Making it happen

Bernie Ecclestone has given Abu Dhabi a global showpiece of lifestyle excellence but not without difficulty, he tells Tom Rubython.

Bernie Ecclestone is Formula One’s commercial supremo. At the age of 79 he personally controls a sport with annual revenues of nearly $4bn, $1.3bn of which sticks to his companies.

Ecclestone makes his money principally from selling franchises to promote races and the rights to televise events in over 280 countries. Of the $1.3bn his Formula One Group earns every year, he pays just 38 percent to the teams to perform and, after running costs of another 22 percent, keeps the rest, 40 percent, as pure profit.

It goes on paying off debts on the loan of $2.5bn he and his fellow shareholders have taken out to pay themselves vast dividends over the past few years.

Ecclestone himself has earned around $3.5bn from equity sales and dividend payments which added to his other assets means he is worth at least $5bn personally. Unlike his other billionaires on the Forbes 500, most of his wealth is in cash and liquid assets. He is one of the few men in the world who could write a cheque out for a billion dollars and not have to call his bank manager first.

He grudgingly says: “Yep that’s probably true.”

Ecclestone never talks about his own cash, but an apparently modest existence hides an old-fashioned tycoon’s lifestyle. He has all the accessories, a giant yacht, a fleet of private jets, a helicopter, a share in his own aerodrome, a Swiss hotel, a soccer club, a London mansion and even his own mountain in Switzerland.

But he can’t seem to find time to enjoy it. Most days he is behind his desk in an office in Knightsbridge fielding non-stop phone calls from anybody and everybody. He loves being at the centre of things and at lunchtime it’s off to his local pub where he has his own regular table. For a multi-billionaire he is remarkably accessible and that at heart is the secret of his success. At 79 he is as sharp as he ever was. If there is anyone who has ever got the better of Ecclestone only he knows it.

He has had few failures. His soccer club Queens Park Rangers is currently one of those and it is costing him $600,000 a month personally to keep going as it languishes in the second tier of English football. But it is one of the few central London clubs and he has two wealthy partners in steel tycoon Laksmi Mittal and Flavio Briatore to help fund the $2m monthly losses.

But his profits from F1, which have only grown during the current economic recession, means time is on his side.

As far as Ecclestone is concerned Formula One is like a giant television commercial he can sell to governments around the world for ever increasing amounts of money. The Abu Dhabi government is believed to be paying as much as $60m a year to Ecclestone for the rights to the race.

Formula One is a perfect business — the TV companies pay Ecclestone to broadcast it and he sells that to governments that need publicity — be it to develop tourist industries or attract business. Both work equally well.

Three years ago HH Sheikh Mohammed bin Zayed Al Nahyan, the Crown Prince of Abu Dhabi, decided Formula One was what was needed to kick start a tourist industry he wanted to develop to rival that of his neighbour, Dubai. The Crown Prince believed that Formula One was in the same category as an Olympic Games or World Cup and says: “It is unrivalled in terms of continuous global resonance.”

More importantly the World Cup or the Olympics were simply unobtainable for a small emirate like Abu Dhabi — but Formula One was.

After agents had sounded out Ecclestone about the possibility of a Formula One Grand Prix in Abu Dhabi, Khaldoon Al Mubarak, chairman of Abu Dhabi’s Executive Affairs Authority, met with Ecclestone in London in November 2006.

The Executive Affairs Authority (EAA) is a governmental department that oversees and facilitates all strategic decisions and communications for Abu Dhabi. Al Mubarak, reports directly to the Crown Prince.

The meeting made Ecclestone realise that Abu Dhabi were serious about hosting a Grand Prix. A deal could have been done that day were it not for some details that Ecclestone now describes as “complications.”

Ecclestone immediately swung into action to sort those “complications” out. It would prove to be a busy winter.

Whilst there were two willing partners at the negotiating table the biggest obstacles to a deal getting done lay elsewhere. There was already a Grand Prix in the Middle East in Bahrain. Although Ecclestone won’t say, it appears there was an exclusive clause in the Bahraini’s contract that established that there could only be one Grand Prix in the region. What happened next was pure Ecclestone genius. He worked his magic to unravel the exclusivity and still give everyone what they wanted.

But the Bahrainis had a price. Martin Whitaker, general manager of the Bahrain Grand Prix, is coy about what that price was. He will only say that the Bahrainis were consulted and “worked out” a compromise with Ecclestone to give up its exclusivity. Whitaker, like Ecclestone, won’t confirm whether exclusivity was contractually guaranteed or not. He does say however, when pushed, that if it was not “contractually exclusive” then they had an “implied exclusivity.”

But it is clear that the Bahrainis were not simply going to roll over and give up. They certainly wanted one exclusivity replaced with another. They wanted season-opener status, which was then owned exclusively by Ron Walker’s Australian Grand Prix in Melbourne.

Despite efforts by all the parties to keep it secret it is clear there was some highly charged bargaining that went on to allow the Abu Dhabi Grand Prix to take place.

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