Formula One: Ecclestone's Grip Loosens As Banks Grab the Wheel

Bernie Ecclestone's control of the formula one business has been significantly diluted as a result of the settlement he reached on Wednesday with the three banks which own 75% of his holding company.

The full extent of the deal earlier this week came to light yesterday. Bayerische Landesbank, JP Morgan and Lehman Brothers had brought a court action to force Ecclestone to give them greater operational control of SLEC Holdings and its subsidiaries in order to reflect more accurately their majority shareholding in the business they inherited when the Kirch media group went bankrupt. SLEC controls the estimated £240m commercial rights income generated annually by the F1 world championship.

"Speed Investments, as majority owner of SLEC, has regained the influence that corresponds to the shareholding structure with this deal," said the Bayern LB board director Gerhard Gribkowsky, who is also chairman of SLEC. "Speed will use this influence on the operating level in a constructive and responsible manner and in the interest of all parties."

As things stand Ecclestone's regime has guaranteed income streams from formula one only until the end of 2007 when the current Concorde agreement, the commercial and sporting protocol which governs the formula one business, expires.

"It's difficult to know precisely what will happen now," said one well-placed City banker yesterday. "It is possible that the banks will eventually want to sell the business, but whether they end up selling to the car manufacturers, who are currently operating under the GPWC banner, or after a period of operational stability, either get a stock market listing or sell it to one of the media companies, remains to be seen."

Ecclestone attempted to prolong his influence on the commercial side of the sport by concluding a deal last month with Ferrari. This guaranteed the Italian team some $100m (£54m) as a one-off payment to prevent them committing to the breakaway series planned by the car makers and supported by the other nine teams. The split is threatened from 2008 unless a better commercial deal is offered to all grand prix competitors. Currently the 10 teams share 47% of an estimated $250m television revenue, but only around 23% of what they describe as the "identifiable commercial rights income".

Ferrari apart, the teams are infuriated that they receive no share in the revenue from either trackside advertising or corporate entertaining, both of which are run by the Geneva-based Allsport Management.

Over the past few months Ecclestone has been busy consolidating his long-term contracts with the television companies and race promoters beyond 2008 in a bid to see off a rival championship.

However, if the banks do now have a firm operational grip on Ecclestone's companies, they will have control those rights through their subsidiary contracts with Formula One Administration and Formula One Management, so any negotiating advantage over GPWC achieved by signing up for those races is now purely academic if Ecclestone is no longer in the driving seat.