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Exclusive: Ecclestone says teams to get no shares in F1 float but Brabeck lands 0.2%

NEWS STORY
23/05/2012

The flotation of F1 was always going to attract a great deal of misinformation. The business behind the sport is frightfully complex and the vast majority of reporters who cover F1 are, naturally, focussed on the sporting side of it.

The flawed information began at the very start with suggestions about the valuation of F1. Weeks before anyone was talking about F1 floating, Pitpass revealed that it is valued at £6.4bn ($10bn). Though scoffed at by some of the F1 media they are now being forced to eat their words as it has come to light that three funds have paid £1bn ($1.6bn) for 20% of F1 which, surprise surprise, values it at around £6.4bn. When it floats, its market capitalisation is expected to be rise to as much as $£7.6bn ($12bn). The funds aren't the only ones who will benefit.

An early report about the flotation written by Sky News city editor Mark Kleinman claimed that "it is conceivable that as F1's most important team, Ferrari would be handed an interest worth tens of millions of pounds in the event of a sale or stock market listing of F1." Complaints from the teams led to Sky News pulling the report and ending up with egg on its face just hours before it was due to host its first live race coverage under its much heralded new deal. The story had to be modified and then re-posted online. As a result of this, the talk of Ferrari being handed shares in F1 has been forgotten about and it is best kept that way.

The reason for this came to light recently when Pitpass' business editor Christian Sylt received a phone call from F1's boss Bernie Ecclestone who denied that any of the teams will be given shares. "The teams can buy shares but they are not going to get given them," he says. It dashes Ferrari's hopes of getting a windfall from the float but its hopes really shouldn't have been raised in the first place.

Kleinman occasionally writes about F1 and, as Sylt has pointed out, many of his reports have a tendency to come to nothing. He is of course the man who told us about News Corp's bid for F1 and former M&S boss Stuart Rose taking over as F1's chairman. He also claimed that David Campbell, the successor to F1's advertising boss Paddy McNally, could take over from Ecclestone. Of course it was never going to happen and lo-and-behold Campbell is now but a distant memory. In March, Kleinman claimed that Singaporean fund Temasek has been approached to buy a stake in F1. It was another report which has come to nothing and they were all labelled as being 'exclusives'.

Kleinman has a reputation in the media industry for using the word exclusive when it really shouldn't be. His former colleagues at the venerable Telegraph newspaper wrote an article about it and Kleinman can even be found publicly fending off criticism on Twitter from readers claiming that his 'exclusives' aren't as exclusive as he seems to think.

His latest blog post claims that F1's new chairman, that's Peter Brabeck-Letmathe (right) not Stuart Rose as per Kleinman's previous 'exclusive', will be handed 0.5% of the business as part of the flotation plan. It sounds like a racy tale but of course it is not what it seems. What Kleinman neglects to mention is that Brabeck, who is currently an independent non-executive director of F1, already owns 0.3% of the business.

So, in fact, Brabeck is not going "to be handed a 0.5 per cent stake in F1's holding company as a payment for taking the helm." In reality, he is getting just 0.2% to add to his existing 0.3%. You might say that it is a minor omission on Kleinman's part and it would be if it had stopped there. The problem is that he doesn't stop there and writes on his Twitter page that the "proposed payout to Peter Brabeck of 0.5pc of F1's holding company dwarfs any other chairman's deal I can think of." It might do if Brabeck was really being given 0.5% in the float but he is just getting an additional 0.2%. Sylt has made this very point in a comment below Kleinman's blog post so at least the record has been set straight there.

It brings back memories of one of Kleinman's first stories about the business of F1 which was written last year and claimed that the sport faced "being thrown into turmoil," by an internal investigation into payments made to its former chairman Gerhard Gribkowsky. Sylt sent a message to Kleinman pointing out that since the investigation was internal it was effectively a rubber-stamping exercise and of course it ended up giving F1 a clean bill of health.

It doesn't say much that the source who presumably failed to mention to Kleinman that Brabeck already owns 0.3% of F1. Nevertheless, this should surely have been checked before the blog was posted and it is too hard to imagine that it was decided not to include such a crucial piece of information which directly affects the thrust of the piece. The one thing that can be safely said is that although Brabeck is getting just 0.2% it is more than Ferrari will end up with.

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