Troubled F1 awards Ecclestone 15% pay rise

[sticky667]

By Roger Blitz, Leisure Industries Correspondent


Bernie Ecclestone, Formula One motor racing chief, took a pay rise of nearly 15 per cent for his work on the sport's troubled series last year, taking his salary to £4m.

Mr Ecclestone's salary makes up the bulk of the £4.9m paid to directors of Formula One Management, one of the group of companies controlled by CVC Capital, the private equity group and F1's commercial rights holder.

CVC's losses from F1 stretched beyond $500m (£302m) after F1's deal with its cash-strapped teams to increase prize pay-outs in order to ensure they stayed in the troubled series.

Delta 3, the group of companies that run F1, saw pre-tax losses rise from $412m in 2007 to $539m last year. Losses attributable to CVC, which bought F1 in 2006 with $2.5bn in loans, were $505m. Earnings before interest, tax, depreciation and amortisation fell $104m to $341m, after the rights holders forked out $179m in prize money, taking the overall prize fund up 52 per cent to $521m.

The prize-fund increase came after Honda announced in December it was quitting the sport because of the pressures of financing its team, sending F1 into financial crisis.

The remaining teams have signed an agreement with CVC and Mr Ecclestone to stay in F1 until 2012. Prize money will rise depending on increases in the commercial rights holder's future profits.

Delta 3's turnover rose $120m to $1.1bn after Singapore and Valencia were added to the F1 calendar, and an increase in TV and race rights' income.

But the US Grand Prix was scrapped and Delta 3 wrote off $22m due from the Canadian Grand Prix after its contract was terminated.

CVC's net finance charges rose $6m to $624m. The charges include a payment-in-kind interest expense of $574m. CVC last year repaid $84m of its loans, leaving $2.3bn to be repaid by 2014

a few weeks old but just ran across it and haven't seen it mentioned here yet.

[sknguy]

If F1 was in trouble, it should make one wonder why there are so many companies, and layers of companies, involved in the management of the sport. But, that 15% pay increase is likely something that was in Bernie's contract regardless of the financial picture of FOM anyway.

You know... there seems such a long and sordid story behind the loss of control of Formula One by the Constructors and the FIA. And, if Bernie can manange to wrestle control of the Formula One brand, and team names no less, away from the sport, he can certainly negotiated a simple 15% salary increase from a company with which he already holds a financial interest.

For my part, this side of the sport kinda makes this "crashgate" affair seem rather trivial. Everyone complains about what FOTA tried to do this past year. But I always said more power to them.

EDIT: I guess what I meant to say about "crashgate" seeming trivial is that "crashgate" was more a symptom than a problem.