One of the most difficult questions to answer at the moment in F1 is whether or not Force India has enough money for 2013, or whether the much-publicized troubles of its two partners mean that the team is going to be short of cash. This has a number of knock-on effects, not least being the choice of drivers. If the team has plenty of money, then it can pick its drivers at will, if not it will need to look for those with funding behind them.
The fears have been raised because Vijay Mallya and Subrata Roy Sahara are both in financial difficulties, independently of one another. Mallya is the Icarus of India, a beer baron who started an airline and has burned his wings badly. Kingfisher Airlines is in deep debt. A couple of days ago it reported a loss of $139.4 million in its second quarter. The airline has struggled to pay its staff and its planes have been grounded for a month. No-one knows for sure how much Kingfisher owes, but estimates have been as high as $2.5 billion. Creditors want the airline to bring in new money by the end of the month, but analysts say that reviving the airline will cost at least $1 billion. There is also a threat that the airline’s licence will not be renewed if it does not come up with a restructuring plan by the end of December. Mallya has pledged nearly 95 percent of the shares in the business and that means that lenders would be able to grab shares in his profitable liquor companies, if Kingfisher Airlines fails.
For some time there has been talk of a sale of Mallya’s United Spirits company. He has said that he will not sell not sell “the family silver”. On Friday the British spirit company Diageo announced that it has agreed to buy a 53.4 percent stake United Spirits for $2 billion. Mallya will stay on as chairman but he has lost control of the most lucrative part of his empire. The good news is that he might now be able to start rebuilding Kingfisher Airlines and that he can continue to fund his F1 team.
At the same time as all this is going on, Subrata Roy Sahara needs to pay the Securities and Exchange Board of India (SEBI) the sum of $4.4 billion by November 15, plus 15 percent interest. SEBI will then distribute the money to Sahara’s investors. If the payments are not made his bank accounts will be frozen and assets seized.
The word in F1 circles is that the team is already using its TV money to pay for its Mercedes engine deal (as other teams are doing with their TV money). A key element in its season has been a technology deal with McLaren but this was due to run out at the end of the season and has not thus far been renewed.
Bernie Ecclestone is keen to keep Force India strong because he wants to see the Indian market increase its interest in F1. He may be pushing for the team to take on Narain Karthikeyan, who is believed to have sponsorship available from Tata. The huge conglomerate is apparently not interested in owning an F1 team, despite the fact that it has its own automobile business, which owns the Jaguar brand. Putting Karthikeyan at Force India is a good idea in that it would increase interest in India. Mallya has always opposed signing an Indian driver, arguing that none of them are good enough. Critics say that his aversion to Indians is because he wants the F1 spotlight all to himself and knows that hiring an Indian driver will shift attention.
The team is expected to keep Paul di Resta in 2013 but has already lost Nico Hulkenberg to Sauber. Among those trying to get the second drive are Jules Bianchi, Bruno Senna, Charles Pic and Adrian Sutil.