Schumacher puts brakes on F1 sales

MICHAEL Schumacher's monotonous winning streak for Ferrari over the past few years has hit Formula 1's finances, the sport's accounts revealed today.

Formula One Administration (FOA), the London-based company that sells the lucrative media rights to Grand Prix motor racing, has filed 2003 accounts showing that turnover tumbled to $562m (£307m) from $643m the previous year.

The figures highlight the potentially serious financial consequences of last week's fiasco in the US Grand Prix when only a six cars raced. North America is seen as a crucial market for the sport to crack to bolster its revenues.

However, the company reported a $31m rise in profits to $158m, mainly as a result of the closure of the profit-sapping F1 digital television operation in the previous financial year.

F1 Digital, the brainchild of FOA's billionaire boss Bernie Ecclestone, opened to great fanfare in 1996 but audiences for the service petered out and FOA closed it in December 2002.

FOA is now owned 75% by three banks - BayernLB, Lehman Brothers and JP Morgan - with the remaining 25% held by the Ecclestone family trust, Bambino Holdings.

In March, Bambino reached an out-of-court settlement with the banks, which had sued for greater board control of FOA.

FOA is still making interest repayments on a $1.4bn bond it took out in 1999, secured against the sport's future revenues, from which the proceeds went to Bambino. In 2003, $232m was repaid, leaving $716m outstanding. It is believed the remainder will be cleared by the end of 2006.

Latest speculation in the sport is that another big bond issue may be on the way, this time from the 10 current Formula 1 teams. They are said to be contemplating a $900m offering to help finance the purchase of Ecclestone's and the banks' stakes in the sport.

The FOA's 2003 accounts arrived at Companies House four months late, leading to a £250 fine - a pittance to Ecclestone, whose $4.1m salary was more than treble the amount he paid himself in 2002.

The other two directors, Ecclestone's legal adviser Stephen Mullens and German banker Gerhard Gribkowsky, are unpaid.

Teams claim negligence

A NEGLIGENCE claim by British Formula One teams Williams and McLaren against law firms Linklaters and Baker & McKenzie is due to be heard in the High Court in January.

The teams allege the firms acted negligently in negotiating and preparing contracts for them in 1998 in which they believed they had secured rights to receive a potential $35m (£19m) windfall each from the proceeds of a flotation or sale of Formula 1's media rights by Bernie Ecclestone.

After a mooted $3.5bn float was abandoned, Ecclestone sold the majority of the rights for £812m but has not had to pay the teams.