I hear from various sources that Manor is in discussion with at least one potential buyer. This is no great surprise. Talks have been going on quietly for months with various potential owners. The team was 10th in the Constructors’ Championship thanks to Pascal Wehrlein’s 10th place in Austria, but 10 days ago in Brazil Sauber went ahead, as a result of Felipe Nasr’s ninth. There is still only one point between the teams, although Manor needs two to go ahead as Sauber has a much better count back of results outside the top 10. Is ninth place in Abu Dhabu doable? Who knows? A multi-car crash can stir the pot…
If that doesn’t happen, Manor needs to do something. The team stands to lose about $11 million in prize fund revenue in 2017. It could raise around $20 million next year from drivers and it still has around $27 million in remaining prize money, but that is not enough to do the job properly and the danger is that it could lose that $27 million at the end of 2017, which would make the business unsustainable. Team owner Stephen Fitzpatrick is in no position to fund the team himself, although he has loaned it money. His Ovo Energy company in the UK is involved in the highly competitive gas and electric market where prices are rising fast. It’s a tough market as he is up against what are known as the Big Six (British Gas, Npower, EDF, Scottish Power, SSE and E.ON). Ovo has just turned its first profits, but these were largely due to the sale of its metering unit business. Nonetheless, the company is growing, but not enough to allow any support for an F1 team. Time is also a problem and Fitzpatrick is rarely seen at races, leaving the team to be run by CEO Thomas Mayer and team principal Dave Ryan. Fitzpatrick would like to keep hold of the business because he believes that teams will have much higher value in the longer term, but finding sponsorship for a back-of-the-grid F1 team is tough and thus they must rely largely on prize money and driver-related fundin, unless there is a wealthy owner willing (and able) to cover losses.
Selling the team is thus the best option, although early discussions pre-Brazil valued the team too highly with Fitzpatrick wanting almost twice what the potential buyer was willing to offer. His demands will likely moderate now, as his primary goal is to avoid losing money. This will no doubt lead to some lively negotiation.
Elsewhere in F1, there is a sense that things are beginning to line up for commercial negotiations to take F1 onwards from 2020. The new owners still need to finalise the details of the sale and find the right people to run operations but once that is done, then thoughts will turn to the future. The big teams are already aligning to try to present a united front, although Renault already has a deal beyond 2020 and so will be something of a spectator in this respect. Ferrari wants to keep its advantages and Mercedes and others would like to increase their’s, while the smaller teams are not going to get much help from them and so any idea of better revenue splits must come from the commercial or regulatory side. The key question is what is best for the business as a whole and the answer to that is clearly a better revenue spread. That might hurt the big teams but not if overall revenues go up, which they ought to do if the business is well-managed and the revenue steams increased in number and in volume.
Everyone would benefit from the arrival of new manufacturers and so the primary consideration should be to freeze the engine formula for at least five years to give newcomers the chance to join the party.
However, nothing much is going to be done until Liberty Media gets the regulatory clearances required, so for now this is the priority, the primary deal being a definition of how Liberty and the FIA intend to work together. The sport needs better regulatory governance and Liberty will probably be happier if they are left to do only commercial stuff. Being bogged down in the sport’s political quagmire will not help anyone.