
The catalyst for the disagreement between Ecclestone and Daimler was the conviction in June 2012 of former banker Gerhard Gribkowsky. He was found guilty of receiving a £28.6m ($44m) bribe from Ecclestone in return for steering the sale of F1 to current owner, the private equity firm CVC, in 2006. Ecclestone denies that the payment was a bribe and claims that Gribkowsky threatened to tip off the Inland Revenue with false details about his tax affairs if he didn't pay the money.
Mercedes was reportedly planning to band together with fellow teams and sponsors to demand that Ecclestone steps down if he is prosecuted. “We would not wait for a months-long process, but would act,” a Mercedes source was quoted as saying in June. It was reported that the alternative for Mercedes would be pulling out of F1 because its strict anti-corruption statutes would prevent it from dealing with Ecclestone.
The stand-off between Daimler and Ecclestone stepped up a gear when it came to light that Mercedes' main rivals, Ferrari, McLaren and Red Bull Racing, are given favourable treatment in new commercial agreements which came into force this year.
Sylt revealed that the three are what is known as the Constructors' Championship Bonus (CCB) teams. According to the prospectus for the planned flotation of F1, a dedicated prize fund of at least $100m has been allocated to “each of the top three teams determined primarily on events won in the four seasons prior to 2012.” Mercedes comes fourth under this methodology even though it won the F1 championship in 2009, albeit as Brawn.
Mercedes isn't just missing out on money but power too. Consent from the top three teams is required if Ecclestone wants to increase the F1 calendar beyond its current limit of 20 races or hold more than 60% of them outside Europe, the United States or Canada. It currently stands at 52.6%.
The final straw for Mercedes was that senior figures from Ferrari, McLaren and Red Bull Racing were given board seats on Delta Topco whilst it was sidelined. This reportedly fuelled internal calls for Mercedes to quit F1 but Uebber's appointment heads that off.
Uebber has been seen at F1 races with Mercedes and in 2009, in the midst of the global economic crisis, he defended the manufacturer's involvement with the sport. “We look into our Formula One engagement every year. But we wouldn't save a cent this year if we quit Formula One now because we have long-term contracts,” he said.
It is understood that the improvement in the relationship between Mercedes and Ecclestone was driven by the appointment to the team of three-time F1 champion Niki Lauda who became its non-executive chairman in September last year. He is one of Ecclestone's closest friends having driven for him when the F1 boss ran the Brabham team in the late 1970s. Lauda was followed in January by Toto Wolff, another Ecclestone confidante who is now Mercedes' head of motorsport. Together, they hold an estimated 40% of the team with the remainder owned by Daimler. It may well be thanks to them that the manufacturer at last has some influence over the board of F1.