From: mfmetzger@aol.com (MFMetzger)
Newsgroups: rec.autos.sport.f1
Subject: Re: Formula One Holdings, PLC/Inc. or Whatever
Date: 9 Jun 1997 07:17:22 GMT
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Weekly Update:  Fear and Loathing on the Road to Floatation or See You in
September

   Oh, the plot has thickened.  The long knives are out for our hero,
Bernie.  Those stock underwriters who care about their Errors and
Omissions insurance coverage are running away from this deal faster than
Donovan Bailey from a suddenly lame Michael Johnson.

   Developments This Week

   A Wrench in the Works:  Litigation by a German TV corporation, Wolfgang
Eisele's AE TV (see Thomas Gmuer's posts for a thorough exposition), and a
new lawsuit in France may end up putting the floatation on hold.  On
Wednesday, June 4, a court in Frankfurt sided with Eisele and ruled that
the FIA's central marketing of TV rights for its European Truck Racing Cup
violates European competition (antitrust) law.  Source:  London Daily
Telegraph.  Bernie and the FIA use the same method to market TV rights for
F1.  This court's ruling undercuts the validity of those F1 TV rights,
essentially the only assets floatable by Formula One Holdings (FOH). 
Others who've experienced the FIA/FOCA brand of doing business are
locking, loading and training their sights on Bernie.  On Friday, June 6,
the "GTR Organisation" announced it was suing the FIA for breach of
contract regarding promotional rights to the GT racing championship. 
Source:  London Daily Telegraph.

   Bernie's Reaction:  When asked whether the litigation affected the
floatation of FOH, spinmeister Bernie said, "It does not affect it.  This
is just an imbecile in France who thinks he can get on the bandwagon
because of this German television producer."  Memo to Mr. Ecclestone's
lawyer:  better research EC, British, and French defamation law, just in
case.

    Salomon Brothers Reaction:  Big meeting scheduled for Monday, June 9,
to discuss the impact of the litigation on the float.  Leading
institutional investors who've been lined up are backing off the deal
until the FOH rights are clarified.  Squads of lawyers will be deployed to
research and write opinions on the matter.  This is expected to take
several months and delay the floation until September.  Source:  London
Daily Telegrah.  Bernie had wanted to announce the float at the British GP
on July 13.

   Show Us the Money, Please?  Some financial figures are have been
emerging, or more accurately, have been leaked by sources connected to the
floatation.  FOH is counting on some TV deals and payments from GP circuit
owners which guarantee a certain level of revenue.  FOH is guaranteed at
least pounds 57 million/US$ 93 million from deals from three of their
broadcast partners (Germany's Kirch, France's Canal+, and Italy's
Telepiu).  FOH also is getting a total of pounds 46 million/US$ 75 million
from all the GP circuit owners, each year for the next five years.  That
amount is subject to escalator clauses tied to the inflation rate. 
Source: London Daily Telegraph.

      Dissension is spreading amongst the ranks of the float's
underwriters.  Salomon Brothers leads a syndicate of 16 houses
underwriting this deal.  Some of the small fry are getting cold feet. 
Apparently, Bernie and Salomon have been less than forthcoming with
details about FOH's financial and contractual information making it nearly
impossible for syndicate analysts to assess the value of the deal. 
Observers close to the deal said, "There is unease among some analysts in
the syndicate, who feel the level of disclosure is woefully inadequate. 
They are anxious about being asked to express an opinion about this
thing's value with so little information."  And, "Never has a company has
a company had more opaque financial information."  Source:  London Daily
Telegraph.  Bernie also limited the distribution of research notes written
by his top-secret crack squad of London analysts to big institutional
investors who've expressed interest in FOH stock.  Source:  The
Independent (London).

   Skeletons in the Closet.  Bernie is apparently the highest paid
executive in the world.  In 1995, Mr. Ecclestone earned pounds 54
million/US$ 88 million.  Source:  The Independent (London).  By my
calculation, Bernie is taking home amounts about equal to 20-25% of the
total gross revenues generated by F1.  Seems to me he could easily afford
to spend more on his wardrobe and have someone other than his wife cut his
hair.  Speaking of Mrs. Ecclestone, a former model from Croatia,
apparently she is the one who owns most of the rights Bernie wants to sell
as FOH. Bernie has constructed a labyrinth of trusts and other instruments
to avoid, not evade mind you, inheritance taxes when and if he dies. 
Source:  Londond Daily Telegraph.

   Keeping the Workers in Line.  Those trouble-makers at Williams,
McLaren, and Tyrrell are coming around to Bernie's way of thinking.  Why,
is not yet clear (can you say "increased participation"?).  Ron Dennis
says negotiations regarding these teams signing of the new Concorde
Agreement are "at a promising stage."  Source:  The Independent (London). 
Unfortunately, I can't translate Ronspeak into reality, so take it for
what it's worth.

Stay tuned for more fun with Bernie & Max

Michael Metzger
San Diego, California