It is nearly two years since Williams F1 floated 21 percent of its shares on the Frankfurt Stock Exchange. The shares were sold in March 2011 at around €25 per share, which meant that the team raised €60 million in cash and gave itself a market capitalisation of €243 million ($337 million).
After the launch the share price fell and by August that year it was down at €12.50 per share, but this had no effect on the team itself except in financial circles where people like to talk about notional value and such things. The naysayers chirped away but they have fallen silent since then and gradually over the last 14 months the team’s value has increased. In the last few days the share price has finally climbed back to the value at the launch and they are now trading slightly above it. The only losers in this process are those who have sold their shares along the way, but the actual selling has been fairly limited. The company is making money and does have a policy that could see between 25 percent and 35 percent of the annual net profits paid out as dividends, although for the moment this is not the case, as the company is holding on to its cash.
On the race tracks the team did win a race in 2011, but overall it climbed only one place in the Constructors’ Championship, despite scoring 76 points compared to 2011′s total of five points. This meant that Williams did not win as much prize money as it should have done. If there has been fewer incidents the team could easily have scored another 50 points, and that would have brought $15 million in extra revenues. One must say that while neither was a bad choice, the feeling was that the car was good enough to have achieved much more. The victory in Barcelona was vindication of the team’s strategy to concentrate primarily on engineering in order to begin a comeback. The architect of that strategy was Adam Parr, who brought in Mike Coughlan to get the technical department working properly. Coughlan showed that despite his troubles with McLaren, he is a very fine engineer and clearly understood what had to be done. The new car was a great deal better than its predecessors. The next step in the strategy is to bring in a top class driver and the team hopes that Valtteri Bottas will be its answer to that problem in 2013 and beyond. If the youngster can rack up a lot of points this year, then big name drivers will start to take interest in Williams again 0 and so too will sponsors.
All this means that if things go to plan the value of the Williams shares will continue to rise as demand for them rises…
I don’t know if it’ll seem punctual to report on Williams F1′s financial successes when the person single-handedly responsible for a good chunk of its revenue and >100% of its profits is reportedly fighting a life-threatening infection on top of (or as a side-effect of) terminal cancer.
Williams might not have all their eggs in one basket, but so much of their income is from this one contract, they’d be severely crippled if it went away.
As a holder (for both emotional and rational reasons) I certainly hope so.
Emotion aside, some of what made me buy in was the potential for growth in the other business areas that Williams are diversifying into. WHP are proving the viability of the flywheel technology with the Porsche and there are trials of a larger unit underway on buses. The Jaguar tie up ultimately didn’t happen but I can see a possible Porsche road car in the future.
At the time there was also a potential of a budget cap/resource restriction along with a renegotiation on the distribution of wealth in F1 which would’ve benefited the business greatly. Little ended up happening here but Williams are still a lot stronger than they were at the time of the float which is probably Adam Parr’s greatest legacy.
Didn’t the proceeds of the floatation go to Patrick Head rather than the team? It was mostly his stake (30% before Toto Wolff’s purchase). Ninety percent of Williams turnover was F1 related, but the Hydrid Power/KERS business has growth potential. Shame about the Jag.
Expectations for Bottas are high and rightfully so. Hope it goes well.
I think the Jag contract will have some pretty steep get out clause, so I suspect that this side of Williams Engineering will continue to so quite a large profit, no work with income is always a nice situation, for the company with the contract!
Good, good, GOOD!
In the last few days the share price has finally climbed back to the value at the launch.
That’s not going to excite most short term traders. Ask a man like Anton Kreil if you want an honest opinion.
What kind of financial setback will Williams have if Venezuela shall stop their financing of the team?
There are contracts in place.
They won in 2012
But you meant that anyway.
Typo at start of paragraph three. You write 2011 when you mean 2012.
If they had another year with a better car and disappointing results, the shares will fall? If they do, in regular companies that means that heads will also fall. Does it apply to a F1 team?
More power to FW – Williams is one of the truly great teams. Others come and go but Frank’s still ‘in’ there. I’d love him to win another championship – and soon!
I read Adam Parrs book. To me, his story was one of success. I was a bit unhappy it didn’t go into more detail. How could such a clever business man fall victim to Bernie? And does he really have that much influence over such teams?
A belated welcome back Joe, hope your time off was enjoyed.
As an aside, yesterday I received my copy of Parr’s book. Looks impressively different, keen to get into it – my copy is number 2480 of the 2500 limited edition print.
Lucky you, I bought it on kindle, and I wish I had a “real” one. There is so much in it, if you read between the lines…
Does it work on Kindle? I got the sample and couldn’t get the text to a readable size (old style kindle with the keypad)
I have it in Kindle format. It works fine on my Kindle DX and even has colour (red) if viewed on Kindle for iPad or PC. You would have to have very good eyes to be able to read it just on the pocket Kindle.
Amazon are still saying that they have copies available.
I’ve always been confused about the notion of buying shares in an F1 company.
Isn’t the purpose of an F1 team to win – not to make a profit like a normal company?
I would have thought that would make the value of rise less than a normal company
Williams Grand Prix Holdings PLC is more than just an F1 team.
Yes, but if you look at the figures, it is not THAT much more than an F1 team at the moment.
Joe, it seems you have fallen into the trap that most people do during the first week or so of a new year by putting 2011 instead of 2012.
I’ve been backing this team since the late 90′s which has been a bit trying at times but I was pleased to see them performing somewhat better last year. I can’t help but wonder what they could have done with a more experienced driver, but I’m pleased to see Joe’s cautious optimism for their future. Good luck to them for 2013 and beyond!
Following on from the previous article, Adam Parr’s book is an example of the positive attributes of the internet as a publishing platform. A man works to get his vision into a communicable form, then gets it out there. There’s power in that. Depth.
Hi Joe, do you think the situation with Chavez is going to change the fortunes of Williams? It may have an affect on Maldonado’s career. Do you think Williams have done enough on the engineering side to keep up their business success?
There is a contract which must be honoured.
I’m not an expert in Venezuelan politics, but looking at this regime history it seems they don’t give a pinch of salt about signed contracts.
Yes, but there are still laws.
PDVSA owe a lot of people a lot of money in this world, me included, and I doubt I’ll ever get a cent of it – but I suppose reneging on an F1 debt would incur a lot more bad PR than losing my invoice in the post!
A couple of sports teams sell (or have sold) stock. Manchester Union, the Green Bay Packers, the Boston Celtics. I would assume that most of the buyers are fans who like the idea of owning a piece of their team and are likely unconcerned about subsequent price fluctuations.
I’ve always admired Williams and wouldn’t have minded giving Sir Frank a helping hand to the tune of a couple of shares. But if I wanted to make money I think I’d look elsewhere.
Buy high, sell low. The secret is volume.
“Buy high, sell low”? Someone’s still feeling the after-effects of all that Christmas brandy.
That’s a joke, Jem. Didn’t you see that the secret is volume?
Thanks. I was letting it be.
What’s that old aphorism? “To make a small fortune in F1, you need to start with a very large one….!” It is great to see Williams doing well, and my personal view is that the requirements of being publically listed generally act to keep a company lean, efficient, and transparent in its dealings. That surely has to be a good thing……who said Vijay Mallya?
Joe, that the share price has finally gotten back to IPO levels coupled with the fact that share prices should reflect the future value of a company, does not warrant your headline of a quiet success.
Also you constant praise of Mr Parr I find annoying because even after reading his utterly rubbish graphical novel (if you could even call it one) it is unclear what he did, besides being part of a process of hiring good people.
Why don’t you praise Sir Frank as much for hiring mr Parr for example or simply for having ensured Williams F1 is still around.
Parr is a little fish who by cuddling up to Max peed off to many people and you will not find anyone except you who misses him.
You are entitled to whatever opinions you like, but in my opinion the team has been doing relatively well in the first phase of its planned comeback. Thus I think the headline is perfect. I think I give Adam a fair assessment – and we did not always get along very well. I also think that his book is very subtle and very clever and perhaps some of it goes over the heads of some of the readers. And while I think that Frank obviously deserves credit for hiring Adam, it was Adam who was running the firm and making the decisions, although he always had to convince FW that the steps being taken were the right ones for the company.
I also disagree with you on the question of his relationship with others in F1. People respected Adam for his intellect. He did sometimes come across as being arrogant – I certainly thought that for a while – by I concluded later that this was not really the case, and I think that a lot of others had the same experience. In my opinion Mosley respected him because of his intellect and Bernie disliked him for the simple reason that he recognised a danger in someone who was that clever. Adam’s failure – if you can call it that – was that he treated F1 like any other business and then discovered that this was not the case.
Now, you may know better than I do, but I do not know any Jeroens in Formula 1.
I don’t know any Joe Sawards in investment banking , company management or financial management either.
What has that got to do with Adam Parr in F1?
Williams nearly went bust in 2011. Is that supposed to be a success?
No it did not.
That’s not what Adam Parr said
In many ways Adam Parr would be a very good successor to Ecclestone – good for F1, that is.
Alas I don’t think CVC would agree.
I´m proud and glad to see Williams doing well,in fact they deserve to be even higher up..
It´s nice to see “old” names keeping alive in Motorsport,the Metro 6R4 was an excellent engineering project, that would not have been without Williams…
Some of us are perhaps are more WTCC or Rallye fans,but Formula 1 will always be the King of Kings…
Having just downloaded Adam Parr’s ‘The Art of War’ from Kindle and spent the wee hours of the morning reading it instead of sleeping, I have to say that it is utterly brilliant and very insightful.
The things that I can deduce:
1. Ferrari was involved in the revealing of the Mosley scandal
2. Parr thinks that Horner is thick
3. The FIA are now populated by ex Ferrari Frenchies, who cannot escape its influence
4. Whilst in the profile of Frank Williams he states that he never remembers the bad things, the story cites rejection of a Renault engines in previous years as being related to how they were treated by Briatore
5. Parr worked hard and isn’t afraid to hold himself to account
6. He gets on well with Donald Mckenzie, which means that he could be inline as Bernie’s successor
Thanks for the recommendation Joe
Having been reprimanded by a certain Mr. A P with regards to point 2, I would like to clarify that rather than appear thick, Christian Horner is sidelined in the publication thus cones across as lacking in ideas to make the sport sustainable.
I do not mean to imply Williams are not doing a great job and I sincerely hope they can further improve. But Williams as an investment for people that went to the IPO cannot be said to have been a success story. The stock trades currently at €23.83 but, for the sake of an argument, let’s suppose it is back at pair at 25 euros. This means that they are not loosing money. Well, in nominal terms since 2-year yield were around 1,5% for german bonds back then and they have waived that for (theoretically) no risk. Additionaly, the Dax (Frankfurt Stock Exchange’s index) posted a moderate 5,6% improvement. It might not be the best proxy but this is no in-depth analysis and, if you look at all the major european stock indexes, they are somewhat higher than they were back in Feb.2011, implying that the vast majority of stock posted moderate price gains. Furthermore, this was a faily good year for Williams, they won a race and expectations are that they will fare better in the future (and stock prices discount future earnings) so price can take a step back if the team stays where they are. Lastly, there is this mark-to-market procedure that is never taking into account when we look at the past. It looks the same for a stock to go from 25 to 12.5 and then back than if it moves from 25 to 37.5 and them back (they have the same volatility) but investors might be forced out of it by the first path. In my humble opinion people who bought in the IPO paid the for a middle of the pack team with some prospects of moving upwards and got a team that was fairing little better than the newcommers. But then again an IPO is when a person that knows the company lets people that cannot have as much information into the bottom line. Nobody should really expect the seller to agree to a bad price.