Formula One: Ecclestone Sells Rights to Formula One

Bernie Ecclestone took formula one by surprise last night by selling the sport's commercial rights to the private equity group CVC Capital Partners for a sum reputedly close to $1bn (£583m). It is a move which many believe will strengthen the sport's commercial infrastructure and improve the prospect of a deal with the five car manufacturers who are threatening to establish their own independent world championship from 2008.

A new company, Alpha Prema, will be established to administer the sport's commercial rights between CVC and Ecclestone, who will retain a shareholding through reinvestment on the part of his family's Bambino Trust. As part of the arrangement the 75-year-old entrepreneur will continue to have day-to-day, hands-on control of the business and there will be no obvious changes in the way the sport operates for the foreseeable future.

CVC, a leading private equity company with interests across Europe and Asia, has experience in the motorsport and sporting rights business through its ownership of Dorna, which administers the commercial rights of the MotoGP motorcycle series. It is also a controlling shareholder of the Automobile Association in the UK and therefore has direct links with the FIA, motorsport's governing body, whose approval must be obtained before the deal can be finalised. European Union merger clearance will also have to be secured. Dr Gerhard Gribkowsky of Bayerische Landesbank, which previously controlled formula one's commercial rights, said: "Bayerische Landesbank is pleased to sell its stake to a reputable investor with a considerable knowledge and experience in motorsport."

Meanwhile the car makers reacted diplomatically. "We look forward to entering into a constructive dialogue with Alpha Prema as we pursue our objective to further develop the sport for the benefit of all stakeholders and in particular the fans," said a statement issued jointly by Toyota, Honda, Renault, BMW and Daimler-Chrysler.

Ecclestone is confident CVC's involvement will be good for the sport. "We are delighted to have CVC as a shareholder whose long-term strategies and vision will provide the stability for teams, promoters and manufacturers. They are knowledgeable about motorsport and make an ideal partner."