A big sale in India

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.

26 thoughts on “A big sale in India

  1. You mention several drivers except Jamie A do you know what or were, he has made some statements earlier saying he was looking good to drive next year

  2. If Tata does end up buying Force India and label it Jaguar, it would be a very confusing F1 world, after the Lotus debacle, because we’d then have a team called Jaguar which isn’t the Jaguar Racing Team of a few years ago (now of course known as Red Bull), but is actually Jordan GP…

    1. For goodness sake can we not stop with all this silly name linking. A new Jaguar team doesn’t have to be the same as the previous one, as neither is the present Lotus team… and none of them is “actually Jordan GP”…

  3. Well Mallya has got a point, none of the Indian drivers are good enough for a seat. I do hope they continue to hire talented drivers for 2013.

  4. Maybe Mallya should hire Kartikeyan so people in India like him (a bit) better. After securing some lucrative sponsordeals, he can always hire another driver again.

  5. Karthikeyan seems like a nice guy but would be a reasonable way down my own list of who should get the drive on merit.

  6. I don’t know if you have actually interviewed him or even chatted one to one but he doesn’t strike me as any more egotistical braggart than any other megalomaniac ? Sure he has a certain thing for bling and swans around whilst others go hungry but in all honesty that is the third world all over. Go to any poor country and you will see pockets of extremely rich people living the high life. It’s their normal and natural. Possibly not morally correct but we need to remove the plank from our own eye as they say …

    I also don’t buy into the ‘limelight’ reason for not having an Indian driver. (He sponsors the one in a million driver scheme for example.) . I suspect he is reasonably correct in saying there aren’t any who can justify a drive past the cash they bring. Circumstances change and B.E may pressure him to do the correct thing (for B.E of course) – or even his Brother may like the load spread out more: as we all know VJ isn’t the main owner now, only ‘team principle’ and as Chairman Bob could easily override him…

    For me FI was all about his love of cars C/W global advertising of his own brands. W&M was bought for the sole purpose of transferring funds out of India and into the team for example. Having other sponsors would dilute that effect. (Sahara is the lead branding on the car now if proof of who really is in charge is actually required.. )

    Of course the economy went tit’s up along with profitable airline businesses hence the Sahara selloff. Hindsight is a wonderful thing and I am sure we would not be having this conversation if he had shut Kingfisher airlines down a few years ago. Advertising is part of what makes a successful business. If he stops advertising then revenue goes down and the ability to pay the debt reduces. It’s a catch 22. You often say how efficient F1 is from that perspective so perhaps it is the right thing to do even though it may seem perverse?

    The team may be in trouble as per but from my understanding they are still looking forward to next year and the new car is shaping up nicely

    1. “Sure he has a certain thing for bling and swans around whilst others go hungry but in all honesty that is the third world all over. Go to any poor country and you will see pockets of extremely rich people living the high life.”

      That make Flavio Briatore visionary of sorts I guess, coz he could see through his blue tinted glasses that Italy was accelerating on path to third worldness and he was representing the pockets of extremely rich people living high life 🙂

      btw, have you followed the recent US elections? the entire theme revolved around widening gap between rich and the poor and the shrinking middle class. So by your definition, I wonder what does that make of the US?

        1. @Joe – I thought @r.bartlett was stereotyping the “pockets of extremely rich people living the high life.” as “third world” thing.
          Just wanted to point to Europe ( with Italy and Briatore example, which is close to Mallya story) and the entire US election campaign that revolved around the “pockets of extremely rich people living the high life that are treated are more equal than others.” Hope you now connect the dots.

          1. The dots were already joined :

            …………………… we need to remove the plank from our own eye as they say …

  7. Opps put Bob when it’s Roy of course!

    And on that note has anyone noticed the huge weight loss this past year -he’s looking quite ill on it – hope he’s ok..

  8. ‘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’.

    Doesn’t that sound familiar Joe?.

    Yes, Ferrari with Italian drivers.

    1. You have to read The Man who caught Crippen too. Like F1, the world has changed since Joe’s great granddad had all those adventures.

      I hope to know the answer to Operation Jericho after Christmas.

  9. Nothing to do with Force India. I went to Sandown Historics today, (Williams FW07, Arrows from about 1979 and a Talbot Lago did some laps), but the highlight for me was hearing the F5000s. I was discussing this on the F5000’s group on facebook and people started to talk about great sounding engines. I hope you don’t mind but I shared the story about when you first met Peter Brock. It’s such a beautiful story and remains one of my favorites.

  10. With Diageo being a long term McLaren partner, is it more likely that we will see them look to withdraw/scale back sponsorship with Force India (whenever current contracts expire) or possibly use their influence with McLaren to further the existing FI/McLaren partnership (which I believe is due to expire shortly and is yet to be extended.

  11. To those saying Karthikeyan is too slow, I would like to point out that a driver who wins races in British F3 with Jenson Button on the grid (at Brands Hatch at that) and qualifies on pole in record time at the Macau GP BEFORE winning races in other F1 ladder series and later A1 GP and then upstaging a Red Bull junior hot shot (Daniel Ricciardo) in equal cars hardly fits that description.

  12. I’d give Karthikeyan a shot based on how calmly he reacted to Rosberg flying right over his cockpit, another really close call that did’nt get much mention. The boys got nerves of steel.

  13. VJM just hocked the large part of his other estate, to get the planes to fly, according to various news outlets.

  14. Joe – I’ve just seen a post elsewhere that says the Aerolab/Caterham/Force India debacle is heading to a Hearing in the Appeal Court in the UK.

    Have you heard anything about this?

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