The Driving Force
Interview | Christian Sylt As this year’s Formula One season gets underway, billionaire Bernie Ecclestone maintains his grip on the world’s most expensive sport. He tells Voyager how he has stayed leader of the pack for over 30 years A PUB DOWN A central London backstreet isn’t the first place you’d expect to meet a billionaire. Diners [...]
Interview | Christian Sylt
As this year’s Formula One season gets underway, billionaire Bernie Ecclestone maintains his grip on the world’s most expensive sport. He tells Voyager how he has stayed leader of the pack for over 30 years
A PUB DOWN A central London backstreet isn’t the first place you’d expect to meet a billionaire. Diners crowd around the bar while waitresses place plates on the wooden bench tables. Although upmarket as pubs go, it’s a far cry from the glitzy hotels of Monte Carlo or private beaches hidden away in the Caribbean.
But F1 boss Bernie Ecclestone is at home here. When he is in London, lunch at Knightsbridge’s Swag & Tails has become as much of a ritual for the 78-year-old as his age-old stewardship of the blue riband motor sport. He is not about to give up either habit.
“As long as I can deliver, I will stay CEO,” the softly spoken septuagenarian tells me as he tucks into his roast chicken.
It’s perhaps ironic that a pensioner with Andy Warhol-style grey hair and round glasses is synonymous with one of the world’s most glamorous and cuttingedge sports. However, there is no doubt that F1 wouldn’t be what it is today if it weren’t for Ecclestone.
Son of a Suffolk trawlerman, Ecclestone epitomises rags to riches. Leaving school at 16, he established one of the UK’s biggest car dealerships while dabbling in driving. Following two failed attempts to qualify for F1 races, Ecclestone realised that there was a grander prize to be had within the sport. He bought the Brabham team and won the World Championship twice in the 1980s but had his eye on the bigger picture: television. At the time, F1 races ran as ad hoc, almost amateur, events. Each team made separate deals with each event promoter and TV coverage was sporadic since races could be cancelled at the last moment if there were not enough cars to fill the grid.
Ecclestone quietly transformed this by convincing the teams to sign a contract committing them to race. On their behalf he then approached TV companies who guaranteed coverage in return. This historic contract, the Concorde Agreement, created the cornerstone of modern F1. When Ecclestone’s lawyer and longtime ally Max Mosley became president of F1’s governing body, the Féderation Internationale de l’Automobile (FIA), in 1993, his power was cemented and the commercial exploitation of F1 accelerated.
Ecclestone reminisces about the time when all it took to solve a problem was gathering together “all the people that had the money and having a chat with them.” He says that he and Mosley “are not ‘a kind of Mafia’. We are the Mafia.”
He continues, “In the old days it was easier to be dictatorial. But now in Formula One we have more of a democracy.” The driving force behind this was the vast sums of money which flowed in to the sport as interest in it exploded following the death of Ayrton Senna in 1994.
In 1990 Ecclestone’s company Formula One Promotions and Administration (FOPA) had revenues of just £7.6m but by 1995 this had ballooned to £83.7m and Ecclestone’s salary of £54.9m made him the world’s highest-paid executive.
Realising that he needed to hold the F1 rights directly, rather than negotiating on behalf of the teams, Ecclestone placed a bid and Mosley handed them over to him in 1997 for the paltry annual sum of £6m. It was the best move of Ecclestone’s career and handed him the keys to the billionaire’s club. F1’s annual revenues now stand at around £900m and, remarkably, Ecclestone has managed to stay in the driving seat as chief executive of the sport’s rights holder despite selling stakes in it four times.
As a result, Ecclestone has banked £2.5bn from his F1 trades (see box) and has all the toys including the obligatory private plane (complete with his own airport in the south of France), a 52-metre yacht and two hotels. However, there is little trace of an ego when speaking to him and for any investment to pass muster it must either help him do business or cover its costs.
His only known hobby is collecting miniature Japanese ‘netsuke’ sculptures and he still communicates via fax rather than email. Ecclestone’s entourage is simply his chauffeur but as F1’s boss, his stature is greater than his literal 5ft 2in height.
In 2006, private equity firm CVC bought a 69.6% stake in F1, leaving 9.4% in the hands of Ecclestone’s family trust and under 1% in his own name. The buyout took F1 in a new direction by saddling the business with £1.6bn of debt which was used to fund the acquisition. It now pays out around £175m in annual interest payments and revenues must rise for it to keep up.
Ecclestone’s solution has been to take races to countries which pay better. F1 has lost the traditional French and Canadian races but debuted Singapore and, this year, Abu Dhabi – countries which want to drive tourism through exposure to F1’s 597m annual viewers. Next destination? “We will go for India then Korea.”
However, while F1’s rights holder is motoring through the downturn, the teams have spluttered with high costs. Much has changed since Ecclestone first got involved in the sport and nowadays team budgets can hit £300m a year. Even steering wheels cost a cool £13,000 each.
“Things that the public can’t see, we shouldn’t spend a fortune on,” says Ecclestone. “They have been spending $17m (£11.5m) a year on gearboxes and it’s completely mad. The guy that goes to the race wants to see whether Massa was going to beat Hamilton. They didn’t give a damn whether he has got four gears or eight gears.”
However, the teams want more from the sport. For over 25 years, their take from F1’s spoils amounted to only around 25% of its revenues. Then, after threatening to start a rival series, their income was increased to 50% in 2006. With the recession biting, even this isn’t enough.
“They can ask for more money but they won’t get it. We have helped them drastically reduce the costs, so we don’t need to pay more,” says Ecclestone, sipping on his water. When in a serious mood, his sentences become even shorter and his stare icier.
“He is a good chap – tough but fair,” says Nick Clarry, CVC’s UK managing director. Ecclestone does not like to lose and he is skilled in steering discussions to subjects which suit him. Disarmingly, many of his responses begin with “I don’t know,” and when meetings aren’t going in his favour he has been known to call one person outside for a private discussion making the person who is being called outside feel special, while up-skittling the proceedings inside.
The politics of divide and rule seem to come naturally to Ecclestone but some of the scheming is by design. F1 is one of the world’s most secretive sports. Its holding companies are located offshore, it doesn’t have a PR department and the telephone number of its headquarters is even ex-directory. This all helps manufacture its mystique.
Ecclestone’s office is littered with artwork and sculptures but one sums him up better than the rest – a bronze work of two disembodied hands gripping each other. For Ecclestone, deals are done on a handshake.
Over the years, Ecclestone has driven through many storms – teams pulling out, threats of rival series and drivers dying on track. Even ill health has not sidetracked him. Despite heart bypass surgery in 1999, according to colleagues he still works a six-day week. Ironically, his biggest challenge may come from within.
For 24 years Ecclestone has been married to Slavica, a Croatian former Armani model 28 years his junior and nearly a foot taller than him. The couple have two daughters, Tamara, 24, and Petra, 20, but at the end of last year Slavica put into motion divorce proceedings.
This rocky time comes as F1 embarks on a new road in a recession when his experience is needed more than ever. Able to rattle off the top of his head all the key facts about F1’s frightfully complex commercial and regulatory structure, he certainly demonstrates he’s on top of the game.
Ecclestone’s contact book is like a Who’s Who of the rich, famous and powerful from decades of building up contacts. He is on first-name terms with most prime ministers and presidents around the world as they have plied him for a spot on F1’s coveted calendar. However, there’s little room for privileged influence on the F1 map now. “The contracts are in place long term. It’s all done. It’s about maintaining things,” he says.
On the face of it, it seems hard to fathom why he continues given his age and wealth but, at heart, it’s very simple. Ecclestone is a man who for a long time has had more money than he could spend, power on an international scale and it’s all thanks to his job.
“Something different happens every day. There are always new things going on. New problems to solve.” Giving that up would be an admission that the race is all but over.
Bernie’s Roadmap
1981: Concorde Agreement committing the teams to race in F1 is signed.
1995: Ecclestone pays himself a £54.9m salary, making him the world’s highest-paid executive.
1997: Ecclestone takes over the F1 rights directly for £6m per year
1999: The Ecclestone family’s trust gets £860m from a bond secured on F1’s future revenues.
2000: The trust collects £650m from selling 50% of F1’s rights holder to two private equity firms, Hellman & Friedman and Morgan Grenfell.
2001: The trust gets £680m when German media business Kirch backs an option to acquire another 25% of F1’s rights holder after it had already begun acquiring the 50% previously held by the private equity firms.
2006: The trust receives £270m from its 25% stake in F1’s rights holder which is sold to private equity firm CVC. The trust buys back 9.4% of the business.
ECCLESTONES’ TOTAL FROM F1: £2.5bn
