F1-NET

Rupert Murdoch’s News Corp and Carlos Slim, the world’s richest man, would have to win agreement from each of Formula One’s 12 teams to get a green light for a planned takeover of the sport’s rights holder, according to documents seen by the Daily Mail.

The teams commit to race in F1 by signing a contract called the Concorde Agreement which contains a clause committing the rights holder and the sport’s governing body to ensure ‘that the championship will be shown free to air where there are suitable broadcasters prepared to do this’.

It would prevent Murdoch’s pay-per-view Sky channels from exclusively broadcasting F1 in key markets such as the UK. Changes to the Concorde Agreement require consent from each of the teams.

Although the contract is up for renewal at the end of 2012, there is little likelihood that the teams would agree to removing the clause from it.

Last year 49 per cent of the teams’ $1.6billion total budgets came from sponsorship and the average deal cost $5.2million. This high-octane price is fuelled by wide exposure to F1 on free-to-air television which gave the sport 527million viewers in 2010. 

The teams have demanded the commitment to broadcast F1 free to air in every iteration of the Concorde Agreement since it was first signed in 1981. F1’s chief executive Bernie Ecclestone adds: ‘It has always been our intention to broadcast free to air television wherever possible.’

He says F1 is worth ‘six or seven billion dollars’ and it could be hard for News Corp to convince shareholders that spending this much is justified if it is forced to let its rivals broadcast the sport free to air.

In particular, it may grate with one of News Corp’s biggest shareholders, Saudi billionaire Prince Alwaleed, who has said ‘I am not interested in this kind of sport’.

Even if News Corp and Carlos Slim swerve around these obstacles, their acquisition could still end up in the pits as they would need clearance from the European Commission.

Murdoch has fallen foul of the regulators before. In the late 1990s the Competition Commission blocked BSkyB from buying Manchester United due to the power it would give the firm in negotiating broadcast contracts.

Given that its acquisition of one team was blocked, it does not seem likely that the watchdog would let its purchase of a sports series get off the grid.

Rupert Murdoch's News Corp is in talks with Carlos Slim, said to be the world's richest man, about making a joint bid for the control of Formula One motor racing – one of the few major commercial sports in which it has yet to gain a foothold.

The bid was, according to Sky News, in the early stages, with News Corp in talks about forming a consortium that would include the Mexican billionaire.

It would also be the first time that the global media group, which currently owns the rights to most live Premier League football, had taken over an entire sport and could be a major blow for the BBC.

The BBC counts F1 as the last major sport – unprotected by legislation governing its broadcast – over which it has sole broadcasting rights in the UK.

It secured the television rights to show Formula One in the UK from the 2009 season as part of a five-year deal covering all platforms and can broadcast F1 on the BBC Sport website as well as on TV and radio. However, senior managers have questioned whether the £40m a year cost of the contract is worth it at a time the BBC needs to make savings.

A spokesperson for News Corp declined to comment on what she described as "rumour and speculation".

However, a source with knowledge of the discussions has confirmed to the Guardian that News Corp was considering options regarding F1. "News Corp going into this transaction now is premature. They are thinking about F1 and options they could take but that is all it is at this stage," the source said.

The Concorde Agreement between F1's governing body and the teams, which governs the distribution of commercial revenues from the sport expires at the end of next year. "They [News Corp] will do nothing until after the next Concorde meeting – there is no way to possibly value or plan until after that," the source added.

News Corp already has its hands full with a very real attempt to take over the broadcaster BSkyB. The path for its proposed £8bn purchase of the 61% of BSkyB it does not already own was cleared in March when the culture secretary, Jeremy Hunt, approved News Corp's plan to separate off Sky News.

F1's current majority stakeholder, the private equity group CVC Capital Partners, was reported to be unaware of News Corp's interest, according to Sky News, which said there was no contact between them.

Aside from CVC's holdings, the ownership of F1 is held by a mosaic of different, smaller companies.

JP Morgan, the Wall Street bank which was a former F1 shareholder, was reported to be advising News Corp about the bid and said that taking part in a consortium was one of several options that News Corp is examining in relation to motor racing.

Mark Kleinman, Sky's business editor, said he had been told that the bid was at "an embryonic stage".

He added that James Murdoch, News Corp's deputy chief operating officer, was involved in the company's discussions with prospective partners. "The company is kicking the tyres, as you would expect, given that there may be a serious business opportunity to examine in relation to F1," Kleinman quoted a person close to the sport as saying yesterday.

"It has been approached by a number of potential co-investors and is thinking about its options but there is a very real chance that it will come to nothing."

CVC Capital Partners, which paid more than $2.5bn to gain control of F1 in 2005, declined to comment.

Any bid involving News Corp would face calls for regulatory scrutiny, because of rights issues involved and the political heat that surrounds the media firm.

A source told the Guardian that when CVC gained control of F1, European regulators "looked extremely hard" at the deal and he believes that given News Corporation's control of rights and sports there could be regulatory hurdles.

Also, both the FIA, F1's governing body, and its chief executive, Bernie Ecclestone, are considered, pretty much, to have veto rights on new owners.

"Unless any bidder – be it News Corp, its partners or a rival – is welcomed by Bernie nothing is happening," said the source.

News Corp is already facing investigations over its takeover of the remaining shares in BSkyB as well as the ongoing probe into its newspapers involvement in the illegal phone hacking scandal.

As well as regulatory scrutiny, a takeover might also face stiff opposition from some in the car industry who have been in favour of it remaining a free-to-air television event because of the large audiences it delivers for each race.

In the meantime, CVC faces issues of its own. The British entrepreneur billionaire Bernie Ecclestone has been questioned by German authorities about an alleged multi-million pound bribery scandal involving the sale to CVC. Ecclestone is not the subject of the investigation and is co-operating with the authorities.

Officials are trying to establish who paid about $50m (£33m) to Gerhard Gribkowsky, a former banker with state-owned BayernLB who oversaw F1's sale to CVC in 2006; they are believed to be planning to question CVC executives. Gribkowsky was arrested in January.

F1 would be a small investment for Slim. Last month, the 71-year-old was named the world's richest man by Forbes magazine – worth $79bn, most of which is wrapped up in América Móvil, Latin America's largest mobile phone company.

Formula One Ecclestone has dismissed speculation that Rupert Murdoch's News Corp are set to launch a bid to buy the sport. According to Sky News, Murdoch has been in talks with the Mexican billionaire Carlos Slim, and people connected to a leading F1 team - widely conceived to be Ferrari - about forming a consortium. Up for sale? Murdoch's News Corp are reportedly interested in buying Formula One Up for sale? Murdoch's News Corp are reportedly interested in buying Formula One F1 is currently owned by private equity group CVC Capital Partners, and they are said to be unaware of any bid. But the sport could yet come up for sale in the next 18 months with NewsCorp expressing a major interest. Ecclestone however, who runs the sport on behalf of CVC, told the Daily Telegraph: 'It's rubbish. The sport is not for sale.' A failed bid to acquire F1 could prompt NewsCorp to launch an attempt to buy the television rights. The BBC currently has the rights to broadcast Formula One until the end of 2013 on a £40million a year deal. But BBC bosses are keen to slash their budget, and despite it's high popularity, they are unlikely to renew their contract. F1 is not on the list of events that has to be shown on terrestrial TV and BSkyB, who are 39 per cent owned by News Corp, are said to be very serious about acquiring the rights. Any such move would mark the first time Formula One has not been screened on free-to-air TV in Britain.

Further to Pitpass' exclusive statement from Bernard Ecclestone yesterday - issued to us before it was issued to anyone else - it has now been reported in the German media that the F1 boss has not just been questioned by prosecutors in Munich but he has also been accused of aiding and abetting Gribkowsky's alleged breach of trust.

On 6 April Ecclestone was questioned in the county court building on 16 Nymphenburger Straße in Munich by public prosecutor Hildegard Baumler-Hosl with her colleague Manfred Notzel also present. Their accusation of aiding and abetting a breach of trust hardly sounds like a strong claim. Indeed, according to Germany's Suddeutsche Zeitung newspaper, the prosecutors aren't even sure how Ecclestone may have been involved with the £30m payment to an Austrian company owned by F1's former chairman Gerhard Gribkowsky.

First we were told that Ecclestone paid £30m to Gribkowsky so that he would undervalue the shares in F1's parent company SLEC when it was sold by his employer, German bank BayernLB, to current owners CVC in 2006. Pitpass' business editor Chris Sylt has repeatedly demonstrated that this theory has no truth behind it.

The latest theory doing the rounds in the Suddeutsche Zeitung is that Ecclestone may have paid £30m to Gribkowsky in return for the German selling to a buyer which would retain the F1 boss as chef executive of the sport. Pitpass knows of no evidence for this and it seems incredibly unlikely. If a bribe had been paid to ensure that BayernLB sold to a company which retained Ecclestone you would have thought that this aspect of the deal would be hushed up. However, it was hardly kept quiet as company documents seen by Sylt state that "key to structuring the transaction was allowing Bernie Ecclestone to retain operating control to continue growing the business." That deals with that theory too.

So what does aiding and abetting a breach of trust mean? Gribkowsky is currently in prison under suspicion of this and it is easy to see how it could apply to him - he received a payment of £30m which is clearly connected to his work yet BayernLB was not aware of it.

The Suddeutsche Zeitung claims that CVC paid BayernLB £472m for its shares in SLEC and then the bank paid £25m of this to Ecclestone personally with £17m going to Ecclestone's family trust company Bambino Holdings. The £25m was allegedly paid to Ecclestone since he was the middle man in the deal. Apparently the money was then paid by Ecclestone and Bambino into F1-related companies and Gribkowsky then paid £30m of it into two tax havens which made the payment to his company in Austria.

The claim that BayernLB paid £25m to Ecclestone for arranging the deal between it and CVC could explain why the F1 boss has been accused of aiding and abetting but it doesn't seem justified since the payment would be perfectly legitimate. But what did Gribkowsky do to deserve the money?

Sources close to Gribkowsky have revealed that the £30m was paid in return for consultancy services connected to F1. The Suddeutsche Zeitung claims that the prosecutors have got hold of a draft of a consultancy contract from Ecclestone's legal adviser Stephen Mullens dated November 2005 - the month when CVC acquired F1.

According to the newspaper, one party to the contract was Bambino and the other was Gribkowsky's company in Austria. It claims that when Gribkowsky signed the contract Bambino had been replaced with the firms in the Virgin Islands and Mauritius.

It remains to be seen whether this is accurate but if it is, it would simply formalise a contract which led to payment - it would not change the fact that the £30m is believed to have ultimately come from Gribkowsky's employer (not Ecclestone) and Gribkowsky (not Ecclestone) paid it to himself. If this is true it explains why Gribkowsky's lawyer is appealing his imprisonment as Pitpass reported yesterday.

The investigations are due to continue into the summer and then it is over to Bäumler-Hösl for a decision. However, Ecclestone isn't likely to be troubled if the case hasn't been wrapped up by the German Grand Prix in July as he stated yesterday that "in view of the sensitivity of this matter, which affects others, I do not intend to make any further public comment on this matter."

Article from Pitpass .com
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Formula One chief Ecclestone has given Pitpass.com business editor Chris Sylt a statement relating to the ongoing investigation in Germany into Gerhard Gribkowsky, former chairman of F1's parent company SLEC.

Back in January Gribkowsky was thrown into prison in Munich on suspicion of taking a $50m bribe. The Munich prosecutors claimed that Gribkowsky undervalued SLEC when it was sold by his former employer, German bank BayernLB, to current owner CVC in 2006. Moreover, the prosecutors believe that Gribkowsky received the payment of $50m for doing this. They also accused him of tax evasion since the money was paid into his account at the Raiffeisenverband bank in Austria where it was taxed at a lower rate than it would have been if he had declared it in his native Germany.

The $50m was paid from companies in Mauritius and the British Virgin Islands after CVC bought F1 and sources close to Gribkowsky have revealed that the money was paid in return for consultancy services connected to F1. However, further details have been thin on the ground and this has led various media outlets to wildly speculate that Ecclestone paid the money to get Gribkowsky to undervalue the shares.

Sylt has repeatedly debunked this theory and the very fact that no one has been arrested for paying the alleged bribe for this in itself casts doubt over it. Ecclestone and CVC have denied any involvement and an internal investigation has cleared F1's ultimate holding company Delta Topco of wrongdoing. Today the German press claims that Ecclestone is being investigated by the Munich prosecutors. Ecclestone has confirmed that he is assisting with the prosecutors and is confident that he will be cleared of any blame.

Ecclestone says "I have been cooperating with the State Prosecution Office's investigation of the affairs of Dr Gribkowsky since the outset. When I was informed that there was a first suspicion in relation to my perceived involvement in the matter, I went to see the Senior State Prosecutor and her team in Munich earlier this month to clear up any allegations against me. I will continue to give the State Prosecution Office my full cooperation in whatever capacity it may ask and I am confident that when the full facts have been established, I will be exonerated of blame for any wrongdoing."

He adds that "in view of the sensitivity of this matter, which affects others, I do not intend to make any further public comment on this matter at this time."

A report in Germany's Süddeutsche Zeitung newspaper claims that Gribkowsky may have blackmailed Ecclestone to get the $50m. However, it is not a crime to be blackmailed so even if this version of events was true Ecclestone would not be to blame.

The newspaper also reports that not only has Gribkowsky's lawyer appealed against prosecutors freezing the $50m he received but he has also appealed against his imprisonment. According to the report, Gribkowsky's lawyer is confident that the tax evasion charge will be refuted and that the bribery charge too will fall. The Süddeutsche Zeitung claims that it is tough for investigators to get evidence that he was paid a bribe since all the theories involve the money being paid from outside Germany and so the country would not be the scene of a crime.

According to the report, this could see Gribkowsky soon released from prison with his $50m returned to him. This would also open the door to Gribkowsky claiming damages for his imprisonment. It would be a remarkable end to a remarkable tale.

Source Pittpass.com

Formula One chief Bernard Ecclestone has been questioned by state prosecutors in Munich, Germany, as part of an investigation into irregular payments made during the sale of the sport's commercial rights.

Ecclestone was quizzed on April 6 as part of the investigation into payments worth 38 million euros made to a German banker during F1's commercial rights sale five years ago, reports the Sueddeutsche Zeitung in Saturday's edition.

Ecclestone's questioning came after the arrest in January of Gerhard Gribkowsky, the boss of Bavarian bank BayernLB, which had a stake in F1 up until to 2006.

British billionaire Ecclestone, the CEO and president of F1's governing body, has said that he will continue to cooperate fully with the German prosecutors.

The case against jailed German banker Gerhard Gribkowsky rumbles on. Last month Gribkowsky was arrested on suspicion of receiving a $50m bribe for allegedly undervaluing shares in SLEC, F1's commercial rightsholder, when they were sold to the sport's current majority owner CVC in 2006.

Gribkowsky was SLEC's chairman and he represented German bank BayernLB which owned a 47.2% stake in the company. As Bayern's representative Gribkowsky had a duty to get the best deal for the bank. The German prosecutors claim he did not do that and added that "the stake had been sold without being properly evaluated." For weeks Pitpass' business editor Chris Sylt has been saying that this is nonsense and, at last, other renowned outlets are catching on.

According to the German press , an article in weekly magazine Der Spiegel reports that other potential buyers of Bayern's shares offered much less than CVC. In any auction the market value of a product is determined by what buyers are prepared to pay. So if the other potential buyers, such as Hong Kong conglomerate Hutchison Whampoa and private equity firm Clearbrook Capital, were not prepared to pay Bayern as much as CVC then it is extremely hard to say that the sale undervalued Bayern's shares.

As an indication, the reports state that Hutchison offered $1bn for SLEC with Clearbrook offering $1.5bn. In contrast, as Pitpass has shown with absolute certainty, CVC paid $1.7bn so this in itself speaks volumes. Indeed, even if an accountant were to come forward with a valuation of Bayern's shares from 2006 showing that they were worth more than it received from CVC, this would be irrelevant if no one was prepared to pay it.

Spiegel has a circulation of over one million and reportedly employs 80 fact checkers so it is a very credible source. But it doesn't stop there. The German newspaper Frankfurter Allgemeine Zeitung reports that sources in Bayern say its F1 stake was sold "clearly above its book value." If both this and the Spiegel report are true there is pretty much no way that Bayern's SLEC shares could have been undervalued.

These conclusions tally perfectly with Pitpass' report that the stake isn't likely to have been undervalued since Bayern received a valuation yield of ?328m in 2006 and its results stated that the sale of the F1 shares "decisively contributed to the positive result." It also tallies with Pitpass'report that Bayern got a better rate for its stake than at least one of the other banks which sold SLEC shares to CVC so it clearly cannot have been undervalued.

It puts an interesting light on last week's revelation that CVC has instigated an investigation into the circumstances surrounding the acquisition of the SLEC shares. As Pitpass has pointed out, given that F1 is a client of the two firms handling the investigation it was clearly not demanded by an external party. On this basis alone it may be unlikely that the firms will reach a different conclusion than the one which CVC and F1 itself has already reached - that the $50m was not paid for the shares to be undervalued. If that happens then F1 will most certainly not face the "turmoil" which Sky News speculated could ensue from the investigation.

Likewise, outlets which have suggested Ecclestone paid the money for undervaluing the shares could be left scrambling if the news from Spiegel and Frankfurter Allgemeine Zeitung is proven to be true in court when Gribkowsky goes to trial. This outcome, combined with the investigation proving that no money was paid for undervaluing the shares, could be devastating for some media outlets.

They could be faced with having to prove why they dragged Ecclestone into their reports at all since, more than anything, there would be no evidence that the scandal should have turned the spotlight on him. Indeed, as one newspaper recently reminded its readers, Ecclestone has said "if the German newspapers write that I had something to do with the payments, which is absolute nonsense, I will take them to court."

The news comes after banker Gerhard Gribkoswky was jailed on charges surrounding his receipt of $50 million, with mainly German publications claiming F1 chief executive Bernie Ecclestone may be connected with the mystery payment.

Sky News revealed on Tuesday that the sport's owner CVC Capital Partners, and the holding company Delta Topco's board, has appointed auditor Ernst+Young and law firm Freshfields Bruckhaus Deringer to investigate the affair.

Sky News City editor Mark Kleinman said the probe will focus on "the circumstances surrounding the takeover of Formula One back in 2006".

Kleinman added that the firms have been instructed to report back "within a matter of weeks".

Bloomberg quotes Ecclestone as saying: "I've been advised not to talk to anyone about it. A person has been detained."

CVC repeated its earlier statement that it "has no knowledge of, nor any involvement in, any payment to Mr Gribkowsky or anyone connected with him in relation to CVC's acquisition of Formula One".

Banker Gerhard Gribkowsky may have taken a $50 million kickback for engineering the sale of Formula One, the world’s most-watched motor sport, German prosecutors say. Who paid that suspected bribe, they aren’t saying.

That mystery has thrown a spotlight on the partnership between 80-year-old Formula One Management Ltd. Chief Executive Officer Bernard Ecclestone, a fixture of London’s tabloids, and the company’s buyer, CVC Capital Partners Ltd., one of Europe’s largest and most-private buyout firms. The case is also reviving the anger of media mogul Leo Kirch, who says the racing company he once owned was sold on the cheap. Meanwhile, Gribkowsky sits in a German prison that held Adolf Hitler.

“When investing in a company like Formula One and betting on a man like Bernie, you have to be prepared for high-profile scrutiny as the media are always looking for scandals and controversy,” said Mark Jenkins, author of a book on Formula One. “The timing may be tricky for CVC if the firm wants to realize its investment in the next years.”

The investigation is focused on the 2005 sale of a 48 percent stake in London-based Formula One to CVC by Bayerische Landesbank in Munich, which received a 10 billion-euro ($13.5 billion) government bailout following losses on U.S. subprime mortgages. That investigation is adding to uncertainties about Formula One’s future, making an exit more difficult for CVC, which manages 31 billion euros, including Europe’s second- largest buyout fund.

Hitler’s Prison

Gribkowsky, 52, a former risk manager at BayernLB who left in 2008, is in custody in Munich’s Stadelheim prison -- where Hitler spent time in 1922 for disturbing the peace and where alleged Nazi death-camp guard John Demjanjuk is being held -- because he may have taken a bribe to sell his employer’s stake in Formula One without first performing a “proper valuation,” prosecutors said in a statement on Jan. 5.

“According to the current findings, the suspect, in turn, received $50 million in payments disguised via two consultancy agreements,” Munich prosecutors said in the statement. A spokesman for the prosecutors declined to say who may have made the payments. No charges have been filed against Gribkowsky, who is being held while the probe continues. Ecclestone hasn’t been accused of wrongdoing.

The banker confided to people who worked with him that the $50 million was a consulting fee paid by Ecclestone, not a bribe, those people told prosecutors, German newspaper Sueddeutsche Zeitung reported Feb. 5, without saying where it got the information.

‘No Knowledge’

Barbara Stockinger, a spokeswoman for the Munich prosecutors, said in a Jan. 5 interview with Bloomberg News that the money was deposited in an Austrian trust Gribkowsky controlled called Sonnenschein, or sunshine in German. Austria dropped a money-laundering probe into the payments.

Gribkowsky’s lawyer, Reinhard Hoess, declined to comment.

Formula One said in a Jan. 21 statement that Gribkowsky received only $50,000 a year since 2006 as a non-executive director of the company. “The Formula One group and Mr. Ecclestone have no knowledge of, nor any involvement in, any other payment to Dr. Gribkowsky nor to anyone connected with him,” the company said.

In an interview, Ecclestone declined to say anything more about Gribkowsky or the investigation.

“I’ve been advised not to talk to anyone about it,” he said. “A person has been detained.”

CVC, based in Luxembourg, said in a Jan. 5 statement that it “has no knowledge of, nor any involvement in, any payment to Mr. Gribkowsky or anyone connected with him in relation to CVC’s acquisition of Formula One.”

BayernLB’s Claims

CVC and the board of Formula One’s holding company, Delta Topco, have appointed Ernst & Young LLP and law firm Freshfields Bruckhaus Deringer LLP to investigate the circumstances surrounding the Formula One takeover in 2006, Sky News reported yesterday, without saying where it got the information.

The firm, whose chairman, Michael Smith, rarely gives interviews to the press, wouldn’t comment further on the investigation or Formula One.

BayernLB, Germany’s second-largest state-owned bank, is seeking to freeze Sonnenschein’s assets as it claims 200 million euros in damages from Gribkowsky for his role in the bank’s subprime losses and the acquisition of Austrian lender Hypo Alpe-Adria-Bank International AG, a Bavarian Finance Ministry spokesman said on Feb. 2.

The roots of the investigation date to 2002, when Kirch’s media empire collapsed after the German cable TV and publishing entrepreneur couldn’t make payments on $5.7 billion of debt.

JPMorgan, Lehman

Kirch, 84, used loans to fund multiple acquisitions, including Formula One. He became the controlling owner after providing $987 million in 2001 to fund an option to buy 25 percent of the firm from Ecclestone and purchasing a 50 percent stake owned by EM.TV & Merchandising AG, a German maker of children’s programs. Ecclestone held the remaining 25 percent.

Kirch’s ownership was short-lived as his lenders seized control of his assets a year later. BayernLB, Kirch’s largest lender, ended up with 48 percent of Formula One. JPMorgan Chase & Co. and Lehman Brothers Holdings Inc., both based in New York, shared 27 percent.

Gribkowsky, representing BayernLB, became chairman of Formula One. He clashed with Ecclestone after the CEO claimed a single share in one of the racing company’s units gave him half of the voting rights. The banks sued Ecclestone, and the two parties settled their differences on the eve of a London trial.

‘Ticking Bomb’

Eight months later, in 2005, BayernLB sold its stake to CVC for an undisclosed amount. Gribkowsky, who became a member of the bank’s management board in 2003, ran the sale and stayed on the Formula One board as a non-executive director. By March 2006, CVC took over almost all of Formula One, buying the other lenders’ stakes as well as most of Ecclestone’s with $2.5 billion in loans.

Ecclestone, who remained CEO, said in an interview that he doesn’t hold any shares. He said his family’s trust, Bambino Holdings, whose beneficiaries are his former wife, Slavica, and his two daughters, reinvested some of the proceeds from the sale alongside CVC, owning less than 10 percent of the company now.

Ecclestone and his family trust received $67 million from BayernLB for brokering the CVC deal and the settlement of “an open claim,” Sueddeutsche Zeitung reported on Feb. 12, citing an unidentified person with knowledge of the bank’s books. Ecclestone didn’t return a call seeking comment on the report.

Formula One’s Value

The kickback case “has been a ticking bomb for at least a year now,” said Klaus Fleischer, professor of banking and finance at the University of Applied Sciences in Munich. “BayernLB is a money sink and is under enormous political pressure to clean up the whole mess of subprime, Hypo Alpe-Adria and Formula One.”

Gribkowsky didn’t run a competitive auction when BayernLB sold its 48 percent stake, two people with knowledge of the deal said. Kirch’s lawyers say the sale undervalued Formula One, according to a letter sent to the bank on Jan. 6.

Accounting firm KPMG valued Formula One at 5.5 billion to 7 billion Deutsche marks ($3.8 billion to $4.9 billion) in 2001, when Kirch weighed an initial public offering of his media group, according to the letter, obtained by Bloomberg News. In 2003, BayernLB CEO Werner Schmidt said the racing company was valued at 3 billion euros. The bank sold its stake to CVC in 2005 for about $860 million, the letter said, without citing where Kirch’s lawyers got their information. BayernLB must reclaim its “bargained away” stake, the lawyers said in the letter.

First Bridge, Lewington

CVC’s purchase wasn’t cheap, Ecclestone said. If anything, he said, it was too high. Threats from car manufacturers to leave Formula One because they were unhappy about the split of TV revenue were raging, making CVC’s bet riskier and lowering the price, he said.

“There were all sorts of dramas at the time,” Ecclestone said. “The car manufacturers wanted to march into the night.”

CVC offered the manufacturers’ teams better terms, quelling dissent, he said.

A unit of Gribkowsky’s Sonnenschein sent a letter to Ecclestone’s London office in December 2007 to complain about a delay in a $2.3 million payment, part of a $25 million fee, Sueddeutsche Zeitung reported Jan. 22, citing the letter written by the banker’s lawyer. The letter noted a contract with British Virgin Islands-based Lewington Invest Ltd., the newspaper said.

From 2006 to 2007, while part of BayernLB’s top management, Gribkowsky received another $25 million from Mauritius-based First Bridge Holding Ltd., the newspaper also reported.

CVC Returns

Neither First Bridge nor Lewington could be reached for comment. First Bridge was listed as defunct by the Mauritius registrar of companies. Lewington Invest was registered in the British Virgin Islands, an official at the island’s financial commission said, without providing details. Neither a telephone number nor an e-mail address for Lewington was available.

CVC, whose investments include printing-inks supplier Flint Group, Evonik Industries AG, Germany’s largest specialty chemicals maker, and Merlin Entertainments Group Ltd., the owner of Madame Tussauds in London, isn’t new to motor sports. It sold MotoGP, the motorcycling equivalent of Formula One, for as much as 500 million euros to buyout firm Bridgepoint Capital Ltd. eight years after acquiring it for $82 million, two people with knowledge of the matter said at the time of the sale in 2006.

The buyout firm, the former European private-equity arm of Citigroup Inc., has delivered some of the industry’s best returns. CVC’s latest 10.8 billion-euro pool is showing a gain exceeding 30 percent, according to two people with knowledge of the situation. That places the fund in the top 25 percent of performers, according to research firm Preqin Ltd.

Hands-on Manager

Since arriving at Formula One more than five decades ago as a driver, Ecclestone, who is 5-foot-2, has a mop of gray hair and wears round glasses, has turned the racing series into one of the world’s most popular sporting events. Last year, the 19 Formula One races attracted about 527 million television viewers in 187 countries. In 2009, it generated more than $1.1 billion in revenue, according to a company filing in May.

Ecclestone has become a billionaire, ranked 38th on the Sunday Times Rich List in 2010 with an estimated wealth of $1.4 billion pounds ($2.2 billion). The one-time auto dealer is known for his hands-on management style: He even organizes loans to keep teams afloat, former Minardi team owner Paul Stoddart said, recalling that Ecclestone agreed to a “multimillion” dollar loan in 2002 to enable his team to start the season.

The CEO is also popular with U.K. newspapers for his quotable style -- Hitler was “able to get things done” -- and his personal life, including his marriage and divorce from a former Croatian model 10 inches taller and 28 years younger.

‘Unique Individual’

“ Ecclestone is a unique individual,” said Jenkins, author of “Performance at the Limit” about Formula One and a professor of business strategy at Cranfield School of Management, 50 miles north of London. “I can’t imagine one individual doing his job when he’s gone. There are so many aspects to his role.”

Since the CVC acquisition, Formula One has been plagued by a cheating scandal, and the global economic slump led Honda Motor Co., Toyota Motor Co. and Bayerische Motoren Werke AG to quit. The average race audience fell to 44 million in 2009 from 52 million in 2004 as younger people watch less TV, according to London-based Future Sport & Entertainment.

The sport is betting on growth in Asia and the Middle East after France was dropped from the schedule because it couldn’t meet the costs and Italy and Germany lost one of their two annual races. This year, the championship has 20 races, including one hosted by India for the first time.

Formula One Results

Since 2007, Formula One’s profit before interest, taxes, depreciation and amortization has changed little at $428 million, according to filings by Delta 3 UK Ltd., a CVC-controlled company holding its main assets. The company has posted annual net losses of about $500 million during those years, on non-cash debt interest charges, according to U.K. filings.

CVC recovered some of its investment through dividends after Royal Bank of Scotland Group Plc agreed to a $3 billion debt recapitalization in 2006, data compiled by Bloomberg show.

Buyout firms often look to exit their investments within five to six years of the acquisition. The investigation will make that more difficult for CVC, Jenkins said. Another issue, he said, is the renewal of an agreement with the teams in 2012 on how to share TV revenue. Most important, Jenkins said, is life for Formula One without Ecclestone.

“If Ecclestone isn’t there, that makes the investment vulnerable because of his incredible position in the industry, his ability to negotiate and resolve issues and tensions and protect the investment,” Jenkins said.

Ecclestone said grooming a successor isn’t on his agenda. “That would be like Frank Sinatra looking for another singer,” he said. “They will probably get three or four people doing what I do. It will be more corporate.”

Williams has announced that it is to go ahead with a stock market flotation, launching an Initial Public Offering (IPO) on the Frankfurt Stock Exchange.

Last month the team said it was considering the unusual step as a method of enhancing its long-term financial future.

A statement from the team announcing the move said: "The offering will consist of up to 27.39 per cent or 2,739,383 existing shares, with a nominal value of GBP 0.05 each, of which up to 330,000 shares will come from an over-allotment option. Sir Frank Williams will remain the majority and controlling shareholder of Williams and Team Principal of the AT&T Williams team.

"Bookbuilding is expected to begin on 9 February 2011 and is scheduled to conclude on or around 28 February 2011. The first day of trading on the Entry Standard segment of the Frankfurt Stock Exchange is expected on 2 March 2011. The bookbuilding price range and final placement price are expected to be published on or around 9 February 2011 and 28 February 2011 respectively."

It added: "Swiss-based Bank am Bellevue will act as sole global co-ordinator and sole global bookrunner. Baader Bank will be joint lead manager and local bookrunner for Germany. Austrian GBR Financial Services and Online Brokers DAB (Germany) and Brokerjet (Austria) will be selling agents.

"The IPO will include a public offering in Germany, the UK, Austria and Switzerland and a private placement for institutional investors outside Germany, the UK, Austria and Switzerland, the United States of America, Canada, Japan and Australia."

Speaking when the outfit first announced that it was considered a flotation, team boss Sir Frank Williams said the intention was to ensure his operation's long-term financial health, rather than gaining a quick cash boost.

"For some years I have been considering how to secure the long-term ownership of Williams such that it will remain true to the aims with which Patrick [Head] and I established the team back in 1977," Williams said.

"My goal then was to race in Formula 1 as an independent constructor. This was and is my great passion and I will race for as long as I continue to be blessed with good health. It is also my desire that the team is in good shape to go on racing long after I am gone.

"To that end, it is prudent and necessary to plan for an ownership structure that will enable Williams to be an independent Constructor, owned and staffed by people committed to Formula 1 and to the sound business practices which have supported us over three decades.

"I have concluded that the option which will best achieve this is to broaden our shareholder base with public shareholders, while having a stable core of long-term investors closely involved in the running of the team. This will ensure stability, good governance and will, I believe, enable us to attract and retain the best people and partners."