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Parr tells Ecclestone how to run his business

NEWS STORY
10/06/2011

Formula One boss Bernie Ecclestone has faced challenges from some formidable foes. The European Commission and a grouping of the world's biggest car manufacturers immediately spring to mind. However, after 60 years in business, he has now received an onslaught from perhaps the most unexpected source, that of Williams chairman Adam Parr.

It came during a Fans' Forum in Montreal hosted by the Formula One Teams Association (FOTA) and the attack was well thought through. "There are two things that Bernie thinks about," said Parr. "First, he likes to control the amount of material that's available. He believes that rarity is an important characteristic of our sport. Second, he believes that if he sells the rights to the BBC in the UK, for example, they should have the rights to everything. They can re-play it on their iPlayer system; they can do the internet; they can do everything. He thinks that's the way to maximise revenue."

Then came the killer blow as Parr continued to say that "the problem is that our total TV revenues as a sport are less than $500 million. By comparison, the NFL is $4.2 billion and Turkish soccer is a little bit more than us. I think it's time that we challenge him."

One wonders why Parr thinks he is the best person to propose challenging Ecclestone. Compared to Ecclestone, Parr is a young upstart who has only been involved with F1 since November 2006. However that wouldn't matter if his own business had achieved blinding success over that period of time but it most certainly has not.

Off-track Williams has made combined net losses of 1.7m since Parr joined (initially as the team's chief executive) and it has not won a race since 2004. This year it has had the worst start to a season in over three decades. It goes into Sunday's Canadian Grand Prix with just two points compared to championship leader Red Bull Racing's 222. Indeed, Williams' performance has been so bad that last month it was revealed Parr himself offered to resign. It hardly sounds like he is best-placed to lecture Ecclestone on business but that's not all.

There are great swathes of empty space on the Williams livery where sponsors have departed and not been replaced. In itself this is a good indication of the team's fund raising ability but there is an even more public display of the health of its business.

In March Williams floated 24% of its shares on the junior market of the Frankfurt stock exchange. Since then the value of its shares has fallen 28.3% and ironically today, the day of Parr's attack on Ecclestone, they fell to their lowest ever price of 14.60 (€16.50). It gives the team a total value of around 147.2m (€166.5m) compared to the estimated 5.3bn ($6bn) worth of the F1 Group which Ecclestone runs.

So clearly Parr does not seem to be the most appropriate person to comment on Ecclestone's business sense. However, putting that aside, is there merit in his assessment?

As Parr knows all too well, F1 doesn't chase the highest buck when it comes to the sale of television rights. It is a rare case of Ecclestone having a driving force other than money and it is in the best interests of teams like Parr's. We are talking of course about the fact that Ecclestone deliberately sells F1's TV rights to free to air broadcasters in order to ensure that the teams get maximum exposure to TV viewers so that they can command high sponsorship values.

Free to air stations may not pay the most to broadcast F1 but they tend to have the highest viewing figures. This is why F1 can claim to be the world's most watched annual sport with 527m viewers last year and this is a huge carrot for team sponsors. So in essence, Ecclestone forgoes higher prices for TV rights to benefit teams like Williams whose chairman is now attacking him for not making more money from them. Very clever.

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