Ex-QPR Dean Wilkins Leaves Brighton...Possible Racing Change for Briatore and Ecclestone

-
Ex-QPR midfielder Dean Wilkins (brother of Ray Wilkins) has left Brighton. There were a couple of messageboards posts a couple of weeks ago, suggesting he might come
to QPR, but there was no evidence offered for that. Meanwhile in the Racing world, a possible new focus for Briatore and Ecclestone


Brighton Official Site - Wilkins Leaves Albion
Club Press Release
Dean Wilkins is leaving Albion, after deciding not to accept the club's offer of a coaching post under new manager Micky Adams.
Former Albion boss Wilkins was replaced by Adams as manager in May, but offered the chance to remain with the club in the role of first-team coach.
Wilkins, who has been silent since the managerial change, today explained, "I was extremely disappointed by the decision taken by the club, but I took the job with my eyes wide open, and I have been in the game long enough to know that is the nature of football.
"With that in mind, and after a lot of thinking and careful consideration of the club's offer of a role under Micky, I have decided that it is right for all parties for me to move on and will be looking to continue in coaching or management elsewhere.
"It has been a wrench for me to leave a club I have been associated with for 20 years and I would like to thank those players, members of staff and supporters who have supported me during that time.
"I feel I have laid some very good foundations which I genuinely hope will help the club continue the upward rise of the last 12 months."
Albion chairman Dick Knight said, "The board thanks Dean for his sterling service to the club over the years, both as player and on the coaching side. His credentials as a coach are excellent and we wish him all the best for the future." Brighton


And of relevance to this blog, only to the degree that it takes any of the attention of QPR owners!

Gulf News - Heading for a crash? By Christian Sylt and Caroline Reed, The Telegraph Group Limited, London 2008 Published: June 16, 2008,

It all started with a few slaps to the backside. However Max Mosley's now-infamous 'M' exploits seem set to spark a rival motor racing series that could leave F1, and RBS, its biggest creditor, in the dust.

Mosley has single-handedly presided over one of the biggest scandals ever in the billion-dollar sport. Despite car companies and auto clubs representing tens of millions of motorists calling for him to step down as president of F1's governing body, the Federation Internationale de l'Automobile (FIA), he refused to resign following lurid revelations about his private life. Heads of state said even that they did not want to be seen with him, preventing Mosley from attending many of this year's Grand Prix events.

Yet earlier this month Mosley won a vote of confidence from the FIA's members who viewed the attack on him as an attack on the federation. Mosley has made it abundantly clear that he is not leaving F1 - but at last week's Canadian Grand Prix, it came to light that F1 might instead leave Mosley.

A series of crisis meetings was held at the race to consider how the sport could survive the damage being done by Mosley to its slick and squeaky-clean reputation. More than 300 sponsors invest nearly £500 million in supporting F1's 10 teams and expect this to bring image benefits to them - not association with a sordid scandal. One team boss reportedly said that "many [sponsors] are even threatening to cease their payments if Formula 1 does not solve the problem with Mosley".

Chairing the meetings was Bernie Ecclestone, the 77-year-old chief executive of F1's commercial rightsholder, and he is said to have come up with the radical solution of starting a new series under a different brand to run outside the FIA. As one senior team source suggested: "The manufacturers supply the cars and the drivers and the sponsors, Bernie has the contracts with the circuits and the TV companies... Max is just the referee. The FIA blows the whistle."

In a case of stalemate over the future of F1, a new series would be one of the only ways forward. The commercial rights to F1 are in fact the commercial rights to the "FIA Formula One World Championship" since the FIA founded it in 1950. As a result of this, F1 could not be run under any other governing body and so the only way for the participants to distance themselves completely from the FIA would be to start a new series.

Seeking stability

"I don't think it is the first option. We would prefer to work with the FIA if we can," said Nick Fry, Honda GP's chief executive, when asked about the possibility of a breakaway series. Ultimately the pressure of finding a solution may be too great to avoid it. "We need stability, consistency and the right values and images for Formula One," says McLaren's boss Ron Dennis. He adds: "If anything is put forward as an initiative that is in the best interests of Formula One and this company I will support it. It's highly unlikely that Formula One will look the same as it does today in five years' time."

An indication of exactly what F1 might look like in future can be found in the intellectual property portfolio of Formula One Promotions and Administration (FOPA), Ecclestone's private company. The company has a suite of pan-European registered trademarks which seem ready to roll out on a new racing series.

The three most crucial of these trademarks are for GP1 and GP3. These are in addition to GP2, which is already up and running as F1's feeder series. The registrations cover a wide range of categories including organising and staging sports events, broadcasting, sportswear and timing equipment.

Although the original applicant of the GP3 mark was not FOPA but an Italian business, Ecclestone's company took it over in October 2006 and, perhaps most tellingly, it now has a logo which looks remarkably similar in design to GP2's brand.

These three tiers of brands would also seem to mirror those of F1's rival A1 Grand Prix, which has A2 and A3 feeder categories. It is a strategy which has clearly been on Ecclestone's mind.

Last year, when interviewed about his hopes for his football club Queen's Park Rangers, he compared its progress to rising through motorsport categories, saying: "We're in Formula Renault at the moment. Next, we want to move up to GP2 and then GP1." In less than 12 months this could be a reality as reports from Canada claimed that there was a deadline for Mosley to resign by today and failing that, the new series, with F1's current participants, would be given the green light for 2009.

Big risk

It would be a big risk given that F1's globally renowned brand has undoubtedly played a part in accelerating the sport's annual turnover to £657 million. However, backing a new series could maximise the return on investment for CVC, the private equity house which majority-owns F1's commercial rights holder.

In March 2006, CVC acquired F1 in a leveraged buyout from Ecclestone's family trust, Bambino Holdings, and three investment banks: Bayerische Landesbank, JP Morgan and Lehman Brothers. According to the private placement memorandum for the investment fund used by CVC to make the F1 acquisition, it "typically targets a three-to-five year investment holding period". It is approaching this window but still has several obstacles blocking the road to it realising its investment.

One of the biggest concerns for CVC is that the 10-year contract which binds the teams to race in F1, the Concorde agreement, expired at the end of last year and has yet to be re-signed. CVC would want the teams' commitment to demonstrate to buyers that its investment has a secure revenue stream. Likewise, the teams want to sign a new Concorde agreement to give them both financial and regulatory security since F1's regulations are written into the contract. Mosley however doesn't agree and since the Concorde also requires the FIA's signature, this is a significant roadblock.

"In my view, we should only sign a new Concorde agreement if it reinforces the authority of the FIA," he said in a letter last month to the FIA's member clubs setting out why he should be retained as president.

The FIA has more regulatory freedom by not signing to fixed regulations in a contract. And since Mosley promised the FIA members that he would take a tough stance on not signing the Concorde, he will now have to live up to it. However, by not signing, the FIA may ultimately be sealing its own fate.

"We have written 146 drafts and spent over £1 million on a new Concorde Agreement but it hasn't been agreed," Ecclestone said recently. He added, crucially: "The teams are free to go if they want." This could play into their hands since the FIA would not be an obstacle to them signing a contract to race in a series outside its governance. Commitment from the teams would not be the only benefit that a new series would bring to CVC's investment.

Buried deep in the commercial rights contracts between the F1 Group and the FIA is a right of veto fondly known as the "Don King" clause. This enables the FIA to veto any change of the ultimate owner of F1's commercial rights and it could depress F1's value. Although, for example, the FIA might not veto the purchaser to whom CVC may sell, it could object to any subsequent sale. This could lower the purchaser's return on investment and so CVC's sale price would need to reflect that.

The very fact that Mosley has not stepped down may also be affecting CVC's sale price. It may make it appear that CVC has inadequate control over all aspects of its investment which in itself might put off potential purchasers.

Some of the most likely buyers of F1 are in the Middle East as countries there have begun to show a great interest in the sport by acquiring stakes in teams, providing numerous sponsors and hosting several races. Companies in the region also have ready access to the money required to give CVC the 52.9 per cent rate of return already achieved by the fund which it used to acquire F1. However, countries in the Middle East have been most outraged by Mosley's behaviour, with the Crown Prince of Bahrain even banning him from this year's Grand Prix there.

Enormous pressure

Ecclestone recently admitted: "Since the story broke I have been under enormous pressure from the people who invest in Formula One. They point out that as a chief executive or chief operating officer of a major company they would have gone either immediately or within 24 hours in the same circumstances." Yet although starting a new series would solve this problem, it could trigger even bigger ones.

To finance its F1 acquisition CVC initially secured loans totalling $2.4 billion. The Royal Bank of Scotland (RBS) provided a great deal of this - an amount believed to be a credit term facility totalling $1.1 billion, with the remaining $1.3 billion coming from shareholder loans presumably from CVC's own investment fund.

A year later CVC refinanced the loan with its new debt total standing at $2.8 billion. This also saw Lehman Brothers coming on board as a lender and thereby mitigating some of RBS' exposure in advance of the credit crunch. But Lehman Brothers itself also lessened its lending risk by returning as a shareholder in Jersey-based Delta Topco, F1's ultimate holding company.

Delta Topco is majority owned and controlled by CVC which is thought to hold 69.6 per cent of its shares. Bambino Holdings is understood to have a 9.4 per cent stake, with 16.8 per cent in Lehman's hands. Fellow investment bank JP Morgan has 3.4 per cent and the remaining 0.8 per cent is believed to be owned by Churchill Capital, one of CVCs advisers, with Ecclestone himself having just one share in the group.

Even though Lehman has a stake in the entire group, it has much more than this covering its back since the loans are also secured on the shares of all key F1 companies and their assets including F1's commercial rights themselves. CVC pays a hefty price for the debt, with the loans attracting interest at the Libor rate plus between two and 4.5 percentage points. However, the sting in the tail is the element of payment in kind interest added to this at 5.375 per cent.

Money matters

Payments in kind are loans that allow interest and capital repayment to be delayed, sometimes for several years. They are the final debts to be repaid in the event of bankruptcy, coming after other debt instruments and only just before equity in a company's capital structure. To compensate lenders for this risk, these offer sky-high interest rates.

Private equity houses are particular fans of these loans because, by allowing interest payments to be deferred until a company is sold or floated, cash can be retained in the business in which they have invested. This is then available for restructuring or paying large dividends and fees to the private equity owner.

By the end of 2006, just nine months after taking out the debt, $2 million of payment in kind interest had already been added to the F1 Group's loan principal. The entire F1 group now makes around $250 million in annual debt payments but its ability to do this would be jeopardised if all of F1's participants deserted it.

Since the debt is secured on the commercial rights to the FIA Formula One World Championship it seems tough to see how it could be taken on by a new structure which did not have these assets. However, even if CVC managed to arrange this with RBS, it could then raise serious questions about RBS' due diligence process since the original loan would have been secured on commercial rights which would have become worthless.

Likewise, CVC could face probing questions from its fund investors over supporting a rival series. They may wonder why it spent more than $1 billion of their money on buying the commercial rights to a racing series which is then ditched in favour of a rival with rights which do not need to be acquired from anyone.

CVC has to navigate through these hurdles in order to keep its F1 investment ticking over. And with the groundswell against Mosley growing with every day he remains in office, the race is on. Gulfnews