There have been stories circulating in F1 circles in recent days suggesting that several of the teams are currently up for sale, or in need of significant investment. The primary underlying rumour in Delhi was the future ownership of the Lotus F1 Team. It has been clear for some time that Gerard Lopez’s Genii Capital is no longer willing to keep pouring money into the team and the word in recent weeks has been that Genii wants to sell 49 percent of the business in order to clear the debts that they have built up supporting it. Team spokesman Stéphane Samson has confirmed that Genii Capital has been looking for “minority investors”. A deal was close just before the Indian GP, but it seems that this fell apart at the last minute. One suggestion that Martin Brundle of Sky suggested in India was that the Malaysian car company Proton might be the buyer. Proton owns Group Lotus and there would be sound logic in consolidating the Lotus brand by adding the F1 team to the car company again. That would make Group Lotus a more saleable company. The problem is that all potential Group Lotus buyers have been scared away by the mountain debt that was created by the previous management at Hethel. This is believed to be in the region of $400 million. Many in the industry think that it is impossible for Group Lotus to come back from such a situation, unless it can get the banks to swallow the debt. Unfortunately, the loans come from banks that have already lent large sums of money to Proton’s parent company DRB-Hicom and this firm cannot afford to upset its bankers.
DRB-Hicom has debts of around $2.1 billion and it wants to reduce this burden to more manageable levels. In recent days it has started to divest itself of non-core assets in an effort to reduce its debt load, selling its Hicom Power subsidiary for $190 million, in order to repay borrowings taken to finance the acquisition of Proton. It is anticipated that further asset disposals will take place, including the sale of DRB’s stake in Bank Muamalat, the insurance company Uni.Asia Capital and perhaps even land that the company owns in Johore. It is also expected that Proton will sell off all surplus assets.
It is clear from these figures that DRB-Hicom is not in the market to spend money on a Formula 1 team. Putting the elements of the Lotus brand back again is a good idea, but only if the resulting company is more saleable as a result. In any case, Samson says that Proton is not involved in the F1 dealings.
The fear is that no sponsors will come forward and it will be left to the owners to pay the bills, which obviously they do not want to do. However the team has done very well this year on the race track, despite not winning a race, so the shareholding is an attractive asset (depending on the price, of course) and the team does not much care who owns the shares, if there is enough sponsorship to allow them to continue to improve. The fact that Kimi Raikkonen has been confirmed for next year suggests that the team and the Finn are confident that the team will be fine, no matter what dealings go on over the ownership.
joeblogsf1 
Proton have supposedly entered into some sort of commercial arrangement with Honda. Honda to return by a back door route?
Think it’s pretty clear that Honda would go with McLaren if they came back. I can personally see Genii waiting for a VW brand to take over ones Concorde agreement and engine rules become clear. Think it is the uncertainty around governing of the sport, concord agreement not done and dusted and technical regulations debate that prevent anyone from taking any stakes!
I do not understand why people keep banging on about things not being settled. The engine rules are done and dusted – and have been for months. Even Bernie has given up complaining now. The governance of the sport is not an issue either. The teams have done their commercial deals. They must now do a deal over governance. Their choice is very simple: agree or get lost. They cannot afford to get lost, so what choice do they have left?
He was still moaning to Martin Brundle on Sky this weekend. Why does he keep moaning about the noise of the engines by the way?
Because he has a really good set of ear defenders.
Putting aside Ferrari, RedBull, Mclaren and Mercedes –
(Although I think at least Mclaren and Mercedes are far from being able to spend what ever they want, at least without world championships to show for it)
What is the long term plan / viability of the rest of the field. We’ve known for a while now that the teams were again going to fall to a ‘divide and conquer’ tactic and let the possibility of actually making a profit from the sport slip through their fingers, again…
What is the business plan for these teams now though? Lotus is hardly a shrinking violet both historically and in it’s present guise, 4th in the championship with every chance of getting 3rd, ahead of a works outfit, world champion driver etc…
I’ve read the stories about how Genii and Virgin etc… were going to harness the F1 audience to cross market other products but given how Virgin went and the fact Genii needed to borrow money to keep afloat and now wants out this seems to have failed.
It’s cheaper for a title sponsor to be a title sponsor than own and run a team and if we presume this sponsorship isn’t viable or won’t yield a return (based on the fact half the field doesn’t have any) I fail to see how marketing your own services will be viable at the cost of owning and running the team, unless it’s a very specific product like say cars for example but as history if it’s cars you need to win.
In my time following F1 and the business of F1 we’ve seen
– Tobacco advertising
– Crazy economy with companies (especially car companies) pouring billions away often for little return in regards results so I also assume ROI
– New business models such as Virgin and Genii
– Find a pay driver
But these options have ended, failed or leave a slightly unsavory taste as in a pay driver from a country of questionable freedoms or human rights records. You can overlook this of course, or sometime find someone with family / business money but is Pic going to pay enough to prop a team, let a lone win!
Don’t get me wrong I take my hat off to Genii for trying – and at least they have a plan even if a failed one but every other team expect the top four and maybe Williams (which is about racing and used to do it well with tobacco and manufacturer money) seems to have absolutely no purpose in regards being in F1. They won’t win and they’re not selling anything, so how they plan to keep financing this, I’m at a loss to understand.
Perhaps Tony F could pick up the Lotus (Enstone) minority stake while he waits for Lotus (Hethel) to go into administration (so he can buy it out of administration)…
Any news, meanwhile, on Dany Bahar and his hunt for the real killers?
Joe
Proton apparently loaned Genii £30m payable back over 3 years with a penalty of an equity percentage of 50% i believe? I’ll bet Genii are not paying back first tranche of this loan as they have not signed any big sponsors to replace Lotus sponsorship.
It also needs to be said that although its good to see Lotus’ name on the podium with this team, and ARTGP in GP2/GP3, and I hope it helps sell more Lotus cars to save the jobs in beautiful Norfolk but
THIS IS NOT A LOTUS F1 TEAM!!
NO TYPE (T) NUMBER SO NOT A LOTUS !!!!
N
They did not loan the money. They took over a bank guarantee, which is not the same thing.
Joe isnt there a distinct possibility that Mclaren could be having an engine made by recardo for the 2014 season and dump mercedes, or is this a touch too far. I know engines cost a fortune to design and develope. Mercedes engines have not been kind to Mclaren for a few years now, with the lack of championship wins and some engine failures. I have ask this question a few times recentley with no response.
No.
Is this a legacy of the realisation (around 1986?) that Honda had far deeper pockets than TAG?
I read somewhere (don’t we all) that Kimi gained equity in the team as part of his initial contract, is that possible/likely?
No
Joe – I’d be interested in hearing your thoughts on the possible impact of the current french auto manufacturer crisis and the likelihood of Renault possibly pulling out of providing engines.
It is unlikely to happen.
Cheers!
Joe, I heard Gerard said to J.Allen that they need 1 more medium scale sponsor to break even. I don’t buy Genii is in financial crisis as earlier Gerard was trying to bought over a football club with 500m. And the company has been actively involve in all kind of investment around the BRIC regions.
Im hopeful you can dig a little bit more about the team ‘s financial status, and whether there are any new sponsors coming.
I’m telling you what the story is. I’m not sitting here guessing. Breaking even and clearing debt are too different things. They are selling 49 percent.
Joe – the team should be worth more due to an increase in the share of FOM revenues under the forthcoming Concorde agreement as well as the performance bonus. Perhaps they see that as a good window to sell?
No, they simply don’t wnat to put any more money in.
Joe – Just to address a constant ringing yet farfetched thought. Is there any possibility that Kimi has structured taking up a ownership stake in his 2013 contract in lieu of a salary with Lotus, since he’d have known that Genii are looking at offloading a certain percentage somewhere down the line?
Reliable sources and financial publications’ like Forbes have pegged Kimi’s wealth over the years at sitting close to the $ 100 million mark, so do you suppose he’s thinking long term and getting entrepreneurial like JYS? Would be great to get your thoughts. Thank you for a great blog – the first thing apart from James Allen that I get onto when I get online everyday.
No.
I hope I am not overly influenced by a rough year with health, but my outlook for anything connected with adland, is simply to take away the bottom 50% of all deals.
My own models – admittedly nothing much to do with the politics and intrigues of F1 – scream at me. IF, and I mean IF, one extrapolates one to the other, which is fraught with confidence risk, I’d expect half the grid to change hands pronto.
Now don’t take that as a prediction, but instead as a force that might affect deal decisions. Anything which was marginal start of year, is just far more marginal now. If I have to make any prediction, it’s the safe and obvious one: that there will not be a linear decline, that slow decline to adjust to reality is in fact predictable on a long term scale, but happens to be non linear in the short term. That’s as safe as saying tomorrow will be different from today. It will be different.
Yours ~ Captain Sunshine.
p.s. Didn’t know (didn’t care) that Sahara was dependant on a public penny stock scam, see Reuters. If FI is on the grid next year, I’ll be surprised.
Whatever the truth is of whether they are for sale or not the fact of the matter is the team are financially not stable and I know that for a fact as I used to work there until recently and I know many people there. I hope whatever happens, happens soon for the sake of the staff and their sanity. It is not a happy ship.
So do you think Mclaren will stay with Mercedes after 2013???????, please do respond joe……
Who knows?
Have you any more in the rumour that Lotus failed to pay staff on time this month, Joe? Have heard this from various sources, but nobody inside the team will confirm. Things must be shockingly back if it’s the case.