Sahara Force India boss Vijay Mallya says that he is going to put $80 million into the Formula 1 team in order to improve its infrastructure, and hopefully its performance. This is the next logical step for the team, which up to now has been buying technology with gearboxes and hydraulics from McLaren, plus use of the simulator in Woking and CFD from Computational Research Laboratories (CRL), which has just been sold. The next step to move up the grid is to invest in suitable facilities to move the team on to the same level as the big players. Mallya says that “we are looking at some investments which will start paying out rich dividends in the future”. This is an interesting argument as the team will need to move up significantly if it is repay the investment. This year the team is bound for seventh place, whereas it was sixth in 2011, which means that it will lose around $7 million in TV revenues. Moving up from seventh to fifth, which might be possible, would gain only $10 million, while seventh to fourth would net $14 million, and seventh to third would be $20 million, so it would be a long time before the investment was repaid, although the team might be able to find some sponsorship if it made such a huge jump forward. This is not likely when you look at the depth of equipment and expertise in the top F1 teams, bearing in mind not only those ahead, but also those behind which have under performed. Still there is no law against spending money… if you have it.
Mallya has recently sold control of the family’s United Spirits empire to Diageo and so in theory has a little more cash than previously was the case, although he still needs to sort out a lot of other loans and unpaid bills. The Indian newspapers are reporting today that Kingfisher Airlines has just paid its employees for the month of May, which means there are still salaries to be paid for six months. The good news is that salaries for March and April have been paid in recent weeks. The airline is still grounded and its licence suspended and will not be allowed to fly until it has submits a comprehensive revival plan. Other articles show that the Indian government is still chasing $36 million in taxes.
There is no doubt that having an Indian team in Formula 1 is a good idea, as long as Indians relate to it. It would probably help if the team had an Indian driver, but Mallya has always avoided this.