Bernie Ecclestone
Page 12
Over the next ten days lawyers for McLaren, Marlboro and Texaco worked on the contractual drafts in total secrecy. In the meantime, Ecclestone was becoming anxious, phoning almost daily for the draft contract he was confidently expecting. Finally, with the contracts between McLaren, Marlboro and Texaco signed, the news had to be broken to Ecclestone. A meeting was set up in London. Duffeler, who claims he wanted to ensure that Ecclestone was not tempted to repeat his offer, took one of his managers with him. Ecclestone, adds Duffeler, was furious when told the contract was going to McLaren. The brief meeting ended acrimoniously, without the courtesy of handshakes.
Ecclestone said he was unable to remember offering a ‘gift’ to Duffeler, or even inviting him out on to the balcony. ‘You know, if you put me against a wall and put a machine gun to my head, and you said, “Are you absolutely 100 per cent sure you never said that?”, I would have to be honest with you and say, “I couldn’t”, because I don’t remember that much. But I may have said, “Let’s take care of you for the efforts you made.” It is the sort of thing that happens all the time in these situations. Normally, people say first, “I want a percentage.” Y’know, they’re part of business arrangements. People actually come up and ask for “commissions”. Unfortunately, that’s the way the world goes round.’
The partnership between Marlboro and McLaren turned out to be one of the most durable in Formula One. It finished the 1974 season with Fittipaldi winning the World Championship title and Marlboro McLaren team taking the Constructors’ Championship title, marking the beginning of a sponsorship that would last for 22 years.
Duffeler, still only 32 years old, was learning fast about the politics and practices of Formula One – the offer from Ecclestone, he was told by the boss of another leading team, was certainly not unusual in sponsorship deals – and he was soon to witness Ecclestone’s knack of squeezing extra money out of sponsors, as he would demonstrate in negotiating the constructors’ transportation costs for Japan’s first Grand Prix. The proposal for a Japanese Grand Prix came from the Asia-Pacific management of Philip Morris following the success of the 1974 season. It was believed that such a high-profile event would help boost the company’s marginal presence and cigarette sales, which, in a country where cigarette sales were controlled by a state monopoly, were in decline.
On 19 April 1974 Duffeler left for Tokyo with Emerson Fittipaldi, one of the drivers most vocal on track safety, to meet officials of the Japanese Automobile Federation and assess two potential venues – Mount Fuji Speedway and the Suzuka racetrack, a visit which attracted coverage in Sports Nippon, the biggest-selling sports newspaper in Japan. More importantly, it attracted the personal interest of the publishing company’s chairman, Mr Chikao Kano, an elderly gentleman who, during a visit to Europe in 1929, saw the first Monaco Grand Prix. He was so enthralled by the spectacle that he promised to do all he could to one day organise a Grand Prix in Japan. At a press conference in Tokyo the positive response by Marlboro to a Japanese Grand Prix was enough to cause Kano to send his son, Sentaro Kano, who was studying at the Sorbonne in Paris, to Lausanne to discuss with Duffeler how the two companies might work together to organise the event.
A fundamental step, of course, was the co-operation of the constructors, or, more precisely, Ecclestone. His response to Duffeler’s approach was apparently far from enthusiastic, a tactic, it was suspected, to hike up the constructors’ fees. Duffeler, anyway, had some powerful allies on his side – the cheque-signing sponsors. The likes of Martini, Elf, Texaco and Renault, through Duffeler’s initiative, were very much in favour of brand exposure in a largely unexplored major industrial market. A Japanese Grand Prix also had the support of the president of the Commission Sportive Internationale (CSI), Prince Paul Metternich, a tall, sophisticated, multi-lingual German aristocrat, who, once having established that there would be no opposition within the FIA to its incorporation in the Formula One calendar, authorised representatives of the CSI’s Safety Commission to ratify that Mount Fuji, the track favoured by Duffeler and Fittipaldi, met with FIA specifications.
In the meantime, discussions between Marlboro and Sports Nippon had ended with the newspaper agreeing to organise and sponsor the race. One of the paper’s senior executives, Yoshinori Arai, was appointed project co-ordinator, and a Japanese consultant with international experience in motor sport, Shunichi Hirai, was appointed to assist. The Japanese began to bone up on the logistical complexities of organising a Grand Prix, as well as the relationship between organisers with the constructors and drivers. Sports Nippon representatives attended the 1975 German Grand Prix and, by the Italian Grand Prix at Monza the following month, were feeling more comfortable with the organising and management of a Formula One event.
But, behind the scenes, there was political opposition, locally and internationally, to a Japanese Grand Prix. The constructors, who wanted a maximum of 14 Grands Prix, were unhappy that 18 Grands Prix had been scheduled for the 1976 season – it would finally be reduced to 16 – while organisers in smaller European countries, feeling threatened by the expanding global dimension, were in a state of high anxiety over the future of their marginal races. The Philippines, through its president, Ferdinand Marcos, and Saudi Arabia, awash with oil dollars, had also expressed ambitions to enjoy the international prestige of a Formula One Grand Prix – senior CSI officials and Duffeler accepted an invitation from the Saudi royal family to visit their country – all of which was enough to cause certain European organisers to voice strong objections to the FIA about the inclusion of the Japanese in the Formula One calendar. Their protests were in vain. A Japanese Grand Prix had the blessing of a greater force – Ecclestone and the constructors were now happy to compete.
By the early winter of 1975 negotiations between Ecclestone and Sports Nippon to decide the ‘start’ and prize money had been successfully concluded, including the funding of the transportation costs of personnel, cars and equipment. In January 1976 the FIA announced at a press conference in Tokyo that the Grand Prix would take place at Mount Fuji on 24 October. It was received in Japan as a momentous event, politically and culturally. Such was its esteem to Emperor Hirohito that planning began for a grand reception in Tokyo, to be hosted by his brother, Prince Takamatsu, for the FIA, the CSI, teams and international press. Everything, it seemed, was running smoothly for a highly successful Grand Prix. That is, until Ecclestone decided to wring some more money out of the Japanese.
With the Japanese Grand Prix just four months away, he approached Arai and Hirai, as they were enjoying a glass of wine in the Marlboro hospitality tent in the paddock at the French Grand Prix, to inform them that he thought the Grand Prix couldn’t be held after all. Visibly shocked, they stood in dumbfounded silence as Ecclestone went on to explain that the costs agreed to cover transportation wouldn’t be enough. If the Grand Prix was to go ahead, more money would be required. The two men were strongly advised by Duffeler not to agree to a tactic that was seen to be a feature of Ecclestone’s negotiating style. If they stood firm, they were reassured, Ecclestone would be forced to back down. He wouldn’t dare risk the controversy the constructors’ withdrawal would provoke.
The stunned Japanese, particularly Hirai, did not want to take the risk. There was too much ‘face’ at stake. Ecclestone was informed that they would have to speak to Tokyo. A series of hurried meetings were held over the next few weeks. By the Italian Grand Prix at Monza, on 12 September, the Japanese capitulated and agreed to a substantial but unknown increase in transportation costs. Ecclestone then expressed his disapproval of facilities and arrangements at Mount Fuji, which saw costs for Sports Nippon escalate almost by the day. Ecclestone did not deny that the transportation costs may have been increased. ‘That may be true, I suppose. I don’t remember, but maybe we agreed to do something and there were more cars. I’ve no idea. But nobody upped the price. If we did a deal we did a deal.’ He did concede that there were increased costs due to the need to improve the circuit’s facilities. ’
Yes, the place was shit. I used to do the circuit inspections in those days. I remember going over three or four times and I said, “Look at this”…“Oh, no, no, we are going to change that”…and you went back and everything was exactly the same.’
No doubt to the great relief of the newspaper’s management, the Japanese Grand Prix took place with no further dispute or demand. The last race of the season, it attracted massive media coverage, including the stirring interest of television, as the race that would decide the World Championship title battle between James Hunt in a McLaren – a frantic replacement for Emerson Fittipaldi, who had decided to join the Brazilian team, Copersucar – and Ferrari’s Niki Lauda. It turned out to be less than a white-knuckled nail-biter, when after two laps Lauda was forced to withdraw through bad weather, leaving Hunt to take third place and the World Championship title by one point. But it was a considerable marketing success for Duffeler. With Fittipaldi’s triumph in 1974, it was the second drivers’ championship title for Marlboro McLaren in three years.
A few weeks later Duffeler left Marlboro to start his own marketing consultancy shortly after Ronnie Thomson, who had been a bulwark against criticism in New York of the European operation’s marketing style and its autonomy, had moved on to a senior executive position at cosmetics manufacturer Revlon. With the departure, too, of Fittipaldi, Duffeler, having achieved the corporate objective of creating a World Championship ‘super’ team, decided it was time for a fresh challenge. It would not be long in coming – in representing the interests of the beleaguered organisers in their negotiations with Ecclestone, a confrontation that would see them once again toe to toe, and come close to bringing about the fatal splitting of Formula One.
By the mid-seventies Ecclestone had begun to look for a new financial package with the organisers to cover, for the first time, a three-year period. He was looking for a massive increase of 60 per cent, from what was now an average of £92,000, to £150,000 for a European race. The intercontinental organisers – in North America, South America, South Africa and Japan – faced even more swingeing increases, as high as $350,000 (worth then about £194,000). Ecclestone’s demands triggered public protests from North America. Bob Hanna, executive director of the Canadian Automobile Sports Club (CASC), the organisers of the Canadian Grand Prix, believed the F1CA represented a serious threat to the future of Formula One. He said: ‘The future of Grand Prix rests in the fact that this little group has to be broken up.’ Tracy Bird, executive director of the Automobile Competition Committee for the United States (ACCUS), agreed: ‘Something has to happen because the control of motor sport has passed out of the hands of the FIA to the Formula One owners and drivers – some 25 people.’3
Their comments were made in support of two Canadian businessmen, Harvey Hudes and Bernie Kamin, the owners of the Mosport circuit, the Toronto home of the Canadian Grand Prix. The 1975 race was scheduled to take place on 21 September, until, that is, Hudes and Kamin refused to agree to the teams’ latest terms as presented by Ecclestone. They claimed that the increase in the teams’ fees had left them too little time to renegotiate with the race sponsors. The F1CA argued that as a contract for the new three-year period had yet to be signed, the constructors were free to increase their asking price. Hudes and Kamin were given a deadline of midnight on Friday 1 August to accept the deal. The deadline came and went without reply. At that time the teams were at the Nurburgring getting ready for the German Grand Prix. A press release was issued stating that the teams would not be going to Canada.
This time Hudes and Kamin responded quickly – they agreed to pay. A meeting of the teams was called in Graham Hill’s motor home – he was the only one with a motor home big enough to accommodate the teams’ principals – and the general consensus, although with Ecclestone in opposition, was in favour of going. A belated Max Mosley arrived to support Ecclestone’s view: if the teams didn’t stand by the deadline, it could fatally undermine the F1CA’s credibility in negotiations. It would embolden others to take on the teams. The team bosses gradually came to share their opinion. The meeting ended with a decision not to go to Canada.
Hudes and Kamin appealed to the CSI to intervene, but without success. Its members doubtless believed they were on a hiding to nothing in taking on Ecclestone and the constructors. The Canadian Grand Prix was duly cancelled, leaving Hudes and Kamin to their only recourse – a lawsuit against the F1CA seeking $8 million in damages. Less than ten months later it was withdrawn and the Canadian Grand Prix was back on track for the 1976 season after Labatt’s Brewery came to the rescue as sponsors with the necessary financial backing. It was a decisive episode for the teams. It sent out the desired signal: if anyone wanted to play hardball, they were happy to provide the arena.
Ecclestone argued that fees demanded of the organisers in North America, South America, Africa and Japan were justified by the costs of the long-haul trips, which, he claimed, were five or six times greater than those incurred in attending the European Grands Prix. In fact, he complained, travelling so far was ‘bad news’ for the F1CA, ‘because we ferry cars and engines back and forth, we fly people home, mechanics get tired and headaches get worse’. It was ‘a bargain at the price’ for the organisers.4 The long-haul trips had been possible, he trumpeted, due to the generous travel concessions the F1CA was able to offer the racing teams. True, but those concessions, he omitted to add, had been possible because the organisers themselves had been forced to pick up the bills.
It was all part of the package deal: if they wanted a Grand Prix, they would have to pay the freight, travel and hotel costs. No travel costs, no Grand Prix. These costs were considerable. For example, the estimated bill in 1977 for transporting one car plus spares, air tickets for seven people and hotel accommodation was £18,600. The travel concessions, incidentally, were only made available to the top ten teams and for two reasons: first, there was only so much money that even Ecclestone could squeeze out of the organisers, and, second, it helped to maintain a high level of competitiveness between the teams to stay in the top ten.
Years later, Ecclestone put some dazzling spin on the reason behind his financial demands in those days. It seems it had nothing to do with getting a better deal for the teams, or even for his financial betterment. Rather, it was for the good of the organisers themselves. Such demands forced them to become more efficient or go out of business. ‘In the old days the FOCA’s [as the F1CA became] role was to kick these lazy amateur organisers into the 1970s and 1980s and 1990s. We kicked them into becoming professionals and running their races efficiently to make money so they could pay.’5 He added that the prize money wasn’t important to the teams because it represented a small percentage of annual budgets. While sponsorship was the teams’ principal source of income, it was somewhat disingenuous of Ecclestone to have dismissed the prize money as not being important, given the huge increases that he had successfully demanded and the grave conflicts they caused.
But if Ecclestone’s latest financial demands were causing serious concerns to the organisers, the FIA was also becoming increasingly alarmed at the authority Ecclestone, on behalf of the F1CA, was taking upon himself. The constructors were now seeking a greater say in the rules and regulations governing Formula One, including the number and type of Grand Prix support races, what type of cars should supplement a grid if there should be a shortage of Formula One cars, the method of qualification for the twenty-sixth car on the grid, either from lap times ‘or by whatever other means the Association [the F1CA] shall decide’, and the facilities and amenities that should be available to F1CA members and common to all circuits.6 The gentlemen’s club that was the FIA seemed powerless to check the constructors’ aspirations.
The all too apparent inability of the CSI’s president, Prince Paul Metternich, to do so on its behalf led to him being kicked upstairs to the presidency of the FIA itself. In this new rough-house environment he was considered to be too full of old-world courtesy and civility to counter the upstart Englishman, w
hose popularity around some of the European circuits was clearly reflected in the message of a banner carried by a group of spectators at Monza: ‘Away with the English Mafia!’ For his successor the FIA went outside its functionary ranks, to find someone who would not feel cowed or intimidated by Ecclestone’s reputation. Certainly there were few candidates indeed within the ranks of the FIA delegates, senior motoring-club officials described as semi- or fully retired amateur bureaucrats more interested in the social jollies and political prestige of Formula One than the hardheaded administration of its management.
In the late autumn of 1975, the FIA appointed Brussels-born Pierre Ugueux, aged 62, who had been joint general director of Belgium’s Public Energy Services Works, which controlled the country’s gas and electricity industry. He had been involved to a minor extent with the affairs of the Royal Automobile Club de Belgique, but knew little about motor racing, That, as far as the FIA was concerned, was a prerequisite of little importance; of more interest was his reputation as ‘a tough little manager’, with, it was hoped, the political wit and mettle to outflank the constructors.