F1 CEO Bernie Ecclestone emerged from a Munich courtroom $100M poorer "but a free man," according to Robinson & Ross of the FINANCIAL TIMES. The 83-year-old billionaire "stood accused of bribing BayernLB
banker Gerhard Gribkowsky in order to maintain control of Formula One." At the outset of the trial, the
circumstances "had not looked good" for Ecclestone. Instead, in a quirk of German law, "prosecutors agreed to drop the charges" after Ecclestone wrote a cheque for $100M to the state of Bavaria. With the threat of criminal charges -- and
a decade-long stint in jail -- no longer hanging over the F1 boss,
"attention can again turn to the future of the motorsport." The end of the Munich trial means that Ecclestone "is
likely to stay as head of the motorsport as long as private equity group
CVC remains the largest shareholder," with 35% of the group. A senior F1 figure said that "this limits CVC’s options." The person said, “No IPO can take place with [Ecclestone] in place.” Even though German prosecutors "dropped their case," it is unlikely that Ecclestone could be the CEO of a public company. A sale "is thus the most likely option." Liberty Global and Discovery Communications,
which are both controlled by billionaire John Malone, are suitors for a
49% stake in F1, "through a deal that would buy out both CVC’s
share" and the 14% share owned by the estate of Lehman Brothers. Any new buyer "will have plenty of upside." CVC co-Founder
Donald Mackenzie said that "the F1 deal was one of their top 10 deals." But F1 "has not been wrung dry by private equity." Insiders said that the motorsport "punches well below its
weight on marketing, sponsorship and media rights." A former F1 employee said, “I don’t believe the
media rights have been sold as cleverly as, say, the Premiership" (FT, 8/9).
BANK REJECTS OFFER: ESPN reported German bank BayernLB "rejected a settlement offer" of $33M from Ecclestone. Earlier this week "a Munich court dropped a bribery case against Ecclestone" in exchange for a $100M payment. A spokesperson for the bank said, "BayernLB has rejected Mr. Ecclestone's settlement offer." The bank's next step "remains to be seen, though options available are civil proceedings or negotiate a bigger settlement from Ecclestone." Ecclestone's lawyer in Munich "declined to comment" (ESPN, 8/9). The AP reported BayernLB "has been keeping open the option of civil proceedings" against Ecclestone. The bank "did preparatory work on a damages claim" against Ecclestone late last year, but did not "file it." Ecclestone's lawyers offered to pay the public-sector bank €25M ($33M), though they said that "damage to the company wasn't evident" (AP, 8/8).
