F ormula One is pondering, with mixed opinion, the story that Rupert Murdoch is in the running to purchase the commercial arm of the sport.
Last week it was suggested the world's richest man, Mexico's Carlos Slim, might team up with News Corporation to bid. Now the story is that Exor -- the Agnelli family holding company -- with shareholdings in Fiat and Ferrari, could be part of the proposed Murdoch takeover.
There are four protagonists to be considered in this tale, and there's even a villain, he comes in later. It gets complicated so you have to pay close attention. There are the current owners -- Bernie Ecclestone/CVC Capital partners; the proposed purchasers -- possibly Murdoch; the governing body, The FIA; and the Formula One Teams' Association, (FOTA).
Bernie Ecclestone's name is synonymous with F1. He's been involved in the sport for over 50 years. As a driver in 1958, then as a manager and owner of Brabham and for the last 24 years as F1's ringmaster, who over time sold, controlled and re-sold the commercial rights to F1 through a company called SLEC, an acronym of Slavica Ecclestone, his ex-wife.
Delta Topco is not a name you would immediately associate with F1. It is in fact the umbrella company for the 'Formula One Group', which controls almost everything to do with F1, from the broadcasting rights down to the brand of champagne used in the exclusive Paddock Club. But the main company controls the media rights, Formula One Management or FOM.
Delta Topco is owned by the private equity group, CVC Capital Partners (70 per cent), and JP Morgan (20 per cent). Ecclestone's family trust, Bambino holdings, owns most of the remainder.
So how did F1 grow into the colossus it is today? Back in 1974 the F1 teams negotiated with the FIA for a larger slice of the commercial rights pie. Ecclestone was at the forefront of that battle and in 1981, in what is known as the Concorde Agreement, the teams were granted the TV rights, then not very valuable. Later, probably recognising where the real money lay, Ecclestone set up Formula One Management (FOM) and took control of this side of F1.
In 1993, Max Mosley became president of the FIA. In 1995, the TV rights were awarded to Ecclestone's FOM for 14 years. In 2001, when the EU demanded that the FIA separate its commercial side from its governing side, Mosley awarded FOM the broadcasting and commercial rights for, wait for it, 100 years. In 2009, Jean Todt succeeded Mosley as FIA president. Todt is threatening to renegotiate this arrangement in favour of a more equitable deal. Needless to say there's no love lost between Ecclestone and Todt.
The sixth Concorde Agreement comes up for renewal at the end of next year. The teams will be demanding a fairer share of the revenues from these rights, which have grown exponentially.
But before we look forward to a future buyer we have to go back. In 2001, SLEC sold 58 per cent of its company to the German media giant Kirch for $1.8 billion. Kirch subsequently went bankrupt. Ironically, Murdoch used to have a shareholding in its subsidiary, Kirch Pay TV.
Three banks that helped fund Kirch's purchase were BayernLB, JP Morgan and Lehman Brothers. Together they formed Speed Investments as they found themselves the unwitting owners of 75 per cent of SLEC.
And here lies the rub. In 2005, a risk manager of BayernLB, Dr Gerhard Gribkowsky, led the negotiations to sell the state-owned bank's stake to CVC. Gribkowsky became chairman of the company that CVC formed for this purpose, Alpha Prema. In the following year, 2006, Gribkowsky joined the board of Delta Topco.
In 2006, Gribkowsky deposited $50m into an Austrian bank account, via Mauritius and the Caribbean. The Austrian bank suspected money-laundering and between the jigs and the reels Gribkowsky is currently incarcerated in Munich's Stadelheim prison accused of corruption, tax evasion and breach of trust. In Germany, they put you in prison before the trial. Gribkowsky is keeping mum and I don't mean the champagne. In other words he's refusing to co-operate.
The German authorities believe this payment was a kickback for undervaluing BayernLB shares, and they allege that CVC paid Gribkowsky this fee. Heavy stuff. Ecclestone has vowed he has "nothing to do with these payments to Gribkowsky". So much for a quiet retirement.
CVC is motivated to exit F1 now as this story is set to become one of the biggest cases of bribery in German corporate history. Even if CVC is vindicated, it could hang over them for years while the trial is ongoing.
In addition, they risk losing their 100-year commercial rights deal. The teams will be more demanding and the reasons for finding a buyer now are mounting. Ecclestone has already made a billion-dollar fortune from F1, but if, as he suggests, the current value of the business is circa $7bn, then he is set to make another tidy profit. He doesn't need the money -- it's the deals that put the spring in the step of this sprightly octogenarian.
Ecclestone has single-handedly dragged Formula One from obscurity to the global phenomenon it is today, with the largest television viewing audience in the world. As long as he's skipping around the pit road most of the folk in F1 are content.
Murdoch has probably no intention of paying anything like the price tag Ecclestone is touting. The News Corp man will be well aware that the Concorde Agreement specifies that F1 must be available on free-to-air terestrial television.
Many countries broadcast on both. Sponsors and advertisers know that audience is everything and he who pays the piper calls the tune. If Murdoch is planning otherwise, he could kill Ecclestone's golden goose.
The FIA ultimately decide who owns the commercial rights and they must approve the new purchaser. Jean Todt will certainly enjoy that.