Business Case Studies, Leadership Case Study, Tata Group,Ratan Tata

Code : LDS0005

Year : 2004

Industry :Automobiles

Region : Global

Teaching Note: Not Available

Structured Assignment : Not Available

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Introduction: Formula One Motor Racing (Formula One), the most-watched televised sporting event in Europe and the world’s second-largest sport after soccer, had typically attracted audiences ofmore than 50 billion fortnightly. Since its inception in 1950, Formula One (Annexure-I) was called the soap opera of the sports world: the exotic locations, vast quantities of money, and famous faces made it unique compared to most other world sports. In the late 1960s, Bernard Charles Ecclestone (Ecclestone), a used-car dealer sensed a great opportunity tomakemoney by getting involved in the administration of Formula One. Gradually, in the early 1980s, he began acquiring control of the racing series’ broadcasting and merchandising rights, which resulted in huge profits for him. In due course, Ecclestone emerged as the most important person in Formula One racing, as he ownedmajor stakes in some key subsidiaries of Formula One.

However, the car manufacturers such as Fiat, Mercedes, and BMW, who financed Formula One teams, accused Ecclestone of being excessively secretive about the web of Formula One companies he controlled. They also felt that he diverted toomuch revenue to his own holdings while Formula One’s popularity was declining. Therefore the carmakers decided to abandon the Formula One series after their agreement with Ecclestone expired in 2008 and planned to start a new auto-racing series. But Ecclestone felt that starting a new racing series would be a huge challenge for the car manufacturers.