Joe doesn’t mince his words when heralding the exit of CVC as F1 owners, bringing to an end a destructively flawed financial model for the sport
Grand Prix racing has never been for the faint-hearted but, at the same time, there are times when it’s very clear that the bar is currently set far too high for new entrants – and it’s tough for race promoters to survive. The problem, of course, is that the people who own the sport have been leeching money out of the sport to such an extent that the cash cow has been milked out. It may be a great idea to invest in CVC Capital Partners and they might be very good at what they do, but it’s been absolutely no good at all for the sport and the sooner we see the back of them the better for the sport. The new owners, Liberty Media, want to make more money than CVC but it seems that they are rather more long-term in their thinking and have realised that ownership doesn’t have to be a smash-and-grab robbery and that wealth can be created by sensible investment and cooperation between those involved. The sport is so used to living in a state of conflict that some seem to think that there’s no other possibility. However, working together for the good of the common cause will produce far better results in the longer term and I think the current era will be remembered by historians as a time of greedy men who had no great love for the sport. At least I hope that’s how they’ll be remembered, for that’s what they deserve.
At the moment, the British Grand Prix is struggling to survive with the British Racing Drivers Club saying that it might need to action a break clause in its contract with the Formula One group because the financial demands are simply too great for a small club that cannot get government aid for its race. The German GP has lapsed for similar reasons. And why do the governments not want to pay, when they will fund other sporting events? The answer is perhaps not very flattering for those who run the sport at the moment, but it’s quite likely that the problem will go away if the faces change. No government wants to be seen to be handing money to entrepreneurs who do nothing but take. It’s bad for the image…
Similarly, it makes no sense at all that there’s not a full grid of 24 cars in F1. Yes, the sport is expensive, but it doesn’t have to be as expensive as it is and it should be like most sports franchises in the world today – worth vast sums of money. And yet, here we are with the 11th F1 team, Manor Grand Prix, back in administration again – for the second time in two years. There are high hopes that the team will be able to survive the problem and be ready to go racing with two news cars at the Australian Grand Prix, under new ownership. The company was taken over on January 9 by insolvency practitioner FRP Advisory, which has a good track record in dealing with troubled F1 teams – and it’s now being run by Geoff Rowley and Phil Armstrong. Their first task was to ensure that there would be salaries for the staff for January. The team has lost a lot of those who were working under contract, but it retains a core of dedicated and passionate employees. This has now been done, and so the team can continue to work to prepare the cars – although there’s still a large hole in the budget that needs to be filled. This is rather more than the estimated $12 million that the team lost when Sauber scored points in Brazil and knocked Manor back to 11th, which seems to suggest that the previous owners were not very good at finding more backing. It’s not that the money is not out there, it’s just that people in F1 seem to think that what they have is worth more than it actually is – and they want to make profit when in truth they’ve achieved very little. Yes, Manor was still going, but that didn’t make it worth $100 million.
What’s now required is an owner who would be willing to put money into the team to assure its survival. It’s logical that, at some point, there will be some kind of spending control to keep the sport healthy – but until that happens the value of an F1 franchise is pretty small. Several teams are struggling, although no one ever admits this out loud unless they have to. There were at least three bidders in the course of the last year, but none of them was willing to pay the price that Stephen Fitzpatrick was asking.
The team, nonetheless, has two nearly-completed 2017 monocoques and a well-developed plan that will get them to the Australian Grand Prix in Melbourne at the end of March. If potential buyers move fast and have the money to do the job, the team might even be able to test as well. However, if that’s going to happen an investor is needed immediately. It might be possible for FRP Advisory to find money to pay the salaries in February if negotiations drag on. The good news is that there are no questions over the team’s entry as Manor Grand Prix Racing Ltd is still a going concern and has secured an entry in the 2017 World Championship. There’s also the fact that the team has earned prize money for the 2017 season, which is in the region of $27.5 million – which is due to be paid in instalments that will begin in May, although some of this money may have already been paid.
Let’s hope that they succeed… and that F1 gets sensible about budget caps in the future.
Joe Saward has been covering Formula 1 full-time for 29 years. He has not missed a race since 1988.
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