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.
joeblogsf1 
brilliant insight. thanks Joe.
I don’t believe we need more manufacturers and the like. We have seen before how that can have a major downside. What Liberty need to do is give the teams (Enstone, Milton Keynes etc) beneath the temporary owners some kind of security, so that when (not if) a manufacturer or energy drink magnate leaves things are stable.
This combined with fairer share of monies would go a long way to fixing F1. That and getting rid of the front wings.
Money comes with manufacturers
Tell that to Marussia
Money does indeed come with manufacturers, but it is often a poison pill.
I am saying the teams, some of whom have been around continuously for decades, should be more valued, and protected when their temporary overlords depart as they are wont to do.
A manufacturer in the loosest sense only, Marrusia…….
Marussia folded because of Western sanctions against Russia.
The Russian backer was prevented from bringing more money into the EU. He didn’t just turn off Marussia – his entire UK-based investment fund had to be shut down.
He didn’t acknowledge this publicly because to do so would have been a tremendous loss of face – more manly to just walk away and pretend it was a choice.
Who’s paying?
Hmm, okay..
I’ll bite:
golden share in each team not able to convince they can plan to stay the next say >5 years min.
in =event triggered prior to technical legal insolvency, a tricky thing to legislate for due to proximity of hard statutes, but it would have to be before insolvency and I think a straight covenant might not suffice= golden share converts to loan for working capital but all other voting interest suspended until plan to provide replacement working capital attested by two random accounting firms, emphasis random. Two accounting rules jurisdictions even, as would be good for marketing in many cases.
Bonds are insufficient and prohibitive for potentially desirable new bosses, given the work outs required.
This is small loss to anyone trying to sell shares in a insolvent F1 team… By which: None. Same going in.
secondary rule: Liberty to issue tracking stock for value of an carried interest, should it accumulate. Say longer than 6 months carry to trigger that. Nothing inhibits small market capitalisation except cost of trading, brokers would love in which case..
It’s barely a serious six figure sum to IPO main London list, at cost plus. I’ve seen 270K GBP on a barebones quote.
I see no reason why both Liberty and public cannot profit by providing capital to keep teams going.
But make it a pool. And make it one into which even grandees may fall, lest they fall further.
One day LM will suss that F1 is in sore need of better financial engineering as much as marketing. Or realise where the brain drain is.
Also, potential new team owners just should not in my book anyhow, have to finance 100% purchases, when so much is always such a mess in these distressed sales. 20 to 30% cold hard cash, against a real market valuation, is plenty, if the person buying is credible.
Just to add:
LM’s cost of money, to what teams pay, is a wild spread.
It makes sense for them to provide a clear “bailout fund” on public terms.
Liberty and all the cable people know high yield (formerly junk, formerly fallen angel) investing in debt. This is how these companies were created and thrived. I say get the financial engineering out of F1, and you see a sport again. LM perfectly capable. Tracking stock neat PR show to explain *sufficient* information to let closed door deals regain their integrity/ lose unpopular appearances.
Incidentally, I think LM are going to be by nature, learned skeptics more willing (encouraging) F1 to find itself, than to go through some show of saying they are in learning mode then out with all sorts of strategies.
If you think they had a agenda, try imagining the following suddenly is simply apparent to you, “F1 was so cheap they only risk chipping a tooth.”
$4 BLN is now the reporting standard figure, incidentally. Hardly worth issuing more debt for, almost. One day it will be a different joke: How do you turn a large fortune into a small fortune? Dunno. Ask Bernie.*
(who here would not think, given financing at nothing cost, they’d decline to buy if they had been offered?)
Possibly the bigger short term financial risk to LM, is if analysts start inferring management ability generally from how F1 is curated.
It was more F1 fit less with anyone else, possibly, others self- eliminating.
Now it is how can one make F1 fit with anything approximately regular, like other motorsports or at least a translatable dialect of a similar financial language….right down to stabilizing the back of the grid. I say go back to front.
One hopes to fill another row still or even two. I would. If back end present can be made sound.
I know one thing: the sport I was a blessed hopeless doe eyed philanderer for, had a few more cars start each race.
Get the current number solid, you can risk a further team or two, but as it stands anyone missing and the party gets too quiet.
By drawing down the talent pool, that pool dilutes from the top.
That’s a.. no two points which in tandem I believe to be more powerful than the spiffy winning oligopoly desire us to note.**
*compare Mark Cuban, for one. If only because Cuban had all the modern distribution, which couldn’t work back then (he’s said as much) and got as much for naff all of any actual sport content, just dubya dubya dubya broadcast dotcom.
** more cars = louder too.
Thank you Joe
Have just read the excellent Tom Bower biography of Bernie and noted your credit as contributor. I now look upon Bernie in a much more positive light than perhaps I did in the past. Am about to begin the more recent autobiography by Moseley. If I have correctly understood, Ferrari obtained its beneficial situation including the veto from Bernie at the time because he needed Ferrari with him as a hedge against other teams threatening to set up a competing race series. So that was done then but can be undone by the new owner when the time and opportunity are appropriate ?
I am not sure I would use the word excellent
Interesting, yes. Excellent, hmmmm. I couldn’t help but wonder, given some of the racing-related howlers in it, how accurate the rest of it was.
My thinking exactly.
The extra cash handed to Ferrari (£/$60 million?) before anyone else even gets a slice of the cake may have done its job back then (keeping Ferrari in the sport), but now Ferrari’s influence has waned and they are no longer top dog as they were then and can no longer call the shots. In any case, I think it’s about time someone called their bluff. They aren’t going anywhere even though they may make threats to leave. F1 is their advertising for their road cars, they do not do any other form of advertising whatsoever, and even at the amount they have to put into the team, it’s still a bargain when compared to advertising prices. It’s about time someone took that £/$60 million away from them and then it can be used for a fairer spread of cash amongst the lower teams, thus giving them a better chance of being more competitive (NOT just ensuring survival). Then we’ll see closer and more exciting races. The time has come to take that cash away from them, especially since now the sport has a new owner and the sport needs a clearout and a new direction. They’ll kick and shout and scream and have a fat bottom lip, but as I said, call their bluff. They aint going anywhere.
Just a thought Did Zak Brown go the McLaren route because the Liberty deal won’t happen due to the beureucrats ?
I doubt it
It always amuses me that so many companies can feed off one small pipe (or cable in the case of electricity) going into a property. Still, it might as well, albeit directly, finance of an F1 team than anything else I suppose. Better than a premier league football team anyway.
Hi Joe, have you ever thought about doing ‘An audience with’ in Dubai to coincide with the Abu Dhabi or Bahrain GP? I live in Dubai and would be happy to recommend a venue and assist with negotiations and organisation (I used to work for Lyndy so have the necessary experience in this field…..!!!). Please let me know.
Love to try next year
Ron Dennis should buy Manor.
Manor Project 5?
Steve, I was summoning up the courage to comment similarly. So… Ronzo Manor as the second Honda team? (Retreats beneath parapet and puts tin hat on.)
I logged in to write the same thing. I would LOVE to see Ron as a team owner… god that would be so sweet.
Let’s be PX by our selves… x<=9
no one has said He won’t
It would be interesting to know how Liberty will raise the money to make the business go ahead, are they going to sale theyr part on other business(es) or are they going to convince teams buy shares, wich would make teams assume part of F1s debt and on the flip side weaknens Liberty regulatory abilty, or borrow money wich would immediatly woulg take F1 to another level of… debt. As for Manor to overtake Sauber, it’s not impossible but given the layout of the track and usual wheather conditions perhaps if the FIA bring the springlers to add drama to the race. The sport need better governance you say and i ask how? In Mexico Hamilton wasn’t punished because that did keep alive the cat that already was born dying and Verstappen wasn’t ordered to give the possition to Vettel just to create some carnage in the end of a boring race to create a talking point. Can’t wonder better governance.
It’s not a problem
Joe,
In your post about the seats that are left, you mentioned one option was for Mercedes to help manor look for a buyer to gain stability. Is that scenario playing out at present?
“the primary deal being a definition of how Liberty and the FIA intend to work together.”
It probably depends on the quality of the restaurant and the wine at the meetings; Todt could be a problem if not feted at his expected grandiose level.
Whilst he appears to contribute little or nothing to F1, he is nonetheless in a position to obstruct.
well, hey there rpaco!
in plus ca meme chose double, with hello from me to you,
i almost barely noticed, distracted by attempts at rejoining Life, that there is still the proverbial Bernie Share to negotiate, despite all the beneficient Change At The Top.
still a place for junior sceptics such as I, possibly..
However,
I just mouthed off that adland is in a proper mess.
Okay, so take F1 and lead with it.
F1 is textbook marketing stuff.
This chap Prof. Ritson (do check him out, worth it) says adland and marketing are gutted. Lost the basics. No plot. He’s convincing. Nobody is replying with any conviction.
Right, so … in a Gen X phrase, “whatever”..
F1 found marketing balls same time as it redefined its income and structure.
Just people were lazy, purely lazy IMO, and made a mess.
Grasp what was understood, loud and clear, by F1 in the late late 80s, write the book (yet to be done) ad transpose something other than tobacco for the case study.
Then, ….
then you bloody well LEAD the adland people out of their misery.
Which result is secondary to paying for some good racing normal people can afford.
it’s time for change, but for reasons not indigenous to F1. F1 needs to briefly lift rose tint ant – NIH adver-chromic lenses.
I see the Apocalypse, and raise you a Solution.
cheers!
jojojojo 🙂
Well JoJ I almost understood that, you must be slipping, though I have to admit that I have not yet looked up the Professor.
Luckily (or not, it remains to be seen) the prospective new commercial rights leaseholder is supposedly well versed in the advert and entertainment industry. It could therefore be hoped that this new media giant will do what has been so markedly lacking from FOM.
I don’t envisage F1 being particularly attractive to manufacturers in the long term when the likes of Formula E will be far more relevant to future of automotive technology. Plus the fact as Honda have proved its hideously difficult to come to the hybrid era late and not be embarrassingly uncompetitive.
I think the days of works manufactures in F1 are numberd. Credit to Renault and Mercedes…for supporting F1, but it’s more a marketing exercise for them.
Eventually privateer teams will return to the fore… I just hope some manage to survive long enough to see it.
Sorry but Formula E is just a small sideshow that manufacturers have signed up to to up their green credentials.
The future is hybrid or hydrogen not pure electric. Electric cars can’t complete a 1 hour race without a car swap and aren’t really putting out any performance. How many years before they are in any sort of position to complete the 24hr race at Le Mans? That’s the real measure of a viable drivetrain technology.
The VW diesel emission cheating scandal appears to have focused several big name manufacturers firmly on the hybrid route. Thus a hybrid F1 will fit better to reality in a few years. Meanwhile there is increased effort in development of next generation batteries.
There is still huge scope for development in F1 in surface technology and if eventually allowed a whole host of electrical features which would enhance racing dramatically.
My understanding is that Honda were not really ready to enter F1 in 2015, but that McLaren pushed for them to enter because their customer engine deal with Mercedes was due to expire and they had no alternative engine supply. That might explain the quick realization amongst many of us that the McLaren-Hondas were running as engine test mules in many of the races, often trying to simply be able to actually run an entire lap at maximumn potential horsepower (i.e. without running out of ERS-harvested energy before the ends of the straights).
Joe, have you heard any amounts, Manor is asking for the team?
No
“Is ninth place in Abu Dhabi doable? Who knows?”
Well, according to the lists, both Manor cars – unlike the Saubers – can have a complete fresh power-train for the last race and, as they only have to last for about 400km, the wick can be turned all the way up…
/both Manor cars – unlike the Saubers – can have a complete fresh power-train for the last race/
Question 1: do they want to use it and pay Mercedes accordingly?
Question 2: how many cars do they need to beat to finish the race in P9 (and making sure there is no Sauber in points)?
well, whoever want to buy Manor, i just hope they are serious people and not the half-tree jumpers or the thin-table drillers. As for engine rules, maybe they can keep current ice unit format and advance hybrid part of it? more engines, more fun – remember the times when there were nearly as many different engines as were the teams with Fords, Ferraris, Renaults, BMWs, Harts, Judds, Mugens and others all at nearly the same time in 80ies
Notably an advert for the Abu Dhabi GP in yesterday’s Express!! For next year!
There is a new “Aside with Joe” on the Sidepodcast site. https://sidepodcast.com/post/an-aside-with-joe-want-something-go-get-it
Thanks. Didn’t think they’d be another of those until next week at least!
Strip out all the fancy unnecessary tech, i.e. tunnels, CFD, CAD/CAM, simulators, recover systems etc. etc. that’d save $bucket loads. Build racing car machines, not characterless computers with wheels
Yes I know teams have always come and gone and that tech can’t be stopped F1 can’t have it both ways either.
I’d rather watch a motor race than a technology race
I would be SO glad to pay F1 directly for a video feed like I’m paying to MotoGP…
Marussia folded because of Western sanctions against Russia.
The Russian backer was prevented from bringing more money into the EU. He didn’t just turn off Marussia – his entire UK-based investment fund had to be shut down. He didn’t acknowledge this publicly because to do so would have been a tremendous loss of face – more manly to just walk away and pretend it was a choice.