A Grab For Power.

In racing, they call it the "moment"--the split second when a driver almost crashes but by reflex or miracle manages to avoid a disaster. Bernie Ecclestone, the legendary Formula One chieftain, has seen his share over the course of his long career in auto racing. Since 1950, he's morphed from driver to team owner to the man running the flashy, high-speed racing league known as F1. Before Ecclestone took control in the early 1980s, F1 was a business struggling to find its way in the modern era. He turned it into a moneymaking machine and personal empire, largely by bundling and selling the TV and commercial rights as a single package. (The rights had been sold by each individual track or race.) Now F1 draws an average worldwide TV audience of 388 million-- only the World Cup and the Olympics attract more viewers. Even more impressive, the glamour sport generates annual revenues of roughly $3 billion. Bernie, as he's known in F1 circles, has benefited hugely; Forbes magazine recently identified him as the U.K.'s second richest man, with a bank account valued at about $3.2 billion.

But Ecclestone's once ironclad hold on F1 is being threatened. He no longer has a lock on the TV rights; after a series of deals ending in 2001, Kirch Media acquired 75 percent of SLEC, the Ecclestone rights company named after his Croatian wife, Slavica, a former model. When Kirch collapsed, a consortium of banks took control of the firm. And now there's a new challenge: the top F1 car manufacturers--Ferrari, Mercedes, BMW, Renault and Ford, which underwrite the racing teams and give the sport its considerable technological cachet--are poised to grab a much bigger chunk of the financial pie for their teams. Doing so would further dent Ecclestone's power, giving the carmakers and the teams a much stronger voice in how the league is run. "It's all OK," Ecclestone told NEWSWEEK. "We can sort it out."

They'd better. The auto companies have vowed to bolt F1 and start their own circuit unless Ecclestone gives the teams more of the cash from TV rights, trackside advertising and ticket sales. According to Frank Williams, head of the Williams/BMW team, the car manufacturers are also looking for "greater commercial transparency" in the series. For instance, it was only recently that some teams claim to have learned how much money the sport generated from all sources.

The current dispute largely stems from a 10-year contract, called the Concorde Agreement, that Ecclestone and the teams signed in 1997. It divvied up the sport's profits--allocating 47 percent of the F1 TV money to the racing teams (many of which have partnerships with the carmakers), along with a $35 million prize fund. Some teams and manufacturers were dissatisfied with the arrangement; they believed they were forced into the deal. The subsequent Kirch investment in F1 engendered more ill will. "[Bernie] made a fortune and the teams didn't participate," a source close to the car manufacturers told NEWSWEEK.

In November 2001, the manufacturers struck back. Led by Italy's Ferrari, they set up the Grand Prix World Championship--ostensibly a new racing league that would compete with Formula One. Although it doesn't yet exist, it's been an effective wedge for getting Ecclestone and the banks to the bargaining table. In fact, for all of ...