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JANUARY 26, 2001

How the EU-F1 deal was done

THE battle between the Formula 1 authorities and the European Commission is over but the full details of the deal have yet to emerge. Under the agreement which has been struck Bernie Ecclestone's Formula One Administration has acquired all commercial rights to the World Championship although the FIA retains an administrative and organizational role and retains ownership of the championship. The governing body has agreed to new rules which remove any blocks on other series competing with Grand Prix racing. Ecclestone has already sold the other rights he held in motorsport (notably in rallying) and has agreed to step down as the head of the FIA's promotional affairs. He has also agreed to reduce his role in Formula One Administration "in other ways". In addition the FOA has agreed to limit free-to-air TV deals to a maximum of five years and will drop the clauses in contracts which penalize broadcasters from airing other single-seater racing.

The announcement did not reveal what the FIA will get as a result of agreeing to cede all commercial rights to F1 to Ecclestone but it is expected that he will make a one-off $360m payment from which the FIA will fund the creation of a research foundation which will be in a position to invest around $15m a year to investigate automotive-related problems such as road safety and the environment.

The battle between F1 and the Commission has been going on for several years but it now seems that the fight is over and that may result in Ecclestone deciding to float his Formula One Group as he intended to do some years ago. However it is still not clear what will happen with the 50% of the group which is currently in the hands of German media baron Thomas Haffa of EM.TV. Our sources suggest that Ecclestone may be behind a bid to buy back the shares from Haffa in partnership with a number of investment companies such as Morgan Grenfell Private Equity and Hellman & Friedman.

"The changes allowing the introduction of new and competing forms of motor sport and creating new possibilities for circuits and broadcasters will bring more choice to consumers both as spectators and as television viewers," said Competition Commissioner Mario Monti.

The final approval of the deal is still to come and will be announced in the European Union's Official Journal.

While the details of the deal remain sketchy at the moment, there is optimism that finally the sport can settle down and begin to build up business which has been left in limbo because of the legal problems. Much of the credit for the success of the talks must go to former European Member of Parliament Alan Donnelly, who has been working quietly with the FIA and with the authorities in Brussels to find an answer to all the issues involved.

The complex negotiations in recent months have used up a vast amount of time for all concerned and with the problem now apparently solved, Mosley will be able to concentrate more on some his pet projects with the new foundation.