Good team… but what are the owners doing?

The Force India team looks to be in a fairly decent state on the race track this year, with the 300-odd staff at Silverstone hoping to continue to show well against much bigger teams. The team’s technology deal with McLaren has been significantly reduced this year as the team has switched away from a McLaren gearbox and transmission and will use the Mercedes powertrain, including the hybrid units, gearboxes and hydraulics. The team has its own wind tunnel located at the site of the old station in Brackley although there is no sign of any new facility. I believe (but am not 100 percent sure) that it still has access to McLaren’s simulators, test rigs and so on. It has Nico Hulkenberg and Sergio Perez, a very decent driver line-up, with money coming from Mexico as a result of the deal with Perez. On paper it is fine. In addition, there is a debt guarantee for $135 million given by Diageo Holdings Netherlands BV to Watson Ltd, the parent company of the team. This was given as part of the deal for Diageo to buy control of Vijay Mallya’s United Spirits. That transaction is being investigated by the Indian authorities but is currently going ahead. That is the good news, and the team should be able to survive with that money, TV money from FOM, and cash from Perez. There are also believed to be deals for the team’s test driver Daniel Juncadella, which will likely to be a reduction in the cost of the Mercedes deal. On the face of it, therefore, the team is fine for another season.

However, Mallya remains in difficulties in India as a result of the huge debts incurred by his disastrous Kingfisher Airlines, which in March last year was reckoned to owe an impressive $2.58 billion. More debt has been added since and creditors have been chasing him round in circles in India to try to get their money. The courts have allowed some of them to grab shares in his other businesses that were pledged, which means that his shareholdings are reducing in the key companies that make up his empire. Mallya is unlikely to ever be poor, but he may not be able to keep funding F1 in the long term. His partner Roy Sahara is in deeper and deeper trouble. Sahara acquired shares in the team after making a series of loans to the team, which were later converted into shares. Sahara himself seems to have little or no interest in F1 and has turned up at only a couple of events. The Indian authorities have been very interested in him of late and the latest news is that an arrest warrant has been issued in India for him after he failed to appear at a hearing. He can now be detained without the opportunity of bail until a hearing on March 4. The warrant was issued by the Supreme Court which is trying to make two of his companies refund $3.2 billion to investors.

To add insult to injury in recent days Bollywood actor Vindu Dara Singh, who was alleged to have been involved in an Indian Premier League cricket spot-fixing scandal last year, was recorded in a sting operation by media, claiming that Mallya was involved in scams that defrauded bookmakers by players in his Royal Challengers Bangalore cricket team agreeing to under-perform deliberately to allow the owner to win various bets. Singh said that the entire series is “100 per cent fixed”.

Oh my!

19 thoughts on “Good team… but what are the owners doing?

  1. Great insight as ever, Joe, but I opened that article wonder which of six or seven teams it could relate to. Would be possible to write a book, with a chapter on the affairs of the owners of each!

  2. Just needs a stainless steel car missing a flux capacitor , and a suitcase of heroin and he is all set to go down in history. (or forward or backward)

  3. Twas ever thus….there’s often been a very fine line between a motor racing entrepreneur and an Arthur Daley type spiv….VJM & Co are neither the first nor will they be the last I’d guess!

  4. Fix! I mean six! I’m glad F1 isn’t being dragged into the gutter like my other love, cricket.

    Hang on…

  5. Previous article about Cosworth looking to get back into Motor Racing….. next article about an owner (who seems to owe $2.58 Billion) but the Team seems totally secure. Duh !!!

  6. The Silverstone-based team has achieved quite a lot and has the potential to continue this trend. It is a genuine racing team with good racing people and a strong current driver line up that, in purely F1 terms, deserves both respect and a secure future.

    I have to say I find Mallya’s shenanigans distasteful and even offensive, so there is a dichotomy involved in my views here. I’d hate to see the F1 team compromised but I’d be happier still if another owner came forward.

    By the way, I am also one of an apparently diminishing band that rates di Resta. His character flaws are no different to Prost’s and I’ve seen him in tears when he’s screwed up. I am still unconvinced about Perez, which is not the same as dismissing him, but in an ideal world I think Hulkenberg, whom I rate highly, and di Resta would be the stronger pairing.

    And as a second ‘by the way’ it’s that line “but I’m not 100% sure” that makes this blog special. Honest reporting is the epitome of good journalism. I have subscribed to GP+ for the first time and am looking forward to the year ahead. Saward plus Tremayne is a priceless combination (and the only reason I’ve not subscribed before is because Sky plus Autosport begins to get expensive).

  7. Lots of praise should go to Bob Fernley for the impressive job he has done for the team in difficult circumstances. He comes across as a Colin Chapman kind of guy, a true maverick.

          1. Yes kinda took that as read Joe. Although not too many COOs are known to many fans. Educate us! One per day perhaps if linked to any team mentioned in your posting.

            1. Great idea to add to Joe’s workload. It would be interesting to know more about some of the behind the scenes team members.

    1. Because those who give the money are the ones who stand to lose it, so they keep giving money in the hope of turning the enterprise around. Kind of like how “too big to fail” worked in America.

      1. Ahh. So ……this must be how the phrase ” Mallya is unlikely to ever be poor” can apply to a man who owes two and a half billion dollars.

        Okay, I know. It’s not his personal debt. Still don’t know how people like him sleep at night.

  8. Mallya is in some mess since 3 years now and that thing is moving in circles since ages. On Sahara, i believe that it is capable of returning that much money, but it may take some time… Sahara boss is very well connected, if he is suppose to down he will take many more people with him who are many times bigger than him in profile along with him… it’s a shameful sham but it’s how it’s been working…

    1. I think things have moved on from that now. The latest is that the courts want to know where the money comes from…

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