The news that Williams Grand Prix Holdings, the parent group of the Williams F1 team, has announced a loss for 2014 of £34.3 million ($52 million) should not be seen as the disaster that it might, at first appear. Accounting is on complicated world and for example the company’s sponsorship for 2014 from Pastor Maldonado was deemed to be part of the 2013 accounts, while the prize money won in 2014 will not be included until the 2015 accounts. The team also has new sponsorship revenues from Unilever, Avenade, BT and others coming that may have been agree in 2014 but will not be booked until 2015. Thus the results do not mean that Williams has a $52 million hole in its bank account, but rather that the numbers have been split between the financial years. This is often advantageous from the point of view of taxation, although it is very hard to know what the accountants set out to achieve.
“Our much improved performance in the 2014 Championship will be seen in higher commercial rights and sponsorship income in 2015, coupled with improved performance from our Advanced Engineering division,” says Mike O’Driscoll, the group CEO. “Our ambition in 2015 is to consolidate the progress we made last year, continue building the necessary foundations for future sporting and commercial success, and consequently to materially improve our financial results for the coming years.”
Williams is unusual in F1 in that it has to publish its accounts in a clear and timely fashion because it is listed on the Frankfurt stock exchange. Other teams are able to obscure their results by different means, notably the use of parent or sister companies to confuse the numbers.
Williams is still not a rich team but the turnaround is moving forwards after a decade in which there was a general slide backwards. The decision to go with Mercedes engines was obviously a good choice and there is little doubt that in the longer term the team will be looking to partner with a manufacturer, as used to be the case from the 1980s onwards when the team paired successfully with Honda, Renault and ultimately BMW. Attracting more manufacturers to F1 at the moment is not an easy task but the sport is in a period of change and new car companies may come in once things have calmed down – if they do.
joeblogsf1 
Oh Gawd, not VW I hope….
AA
Or Honda…
Williams-Porsche sounds nice. The Williams-Sainsburys deal was also interesting to read mentioning cooling technology. Manor can probably taste the difference too (sorry).
Also very interesting to see further blog entries on ‘Save our formula’, way past April 1st.
Relative to turnover the loss is enormous, on top of last year’s losses. The business is not really sustainable without a massive change in fortunes. Sure the $94million that you estimated their prize money to be last November will clear the debt, but they have to race and develop the car as well.
While it would helpful if they could partner with a successful engine provider this can only be a long term objective at the moment. McLaren and Red Bull’s minimum objectives for 2016 will be to drive Williams down to 5th in the WCC.
Somewhere along the line, their investors will expect to receive a dividend.
Why?
It is the nature of being an investor in a PLC, rather than being a passive shareholder, like Frank.
Capital gains are always possible, but not generally while a company is making losses over several years.
I too thought that a massive loss. Yes they will get more money this year from their 2014 championship standing but even so. It’s probably not going to be long before 5th is the best they can hope for. Can they be sustainable purely on FOM money ‘cos big money sponsorship is a thing of the past.
I missed what debt they have? The business made a loss and while I am sure they have current liabilities on their books like any business, I am not sure what the debt is you are referring to? Your tone suggests that this ‘debt’ is toxic, so I would be interested to hear what that is…
Also regarding a dividend to investors, I can’t see why one would be paid? Take Apple – the richest company in the World both in terms of value and cash held. They have been very sporadic with their dividend payments to investors and before 2012 had only paid once in 12 years. Companies only tend to pay up a dividend when the business is doing well and when the net worth / retained profits allow for it. Perhaps this is the goal of the accountants.
You’ll often see companies that are not performing well will also pay out dividends to give the perception that the picture is rosier than it seems (to maintain investor interest in a failing business).
After all, would you invest in a company that is slowly eroding dividends pay out year after year?
Perhaps not an immediate concern for Williams in the immediate term.
This is true Bob. But a business like WGF1, especially when Frank is still in charge exists to do one thing and that is to race and race to win.
Therefore, it is unlikely that any of his precious cash would be handed to soppy investors and therefore hampering any R&D efforts to continue the push.
As I write this, their share price is currently up 1.35% over their opening this morning and that is a fairly big jump for these shares. I personally would not expect a dividend year on year in this current position. I would prefer that the cash be used to advance their fortunes and drive more value into the business. If they were to ever sell the team, then of course I would then expect a dividend. Or should F1 change as a whole therefore increasing the value of the “franchise” that they have, then I would similarly expect a cut.
Relatively little of the shares are on the market, to be bought by those possibly expecting a divi, most are held by key Williams people. You will remember that the partial and restricted float was in order to reward Patrick Head for his many years of service, and that it was/is listed on the German XETRA electronic trading exchange. Currently listed as a strong sell, but it means little in the circumstances, since the available share volume is so low.
If any of the VAG brands do decide to dip their toes into F1 waters and partner up with an existing team, rather than go full manufacturer, I would have thought that a Williams proposition would maybe sit more comfortably with them, firstly given VAG’s historical aversion to the whole Bernie dodgy bloke and dealings thing, but also Williams’ existing experience in hybrid technologies and advanced engineering
Williams are one of the more “above board” teams.. Frank being a bit more of a respected and honest chap, it still being a bit more of a family firm
Anyone know how Audi found working with Williams on the flywheel project?
Porsche use Williams stuff on some of their recovery tech.
I believe it is used in WEC/LMS. A huge shame that it did not remain in F1.
Given the catastrophic finances of some teams recently I actually think that ALL teams should be made to publish thier figures, this will build confidence and trust, showing that F1 is not a house of cards built on blancmange foundations.
While an admiral goal, private companies are not obliged to do this. In reality, given the actual state of the likes of Lotus, Sauber, Force India and Manor – I doubt confidence would be built for further investment for each respectively should they ‘open the kimono’.
I would expect a new engine mfg. Entering the sport to follow the MB model; supply engines to a preferred team with a total takeover in the future. So the question becomes which team fits the takeover profile?
I don’t think Williams will ever want to loose control of their operation. The best target of opportunity may be Sauber.
You don’t think Sauber would be weary of any manufacturer wanting to take over their business, after the BMW mess?
They might also be weary of trying to continue on their own, given their recent problems.
The accounting treatment of this might seem a bit confusing, but such measures were bought in as a result of the whole Enron/Arthur Anderson shambles.
Since the lates 00’s all expenditure and income has to be allocated to the year it relates to. This is to stop the creative type from recognising future income based on zero logic in the pursuit of fufilling stakeholder expectations. I would expect Williams to have some form of accrual in their 2014 accounts for 2014 prizemoney.
Another common one with sports is the team might have received sponsorship funds in 2014, but for 2015 season related activities. This amount would be sitting as a liability in Williams 2014 accounts with the income recognised in 2015.
Well, Dr Piech being ejected like a Red Bull Junior certainly opens up an option for Williams if they decide they need to go the McLaren route and partner more directly with a manufacturer.
Williams-Bentley would be a bit special — and (if VW are ready to open the second age of engine rebadging) would leave the door open for them to enter directly as Audi or Auto-Union or whatever. A Mercedes lining up next to an Auto-Union would be something to see…
Speaking of Red Bull Juniors, any bets on Kvyat being replaced by Vergne at RBR before too long?
I think you may have overlooked Red Bull…
Interesting notion you bring up about Kyvat being replaced by Vergne. Although pure speculation at this point, you’d think someone at Red Bull must have at least toyed with this idea.
Vergne has a Ferrari contract so unlikely!
Ah, that would indeed by a bit of an issue..
Sport, sport… what sport? F1, it’s all about business, bureaucracy, finance, and accounts 😉
A while back I was reading about their portfolio of non-F1 business endeavors and it looked to be taking a fairly nice trajectory. I wonder how they’re doingn now. It would seem a stable team with diverse technological expertise and equipment as well as an incredibly long history of dealing with the corporate world should be able to find at least a far number of lucrative revenue streams in the areas of consultation, product development, leasing facilities (think of all the companies that use Toyota’s cologne facilities), etc. For these reasons, I’m always surprised that it seems like teams are only able to make a token amount from outside business ventures.