While folks have been trying to understand the complexities of the Liberty-Formula One deal, another story has been and gone: the suggestion that Carlos Slim Jr might buy Force India. It is not the first time this old chestnut has fallen from the F1 tree. The team does a remarkable job, thanks to a great group of people and some extra oomph from Mercedes engines. But what is such a team worth? The answer is that it is worth what someone will pay for it, be that $1 or $200 million. It has solid revenues from the Formula One group, in 2015, this will have amounted to about $85 million. In addition to that, sponsorship associated with Sergio Perez will have added around $25 million, with some money coming from other sponsors, if indeed the names on the cars actually paid to be there, which is doubtful in some cases. The Sahara deal, for example, seems to have been related to money long gone, while the Diageo cash may or may not have arrived, depending on who you talk to. Other money will have come from test drivers and so on. In total? Probably $120 million. The catch is that all of this will have been spent to keep the team sufficiently competitive to win the prize money, and to pay for the all-important Mercedes engines, so in the end, it’s a high turnover, low/no-profit operation. It survives, in the hope that one day things will get better, like most F1 teams without other businesses.
So what is it worth? It has an entry and runs very lean, but it requires funding on an annual basis, a chunk of which comes as a result of Carlos Slim Jr and his connections in the business world. If that money stops coming, then Force India is in a hole. It is perhaps logical for him, therefore, to say to the current owners: the troubled Vijay Mallya and his business partner Subrata Roy, who is up to his neck in financial and legal trouble (a la Mallya), and has spent much of the last two years in prison in Delhi, that he will take the team off their hands to avoid them getting into further financial trouble in the future. Putting more money into the team will inevitably lead to questions in India about from whence this money came. The team’s holding company used to borrow money from banks, but few if anyone will loan them money at the moment. Besides, what fun is a team that one cannot see in action and cannot be used to boost their own brands/egos?
Obviously, they would prefer cash, but the removal of future potential liabilities is often the most sensible route out of the sport for those who come and go. We’ve seen that happen so many times…
It is clear that in F1 circles, the shenanigans that surround the Force India owners have become a bit of a problem, and will become more so in the future as F1 dallies with the clean-living, all-American NASDAQ exchange, with its squeaky-clean apple pie approach.
So, is Force India for sale? Yes, of course it is. But will anyone leap in at the price that Mallya & Co might want? It’s unlikely. Potential buyers are better off waiting. There is a lot that is uncertain in F1 at the moment, but for a dollar you will always find a gambler, finding $200 million in the circumstances will not be quite so easy.
Have you been at that French cheese again Joe?
If this comments makes sense to anyone please advise…
Perhaps he is on about the unpasteurised cheeses that are available in France that are not regulated. Otherwise I think he may use the word cheese to denote hallucinate qualities in a brand of french cheese.
In conclusion I think the poster may be on the mushroom tea on a regular basis 😂
Can’t wait for some decent financial security to come to FI and the others who aren’t at the top.
I was very impressed with Celis putting in some excellent times in the first session in the middle of the pack, do you rate him Joe ? And presumably he’s a Carlos protégé.
No Celis is not Telmex. And if you look at his actual racing results, you can see he would challenge to be the worst ever F1 driver if he pays to race
Heard he was only given the test sessions to help FI’s bank balance rather than down to any ability FI foresee in him.
Impressed with Celis? Are you trying to be funny?
I recently read in the New York Times that Mr. Slim is having trouble with competitors in his most valuable asset, a Mexican cell phone company. It seems that there are two guys of great wealth in Mexico that are aggressively fighting for a slice of the cell phone market. These guys feel they were screwed by Slim when the government arranged a monopoly just for Mr. Slim. These two men are now deeply hurting the income of Tel-Mex or whatever its called. Profits are turning into loses and Mr. Slim is now nowhere near the richest man in any world.
In my observation when corporations lose their governmentally contrived monopoly they face-plant badly. Competition is a bitch, as they say. It looks like Mr. Slim has some distractions at home, why would he suddenly spend $200 million on anything as things are becoming iffy. Under these circumstances, what kind of money does Perez really have to offer when the present Mexican based team sponsor contracts run out?
There are two Mr Slims
Are there two Carlos Slims?
Yes
Ok, so Carlos Slim Helu is the individual covered in the New York Times. Given that Carlos Slim Domit is the son of this man, how much personal wealth does Carlos Slim Domit have ‘free reign’ over? Indeed, given that Carlos Slim Domit is now President and Chairman of Telmex, wouldn’t Blub’s comments still hold true? The wealth of both Carlos Slim Helu and Carlos Slim Domit seem closely tied (as one would expect within a family). Unless there are other considerations that you are aware of, its difficult to see why the situation changes regardless of whether it is Carlos Slim Helu or Carlos Slim Domit that was rumoured to be interested in Force India (and F1).
You said it yourself “…It’s difficult to see.” You are one having difficulty understanding. Other people see and understand things that you do not.
Is this addressed to me?
No its addressed to me Joe. CBR – of course I’m the one having the difficulty understanding, that is why I qualified the statement with “Unless there are other considerations that you are aware of” (implying I’m not aware of reasons why the distinction makes a difference). That was an effort on my part to remove that lack of understanding. Do you have something to add in that respect? Do you see something that I do not?
Slim Sr. is always on the list of the 3 richest men in the world, 200 million is sofa money for the man. He’s shrewd and has staved off competition attempts from the likes of AT&T in the telecom sector.
Currently he’s locked in a fight with the biggest TV & cable/sat TV consortium in the country, Televisa, which wants the right to delve into mobile service without allowing Slim into the TV market.
This, however, is not the extent of Mr. Slim’s business, he has mining operations, oil platform construction, mobile service in almost the whole of Latin America, banks, call centers, hotels, insurance and a long etcetera. The man is the biggest share holder in the New York Times (funny how the paper doesn’t hold back when it comes to him though, speaks well of the man if you ask me).
Yes, he did start out with a telecom monopoly which he bought under questionable circumstances and was guaranteed the monopoly would stay so for a few years, the rest of it though…
Senior and junior, I presume.
So which one is the real Slim Shady?
IGMC.
Force Mexico?
A name like diageo not paying up? Not as simple as that surely? Are they owed money by another part of the empire or something?
No there is a legal block
Diageo paid Mallya $75m to walk away from (part of?) his family business earlier in the year. A long and complicated case where the only winners were the lawyers.
There’s enough info going around these last couple weeks to do a pretty interesting Aside with Joe, wouldn’t you think?
Yes
Splendid, splendid. Perhaps you could touch on what you think the direction FOG intends to take in these “new markets” they have mentioned. Back to India? Less absurd race fees for US races?
Presumably the time to make such a deal will be just before pre-season investment is at its highest/most vital, and so when finances are tightest? Until then Slim will pay a waiting game and say X million…too much.
Mallya (on paper atleast) does not have any businesses or significant sources odf revenue. A large part of his $75 mil walk away fees have been frozen by the Govt. of India. Mallya has fled India and is hiding in one of his 2 palaces outside London.
Meanwhile, Mr Subrata Roy of Sahara has been recently released from jail after staying there for around 2 years. He has a huge INR 20000 crore to pay back. He has probab;y arranged half and has allegedly used illicit means to get the other half. In short, he has no cash to fund Force India.
From what I have read, FI needs $180-200 million to stay competitive. As you have suggested Joe, they have a revenue of $120 million. To stay afloat, they would need $60-80 million annually. Where does that money come from? Wouldn’t it be best for all involved to sell this team asap (they have a very talented group of drivers and technical staff who deserve better than Mr. VJM)