Interpublic pays $93m to get out of British F1 deal

LONDON – The Interpublic Group is to take a $93m charge to get out of its contract to promote the Formula One British Grand Prix, marking another stage of its withdrawal from motorsports.

Interpublic had been tied in until 2015 to promote the British Grand Prix, held at Silverstone, but will now end its commitments after this year's race in July.

The charge will add to losses at Interpublic, which last week was revealed to have paid executives more than $41.4m in bonuses for 2003. In March it revealed losses, blamed on more restructuring, of $40.6m.

The exit from the British Grand Prix follows January's sell-off of Brands Hatch and three other British motor racing tracks to the former F1 driver Jonathan Palmer. Having paid £120m for Brands Hatch four years ago it revealed a $38m loss relating to the sale last month.

The withdrawal is part of Interpublic's move out of non-core businesses, which have left it dealing with debts after a late 1990s acquisition spree. In 2001 its motorsports division lost $135.8m.

David Bell, Interpublic chairman and CEO, said the move was another important step in Interpublic's turnaround. From his position, he said, Interpublic's involvement was inappropriate.

"From the point at which I was asked to lead this company, I have made it clear that it is inappropriate for us to be involved in owning or operating venue-based motorsports businesses. We are pleased to have moved closer to completing our exit from the motorsports business," said Bell.

Interpublic will take the $93m hit as a second quarter charge. After exiting the F1 deal Interpublic still remains bound under its Silverstone lease and its related obligations to the British Racing Drivers Club until 2007, which cost around $62m.

If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the Forum here.