Bernie Ecclestone, Circuit Gilles Villeneuve, 2016

The seven F1 deals which made Ecclestone rich and powerful

F1 historyPosted on | Author Keith Collantine

If there was a world championship of deal-makers, you’re looking at one of the all-time greats.

Having started out as a used car and bike salesman, Bernie Ecclestone rose to the top of one of the world’s most lucrative sports.

Innumerable deals have passed through his hands in the past five decades. But these seven ultimately proved the most significant, leading him to power and riches far beyond which even he might have imagined.

1971: Brabham

Nelson Piquet, Brabham, Spa-Francorchamps, 1983
Nelson Piquet won the 1983 title in Ecclestone’s Brabham
Ecclestone’s first encounter with Formula One lasted only a few years. In 1957, aged 26, Ecclestone began promoting the career of upcoming British racer Stewart Lewis-Evans. When his friend was killed following a crash at the 1958 Moroccan Grand Prix, Ecclestone cut his ties with the sport.

But Ecclestone, who had retired from racing himself after a crash in 1953, was ultimately lured back by the glamour of racing. He negotiated Jochen Rindt’s move to Lotus in 1969. Once again disaster lay around the corner: Rindt was killed in a crash the following year.

This time Ecclestone resolved to remain within the sport. In 1971 he purchased the Brabham team off Ron Tauranac and quickly elbowed the former owner aside. Within two years Ecclestone had quit the car trade, devoting his focus entirely to Formula One.

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1971: FOCA

Taking control of Brabham was significant for two reasons. First, it led to world championship success in the early eighties with Nelson Piquet at the wheel of Gordon Murray’s elegantly-designed machines.

But more importantly for the long-term future of F1 it introduced Ecclestone to F1CA – the Formula One Constructors’ Association, later renamed FOCA. At a pivotal meeting in 1971 Ecclestone made the suggestion that instead of each team arranging their own race fees and transportation, one F1CA representative should take care of all of it. Ecclestone was that person.

Ecclestone’s deal-making nous ran rampant. He squeezed promoters for more money and better facilities. Even at this early stage he grabbed lucrative opportunities to put on races outside Europe, taking F1 to Brazil and Argentina.

1981: Television rights

Start, Osterreichring, 1982
Ecclestone’s FOCA warred with FISA in the eighties
Ecclestone’s rise to prominence did not go unchecked. The late seventies and early eighties brought him into increasingly bitter conflict with Jean-Marie Balestre, the autocratic president of FISA (now the FIA). A collaboration with former March boss and lawyer Max Mosley helped Ecclestone to repeatedly outmanoeuvre Balestre.

In early 1981 the signing of the first Concorde Agreement between the teams and the FIA brought an end to an acrimonious fight which had damaged the sport. But Balestre failed to notice Ecclestone had quietly inserted into the agreement a clause which potentially unlocked a vast new source of wealth for him.

The clause gave FOCA control of all the rights to F1 television broadcasts and all the revenue generated by them.

1984: Paddock Club

By taking control of the signage rights at F1 races (with the exception of Monaco, which remains a hold-out to this day), Ecclestone built the next pillar of his growing wealth. The solution came via Paddy McNally, who established his Allsport company to sell advertising on behalf of Ecclestone’s Formula One Management company.

This also gave Ecclestone the justification for imposing strict standards on the presentation of circuits and force them to improve their facilities.

From the mid-eighties the days of spectators being able to wander the paddocks were over – unless they’d paid top dollar prices for Paddock Club entry. F1 journalists too found their access jeopardised if Ecclestone did not like what they wrote.

1992: Concorde Agreement

Start, Adelaide, 1992
Ecclestone outfoxed the FIA to boost his bottom line in 1992
When did the teams lose their claim to the vast riches Ecclestone’s growing empire was now generating? According to the man himself “they signed away their rights in 1992”. The 1992 Concorde agreement, signed in 1990, was a double victory for Ecclestone.

First, he persuaded the teams to accept moving the management of their commercial deals from FOCA to a new company, Formula One Promotions Administration (FOPA). This was not achieved without some difficult: Frank Williams, Ken Tyrrell and McLaren’s Ron Dennis were particularly hostile. But Ecclestone persevered, and the new arrangement vitally meant the teams could no longer see how much money Ecclestone’s television deals were making.

Ecclestone’s second victory was over Balestre, whose days were numbered. While FISA had been entitled to a 23 percent share of the television money, Balestre inexplicably traded it away for a fixed few of no more than $9 million per year. This greatly boosted Ecclestone’s share of the TV money at a time when the deals were getting bigger and bigger.

Prior to the next Concorde agreement Ecclestone switched British TV rights to ITV for nine times what the BBC had paid. When the teams realised how much money they’d missed out on they became incensed. Tyrrell infamously screamed at Ecclestone for “stealing Formula One”. But even bigger rewards lay ahead.

1999-2000: EM.TV’s stake and the 100-year deal

FIA, Circuit de Catalunya, 2016
The FIA gave up control to Ecclestone
The late nineties were a particularly busy time for Ecclestone. His latest second attempt to sell F1 was frustrated by a European Union investigation which judged the sport to be in “serious infringement of EU competition rules”. Small wonder he had a triple heart bypass operation in 1999.

As part of the deal reached with the EU, Ecclestone agreed to purchase a 100-year lease on the licence to use F1 rights. In one of the most contentious of Ecclestone’s deals Mosley, now the FIA president, agreed to sell the lease for just $360 million: a sum which paled in comparison to the amounts Ecclestone was able to generate from them.

The following year saw Ecclestone conclude a deal which would add billions to his personal wealth but also set in motion events which would lead, 17 years later, to his departure from F1. A 50% stake was sold to media company EM.TV for a whopping $1.65bn.

Ecclestone retained the remaining shares and – crucially – retained control of the spot. EM.TV’s share was later taken over by another company, Kirch, which bought a further 25% in 2001 for $1 billion after taking out a loan, making Ecclestone richer still.

When Kirch became insolvent in 2002 its stake was purchased by a consortium of three banks. But when Ecclestone attempted to buy his stake back for a bargain price his move was frustrated by a name which would play an important role in his future: Gerhard Gribkowsky.

2005: CVC

When the three banks which inherited Kirch’s stake sought a buyer, Ecclestone was typically eager for it to be one which would leave him in charge of the sport. CVC did just that, keeping Ecclestone on as CEO while owning F1 for more than a decade.

The fact CVC stuck around for so long – several years longer than their typical holding period – reflects how lucrative Ecclestone’s money-making machine had become.

For Ecclestone the deal allowed him to extend his period at the helm of F1 well into his eighties. However the manner in which he achieved this came under sharp scrutiny. He was charged with bribing Gribkowsky during the CVC discussions.

Ecclestone won one court case against Constantin Medien but was told by a judge he ‘had not been reliable or truthful’. In 2014 paid to settle the charge of bribery.

Two years later CVC decided it had squeezed all it could out of Formula One and sold up to Liberty Media. This final deal brought Ecclestone’s remarkable ascent to a close. But will he be able to resist the temptation to continue his deal-making elsewhere?

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23 comments on “The seven F1 deals which made Ecclestone rich and powerful”

  1. One of the greasiest deal makers I have ever seen. I can’t say I’m sad to see him leave. Although he has done some good for the sport, I haven’t agreed with much he’s said over the last few years.

    1. I’m not sure what good he’s really done. He got the sport onto TV etc and grew the brand but I think anyone else put in the same position would have done the same.

      All sports have grown in similar ways over the years – it’s just that others have aimed for what the fans want and F1 has aimed for what whoever will pay Bernie the most wants.

    2. Agreed. He did well at the start, helped grow the brand into what it is today, but in recent years has been pretty shocking, especially with his prize money to teams, and it was time for him to leave.

    3. The huge fees he has wrung out of each circuit has also seen the cost to attend the race reach exorbitant levels. Best part of 300GBP to have a seat at european races – not to mention the extra for every meal, drink or a Ferrari hat.

    4. knoxploration
      24th January 2017, 16:53

      Ecclestone hasn’t done a single *good* thing for the sport in at least two if not three decades. He has long overstayed his welcome, and has greatly damaged F1, its reputation and the product offered to the fans with his greed, selfishness and unwillingness to embrace the modern world. He’s a dinosaur, and one I fervently hope is finally caught with his hand in the cookie jar soon. It’s high time his greed came back to haunt him — I don’t doubt for one second that he’s as evil off-track as on, so you can be pretty certain he’s shirking his financial responsibilities and getting a cheap or free ride off the tax dollars of the common man.

  2. I personally think there was another deal that happened that also bolstered BE and Max’s pocketbook. That was the orchestration of moving MS from highly contentious and illegal Benetton over to Ferrari, along with MS’s crew, in order to prop MS up as F1’s next icon post-Senna, and at the same time end the (at the time of the deal) 16 year WDC drought at Ferrari.

    Everything in F1 became geared toward that goal, with the extra hundreds of millions to Ferrari as well as veto power over the rules. A veto power that some say they ‘never used’ which I doubt, but which could also mean they didn’t have to use it as they were simply consulted first and foremost over reg changes and would approve or disapprove of them before needing to exercise the veto power.

    A controversial driver, perfect for media buzz, with teammates contracted to be subservient and never an on or off track bother due to said contract, which then meant a designer car and tires for the one rooster. Unlimited testing at their own private track, Bridgestone with a headquarters there. The extra millions upon millions to help fund it all.

    1. @robbie, I have to say, I have come across another individual who has been researching the 1994 season and has pointed out that, when you dig into what went on and the rulings that season, quite a few of the other teams and drivers on the grid were cheating.

      McLaren, for example, made no secret that, just as Benetton had “option 13” in their engine management software, McLaren also had the software code for traction control in their engine management software in 1994, with Ron defending it by saying that McLaren had taken steps to “disarm” the software (there was also McLaren’s use of a gear preselection mechanism that season which the FIA later classed as being illegal).

      1. @anon Yeah I think the joke back then had become that the FIA went to Silicon Valley to hire their best software person to police for this kind of stuff but they were told he already works for Benetton. The teams’ stance on it seemed to be yeah we have it…prove we’re using it.

        Benetton had also been penalized for skid plate wear indicating running too low and of course there’s the pit fire that revealed they had removed a valve in their refueller that shortened their refuelling by a second and a half. MS’s whack on Damon for the Championship didn’t help in quelling the media from being all over F1 for allowing a team that had so many illegalities and then the questionable hit on Damon, the Championship.

    2. Wow, you really enjoy choosing to believe everything that fits your preconceived narrative, don’t you?

  3. Great background article! Fantastic stuff @keithcollantine ! I started watching in the 90s, so half of this was unknown to me up until today.

  4. Short and concise! So many others who wrote Bernie bios and his rise to power completely overlook Jean Marie Balestre and FOCA. Power corrupts, absolute power corrupts absolutely.

  5. WilliamB (@william-brierty)
    24th January 2017, 16:22

    I hope we see more of these kind of honest reflections in the more mainstream press. The well-founded rumours of paddock pass cancellations for recalcitrant and critical journalists (as Keith has discussed the troubles of “F1 governance” has become the preferred euphemism for journalists critical of Bernie) is no longer an obstacle to a free and frank discussion of Bernie’s legacy.

    Bernie’s flagrant exploitation of the sport in the modern era especially merits being traded off against his role as a founding father of F1’s corporate and commercial spheres. The pertinent question is, had Bernie not seized on the opportunities that F1 afforded in the 1970s, would F1 have blossomed into the global leviathan it is today? Of course it would.

    Bernie has a personal wealth of $2.5-4billion. So there was an opportunity worth at least $2billion available to any commercially-minded, transactional entrepreneur who could see F1’s potential, and it was plainly apparent: F1’s profile, whilst in essence still an amateur sport at the time, was skyrocketing in the mid-1970s, aided by the legendary title fight in 1976, and by the groundwork laid by Jackie Stuart’s safety campaigns and in being the first truly commercially-minded driver. The foundations were there; all F1 needed was a deal-maker. At least F1 got Bernie Ecclestone and not Donald Trump…

    …but I don’t think that is any reason to proclaim him as a hero figure. Not when he was systematically indifferent to the plights of the smaller teams and the livelihoods of their personnel, not when his daughters’ have been the greatest net beneficiaries of his policies, not when he has driven up ticket prices and driven down fan engagement, not when he has had abject apathy towards stalwart races, young fans and free-to-air coverage. He is a self-centred dictator, and endemically disinterested in anything other than his own empowerment.

      1. Hard to argue anything you’ve said @william-brierty BE will and does get accolades for being that person who oversaw F1’s blossoming but I completely agree if it wasn’t him someone else would have done it, likely in a much less dictatorial way though. I know to that BE would argue that no, it took dictatorship to do it, but I disagree. It took dictatorship for him to get what HE wanted.

        1. WilliamB (@william-brierty)
          24th January 2017, 18:19

          @robbie – I’m not sure it was Bernie’s dictatorial style per se, I think Carey is going to have to been something of a dictator if he is going to keep colourful lobbyists like Toto Wolff and Sergio Marchionne out of the way of the proper direction of change. I think the problem with Bernie is he viewed F1 as only a means to his own empowerment. The fact that he and Flavio ran Queens Park Rangers for five years rather suggests that he didn’t care what direction the money was coming from, but that F1 was the only sport where he had the portfolio, the reputation and the contacts.

          I don’t doubt that there was a time when he had a true affection for the sport, but increasingly he fell in love with the power the sport gave him, and subsequently he became less and less receptive to reason and rationality. For the past fifteen years he has not been actively trying to improve the sport, and I don’t really see how he could argue with that.

          We are starting to get a trickle of reflective pieces – AUTOSPORT looked to take the bull by horns, but have rather overlooked his wantonly disruptive influence in recent years, and have instead produced a fairly flimsy piece.

  6. While not necessarily an F1 deal, I’d say that this one:

    “Ecclestone won one court case against Constantin Medien but was told by a judge he ‘had not been reliable or truthful’. In 2014 paid to settle the charge of bribery.”

    Is probably the best deal of them all. Imagine settling a charge of bribery with another bribe! Utter madness!

    Also, after reading this article, I really feel sorry for poor Ken Tyrrell. I know he eventually sold up to BAR due to ill health, but the stress of being an ever struggling independent entrant at this time can only have contributed to that.

  7. I love the sentence:

    While FISA had been entitled to a 23 percent share of the television money, Balestre inexplicably traded it away for a fixed few of no more than $9 million per year

    Hands up those who think we should tag on the end ” and probably a big fat illegal backhander.”?

  8. Good for Bernie, good for CVC, but a progression of diminishing returns for the sport of F1. It remains to be seen whether Liberty is left holding the bag or they can make something of F1.

  9. This hapening now is no coincidance. Just wait a few months and he will be somewere on the Trump administration, secretary of Sport…

  10. Anyone have more leads on Villeneuve Jr. saying that “[Mansell going to CART] annoyed Bernie and I think he was very instrumental in separating IndyCar so they would have separate championships. That’s why Indy car racing died – because it was starting to damage Formula 1.” because that sounds like too big an intrigue to keep quiet for so long.

    here’s the original article: http://www.motorsport.com/indycar/news/ecclestone-instrumental-in-splitting-indycar-says-villeneuve-866081/

  11. Maybe now i’ll be able to purchase a live stream of a race for a reasonable and fair price without being saddled with a contract ans subscription for things that I do not want. I know, wishful thinking.

  12. Why are people not so understanding when writing about Sepp Blatter and how he has built soccer into a global franchise ? I am missing something ? Bernie Ecclestone has been getting away with murder for 30 years but the run is over. Let’s go back to racing.

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