Goodbye Bernie Ecclestone: The Gamechanger

Melbourne might not be hosting the Australian Grand Prix if it were not for Bernie Ecclestone. In fact, there might not have ever been an Australian Grand Prix in the first place if it were not for Bernie.

Ecclestone played an instrumental role in getting Adelaide to stage Australia’s first world championship Formula 1 race in 1985. That’s not to say that if Ecclestone had not been around that Formula 1 would never have made it to Australia in the past 30-odd years, but he was the first person to get the job done here Down Under.

One year later the first Formula 1 race was held behind the Iron Curtain. Bernie did that. The Hungarian Grand Prix, like Australia, is now a fixture on the calendar.

When some politicians and some members of the public began to moan about the race in Adelaide, Ecclestone wasted no time in doing a deal to switch the event to Melbourne. That left many folks in Adelaide stunned. They couldn’t quite believe that the city had lost the race, and some overly optimistically thought that it would return. But those who knew Ecclestone were not surprised. He is a ruthless negotiator, and he rarely loses.

Ecclestone ruled Formula 1’s commercial side for 40 years, and he planned to keep running the show. At the Canadian Grand Prix last June, during the announcement of the new lucrative Heineken sponsorship contract – another Ecclestone deal – he said the news of his retirement would be broadcast from the funeral parlour.

As it turned out that announcement came early this year on January 23, which was just days after the Federation Internationale de l’Automobile (FIA) had announced that it had approved the sale of the majority of Formula 1’s commercial rights to Liberty Media. Initially it was believed that Liberty would give Ecclestone, now 86, a three-year contract to continue to run the business just as he had done for the previous owners including the most recent one – CVC Capital Partners.

“Bernie deserves tremendous credit for the way he built the sport in the past decades and the proof in the pudding is that it has just been sold for eight billion dollars,” Formula 1’s new Chairman and CEO Chase Carey told CNBC. “He should be recognised and we certainly appreciate what he built here. But that being said, when you look at the last four or five years, the sport has not really grown to its full potential, and we have an opportunity to really grow this sport in a new and exciting way.”

Liberty gave Ecclestone the role of Chairman Emeritus of Formula 1. He can offer advice but he can’t conclude deals, and Bernie has thrived on making deals. He is the one that turned the sport and business into a multi-billion-dollar global affair. And he helped turn the Formula 1 brand into a household name rather than something only known to racing fans.

With marques like Alfa Romeo, Maserati, Ferrari, Lotus and Honda, and big name teams like BRM, Cooper, Tyrrell and McLaren, it’s not like Formula 1 was just a bunch of amateurs messing about with racing cars before Ecclestone started to take over.

Grand Prix racing has been around since the 1906 French Grand Prix, and Formula 1, as we know it today, has been around since the modern world championship was created in 1950. All that would not have just wasted away without Ecclestone, but he galvanised and organised the teams into a collective bargaining force.

Yet when it came to maintaining power and control, such as when a majority of the teams planned to strike off on their own with the Formula One Teams Association (FOTA) in 2009, Ecclestone deployed another favourite weapon in his powerful arsenal – divide and conquer. He did individual commercial deals with first Red Bull and then Ferrari. FOTA crumbled.

Still, along with his wheeling and dealing on a global scale, Ecclestone was, and is, a racer. For all his ruthless negotiating, he loves the concept of drivers and cars competing on the track.

Born on October 28, 1930, Bernie was the son of a commercial fisherman. Bernie eschewed boats in favour of dealing in used motorcycles and cars. He raced a Cooper in Formula 3 in 1951 before going off to make a small fortune in businesses including real estate.

In 1957 he bought the remnants of the Connaught Formula 1 team, and he tried and failed to qualify one of the cars in the 1958 Monaco Grand Prix. Stuart Lewis-Evans, who drove for the team and was managed by Ecclestone, died of severe burns suffered in a fiery accident in the 1958 Moroccan Grand Prix. That prompted Ecclestone to retire from driving for good and to walk away from racing.

Ecclestone returned and became the manager and friend of Jochen Rindt only to suffer more grief when Rindt died in a crash during practice for the 1970 Italian Grand Prix. One journalist recalls seeing the sad figure of Ecclestone walking from the accident scene back down the Monza straight to the pits carrying Rindt’s helmet.

The real seeds of Ecclestone’s rule of Formula 1 began in 1971 when he bought the Brabham team from Ron Tauranac. Ecclestone’s obsession with perfectionism, which would later be matched by Ron Dennis at McLaren, raised team standards to new heights that are commonplace today.

Meanwhile, Ecclestone was becoming a mover and shaker and taking the first steps that would make him a billionaire and the boss of Formula 1. The basic idea of a teams’ union had been in place already, but Ecclestone and other team bosses formed the proper Formula One Constructors’ Association (called F1CA and later FOCA) in 1974. Ecclestone turned it into a force to be reckoned with. In the early days each team negotiated individually with each track organizer for starting money. Ferrari could command a lot of dosh while a small team had to settle for the dregs.

Ecclestone banded the teams together and offered the tracks an all-of-us-or-none-of-us proposition. Naturally, he kept raising the price, but FOCA also guaranteed the tracks a full field of cars and drivers.

In 1978, Ecclestone became FOCA’s Chief Executive, and he led the charge in the FISA-FOCA war. FISA, the sporting arm of the FIA, was headed by President Jean-Marie Balestre, and he and Ecclestone were at the front of the battle for control of Formula 1 in the late 1970s and early 1980s.

Things were finally settled in 1981 with the Concorde Agreement, a document that exists to this day and stipulates how the sport and business are run. The basics were that FISA ran the regulations and technical side of things while Ecclestone ran the commercial business.

Ecclestone was one of the first to recognise how lucrative television would be, and he set off doing deals with various broadcasters around the world. He also became involved in advertising, sponsorship and hospitality at the race tracks, effectively freezing out the organisers and taking all the money. And, of course, he kept increasing the fees those tracks had to pay to get a Formula 1 race – the standard contract still calls for a 5 to 10 per cent raise per year. How many other businesses can claim that sort of guaranteed growth? The only way the tracks could make money, and this still holds true today with current venues, was by raising ticket prices for the fans and by calling for government funding.

At the end of 1987 Ecclestone sold Brabham to concentrate on the booming commercial business. Earlier in the decade he had offered the teams shares in that venture. They all turned him down, saying the price was too high (it really was not) and the risks too great. Boy, were they wrong! They would have made many millions of dollars. Ironically, when new owners Liberty Media recently broached the plan of selling the teams shares they once again baulked.

Still, the team bosses and drivers were earning money, and quite a few were becoming millionaires. Ecclestone, meanwhile, was becoming a billionaire.

In 1996 he paid the FIA a measly US$360 million for Formula 1’s commercial rights for 100 years. He then set about selling shares. That was something he later would say was one of his biggest regrets. It started in 1999 when Morgen Grenfell Private Equity bought 12.5 per cent. Over the years a number of different banks and investment companies, some of which went out of business along the way, bought shares. In 2005, CVC Capital Partners became the major stake holder with 63.4 percent.

Liberty Media, the new majority shareholder, paid US$8 billion for its 34.6 per cent. That’s more than a 2000 per cent increase over what Ecclestone originally paid. While the Ecclestone family trust had only ended up with a small percentage of the original 100 per cent, he had continued to run the show over the years no matter who the majority shareholder was. But that ruling role has now finally been ended by Liberty Media.

Throughout his ruling decades Ecclestone continued to expand Formula 1 into different countries while at the same time culling some of the traditional European races. His ventures did not always pan out. Races in places such as Korea, India and Turkey eventually failed.

Ultimately, trying to ram Formula 1 down the throats of people who knew little about the sport but were asked to pay high ticket prices just didn’t work. But there have been hits from Australia to Singapore to Mexico to Japan and, while it took time, China. The jury is still out on Russia. Other events like Bahrain and Abu Dhabi are cash cows that add considerably to Formula 1’s profits.

Ecclestone has an extremely dry wit. He loves one liners. Those who don’t know him don’t realise those quips are said with a wink, and they take his remarks seriously. But there were times when he spoke his mind when he should have kept his mouth shut.

His “women should be dressed in white like all other domestic appliances” remark did not go over well, nor did his praise for Adolf Hitler for being “able to get things done,” nor his statement that “democracy ... hasn’t done a lot of good for many countries” including the United Kingdom. Ecclestone’s close association and praise of Russia’s President Vladimir Putin hasn’t made him popular in some quarters.

Ecclestone’s vision and drive and tactics were very effective. But, as Chase Carey says, things have stagnated in the past few years. Television viewing figures are down, and Ecclestone has shunned social media which has changed the world.

Putting it another way, Carey told The Sun newspaper in the UK: “Bernie is a one-man team. It was not right in today’s world.”

Grand Prix racing has been around for 100 years, and it will exist in some form or another for a long time to come. For 40 of those years Bernie Ecclestone ruled and expanded an empire into what it is today. But the time has now come to say goodbye to Bernie.

The Era of Ecclestone

The life and times of F1 and its most influential figure

1949 READY TO RACE
Ecclestone takes to the track and races a 500cc Formula 3 at Brands Hatch

1950 IT ALL STARTS HERE
The Formula One World Championship for drivers begins after the FIA starts in 1946

1970 LOSS OF A MATE
Manager and friend of Jochen Rindt, his death takes a toll and leads to Bernie leaving racing

1978 BACK IN THE GAME
Ecclestone buys the ailing Brabham team for £100,000, but endures an unsuccessful 1972

1974 TOP OF THE PODIUM
The South African GP is the first win for Bernie’s Brabham with Carlos Reutemann at the helm

1978 TAKING THE LEAD
Bernie becomes chief executive of FOCA and battles with FISA head Jean-Marie Balestre

1981 MONEY TALKS
Concorde Agreement is signed, securing teams a bigger slice of revenues made by F1

1985 LAND DOWN UNDER
Bernie leads the charge to bring F1 to Adelaide. Senna claims pole, but Keke Rosberg wins

1987 CHANGE IN FOCUS
Brabham is sold for more than $5m so that Ecclestone can ramp up his F1 involvement

1994 DEATH OF A GREAT
Senna’s family did not allow Ecclestone to attend the funeral after the fatal crash at Imola

1996 MELBOURNE SHIFT
Ecclestone famously said that the deal to shift F1 from Adelaide took only 10 minutes

2005 ON DANICA PATRICK
“Women should be dressed in white like all the other domestic appliances”, Bernie said

2015 SCHUMACHER VISIT
“I don’t want to see Michael like that”, Bernie said on why he won’t visit the F1 great

2017 CURTAIN CALL
On January 23, after decades within F1, Ecclestone steps down as the sport’s top man

Post Bernie, Now what for F1?

CVC Capital Partners, the most recent majority shareholder of F1’s commercial rights, was happy to sit back and rake in profits while letting Bernie run the business. The new majority stakeholder Liberty Media plans to take a much more proactive role. Yes, Liberty is in this to make money, but it also plans, unlike CVC, to invest, improve and expand the entire Formula 1 product.

Based in the US, the Liberty Media Corporation owns interests in a broad range of media, communications and entertainment businesses, so it has a good background from which to achieve its goals in the domain of Formula 1.

Such was Ecclestone’s control over Formula 1 that Liberty had to put in three people to take over his tasks. Liberty Media’s Chase Carey became the Chairman and CEO of Formula 1, former ESPN marketing executive Sean Bratches is the new Managing Director of Commercial Operations and former F1 technical director and team boss Ross Brawn became the Managing Director of Motorsports.

Carey detailed his plans for a two-prong strategy. “One,” he said, “put an organisation in place that lets us make these events everything they can be, reaches out to digital media that we’re not connecting to today, build an organisation that connects with the fans and enables the fans to connect with the sport.

“And, on another level, to really build a spirit of partnership with our teams, promoters, sponsors and broadcasters that will enable us to work together.” That vision differs considerably from CVC’s profits-only strategy of the past. Indeed, interesting times ahead for F1.