Teams reject Ecclestone offer of bigger share

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Formula One teams snubbed an offer from Bernie Ecclestone for a greater share of profits aimed at stopping them quitting the sport.

The championship has suffered a series of setbacks in the past two seasons with three of the six carmakers pulling out. Mr Ecclestone, the F1 rights holder, told the Financial Times he had tried to stem the flow by offering the teams a 60 per cent share of the sport's underlying profits. In return, the team's owners would have had to sign up to an agreement, committing them to the sport until 2012, but they declined.

Under the so-called Concorde agreement, the teams currently receive a 50 per cent share of F1's underlying profits as annual prize money, which totalled $521m last year.

A direct contract with the carmakers would have prevented them from pulling their teams out of F1 until the existing agreement expires in 2012. Honda pulled out last December, BMW (Xetra: 519000 - news) announced it was quitting in July and Toyota said it was walking away earlier this month.

The defections leave just three carmakers involved in F1: Mercedes Benz, which on Monday reaffirmed its commitment by switching from McLaren to Brawn; Ferrari and Renault (Paris: FR0000131906 - news) . However, Renault has refused to commit its future to the sport, promising a decision before the end of the year.

Most F1 teams are run by private limited companies and, in all but one case, they are the signatories to the Concorde agreement rather than the car companies and billionaires, which ultimately own them.

The upshot of this is that if the owners decide to pull the teams out of the sport, the companies can be put into liquidation leaving F1 with little recourse to pursue their parents.

Mr Ecclestone said this arrangement meant he was powerless to stop others leaving: "You can't [prevent more teams from leaving]."

"The manufacturers won't commit," he said, adding there were two reasons for their reluctance. Firstly, "they don't know what they're going to do next week". Secondly, he said that if the manufacturers were to commit directly they would have to allocate the £1bn ($1.7bn) cost of participating in F1 for the five-year duration of the Concorde agreement on their balance sheets. He suggested that no carmaker's board would agree.

The only manufacturer which has directly signed the Concorde is Ferrari which does not run its F1 team through a separate subsidiary. In recognition of its historical status and commitment to the sport, Ferrari receives an increased share of the sport's earnings.