Bernard Charles Ecclestone turned 86 in October. For more than 40 years he has been at the top of Formula 1; calling the shots, single-handedly negotiating some very difficult patches that would have no doubt defeated others decades younger and making boat loads of money along the way for everyone involved in the process. There was no sign that he was getting set to hand over the reigns, at least willingly, anytime soon, but fate, as they say, waits for no man.
To say he is a survivor is to miss the point. Mr E is an impresario. To use a popular term in tech circles these days he’s a “founder” and a renaissance man who fashioned an entire industry out of bits of metal and rubber with a dash of pizzazz. He made it up as he went along seizing opportunities and mitigating risk. What started as a game of roulette became Ecclestone’s favorite game of Backgammon, a strategy game with a high risk factor that routinely separates a fool from his money if he fails to appreciate that.
Mr Ecclestone (and don’t call him Bernie unless you are on familiar terms) has always maintained, with a dismissive wave, that regardless of who owns the shares, from time to time, he runs Formula 1 as if it all belonged to him. He insists he isn’t concerned about legacy. That would be looking back and he’d rather sort out what’s right in front of him.
Formula 1’s shareholders, including CVC, had so far been happy to oblige. Why not? The sport generated a return in excess of 350% on their original investment of $2B ten years ago. A substantially better return than most of CVC’s portfolio. Certainly strong enough to attract several serious tyre-kickers over the past few years. Yet none of them had the capacity and experience to really take Formula 1 to the next level and beyond until last September. And just like that, whether he liked it or not, Mr Ecclestone was faced with new players at his table.
The essential moment
A clock began ticking the day CVC Capital Partners purchased the shares in Formula 1. As a private equity investment fund they have an obligation to return the capital back to their investors along with that sizeable return attached. Normally these funds make investments in businesses that evolve predictably along market driven paths. As managers of the fund, CVC executives monitor the progress of their portfolio while carrying on with the daily pursuits of their lives. Boring stuff, really. Caretakers, not operators.
Ah, but Formula 1 is far from predictable thanks to its unique management structure and somewhere along the line Donald Mackenzie, CVC’s Co-Founder and Co-Chairman, fell under Formula 1’s spell. Some 10 years later both CVC and Mr Mackenzie were still seeing pinwheels even as they prepared to liquidate their interest and transfer control to new owners. New owners in the form of John Malone’s Liberty Media (LMCA, et al) that would allow CVC to retain a sizeable stake.
Liberty’s CEO, Greg Maffei, had said that they intend to preside over a smooth transition. Malone’s media assets are run by thoroughly experienced professional operators, such as Maffei, the President and CFO of Oracle before Malone recruited him 11 years ago, who know how to make a buck and return value to their shareholders. They avoid the limelight and are well compensated for their efforts.
What they didn’t count on was a house in disarray and that transition quickly became mired in muck. The team at Liberty soon learned that the steep learning curve they planned on now needed studs and a winch.
As part of their deal, Malone had smartly installed Chase Carey as the new Chairman of the Formula 1 Board. He too was new to the sport, but a very accomplished media executive who was once thought to be the heir apparent to Rupert Murdoch until blood ties proved to be thicker. What Carey lacked in direct knowledge of Formula 1 was easily compensated for by his CV that clearly demonstrates he is as much a savvy utility player as a gifted specialist.
The immediate challenge that Chase and his superiors faced was one of finding experienced executives who could execute within a reorganised operating structure. Ecclestone is essentially irreplaceable by a single person and justifiably so. He is as much a statesman dealing directly with government leaders desperate for an opportunity to secure a slot on the limited calendar to managing a fine balancing act with the teams and the FIA not to mention negotiating dozens of broadcast contracts. Any other organisation of a similar size and scope would have had at least three people covering that ground. Separating and defining those roles and then finding capable people to execute them without tipping the applecart topped the punch list.
To say he is a survivor is to miss the point. Mr E is an impresario.
Mr Ecclestone’s management style made this more of a challenge because Formula 1 has not developed a deep bench of experienced executives who understand the various ins and outs of this complex sport and business. This worked well for Mr E, but hindered a smooth succession. Teams routinely trade players in every role, so the racing doesn’t suffer, but pulling management candidates from within those ranks is a bit more apples and oranges than the situation requires.
There were no shortage of willing suitors. Names included Walsh, Zak Brown (even after recently joining McLaren), Toto Wolff, Gerhard Berger and Christian Horner as well as Formula E’s Alejandro Agag and dozens of lesser-known punters hoping to catch Carey’s attention.
For a time between their initial acquisition of 19.1% and closing on the remainder of the shares the news from within Formula 1 offices fell virtually silent.
That is until the 31st of January, when it was announced that Malone and Liberty had completed their takeover. Accompanying this momentus news was the real stuff people had been gossiping about. With the takeover would come changes and a sigh of relief to many.
New old blood
To no one’s real surprise Ross Brawn was announced as the new Head of Sport while Carey recruited Sean Bratches as Head of Commercial – a very broad remit that offers significant untapped opportunities. Brawn, a known and respected insider, brings a wealth of knowledge and experience. Bratches, while new to Formula 1 is a very experienced TV executive who spent much of his career innovating at ESPN. Carey completed the announcment by replacing Mr Eccelstone as CEO with himself. By all rights a powerful triad to reshape the future of Formula 1.
“I would expect this is difficult for Bernie”, Carey said. “He has run this sport for his entire adult life and I respect completely that this is a difficult change. I have been sincere in saying I value his help and advice as we go forward. Bernie deserves enormous credit for the sport he built. It just got sold for $8bn so the proof is in the numbers”.
Maximising that value and insuring Formula 1’s future has really become a race against the clock. How do they stabilise, re-engage and grow the aging fan base as the relevance of an expensive, petrol (ok, hybrid) racing series decreases over time?
Anyone thinking wholesale changes are in store, or that the newly minted American owners are hard at it planning to add races and overhaul the series, will be sorely mistaken. For now, they have their hands full converting the numerous Formula 1 systems to operate within a public or listed company environment. It’s a daunting process that will leave them precious little time to make alterations to the series. Expect 2017 to be a year focused on everyone getting used to new regulations and new owners, not new initiatives.
Should Ecclestone have been replaced or allowed to drive the sport he fully developed to his final days is now a question of the past, of little interest to anyone besides the local odds makers who counted their coins or licked their wounds.
Ecclestone’s date with destiny has been chiselled into the stone. He is out. Even if his honorary title as Chairman Emeritus suggests he is still viable.
Regardless of whether or not we’ll ever see him in the paddock again as anything more than a glorified guest his shadow in that hallowed ground around the world will continue to loom larger than life. Maybe now, instead of criticising him for his shortcomings we can all gaze on what he created and thank our lucky stars that he created such an extraordinary environment to work within as well as lived a legacy people will be talking about for many years to come.