Mclaren Mercedes 2014

[Waffle]

Hilarious posts by SidSidney. Would laugh again.

I am not sure I understand your comment but in any case I am not saying they are in bad shape, just that the lack of major sponsor is a drain and that at some point somebody has to inject cash into the group.

Hence the instructions to Morgan Stanley to find an equity investor in March this year:-

http://www.ft.com/intl/cms/s/0/d8325610 ... z36uQYct00

F1’s McLaren revs up hunt for investors

McLaren boss Ron Dennis has instructed Morgan Stanley to search for new investors as he plots to revive the Formula One team’s ailing fortunes and expand its technology division.

Mr Dennis, 66, re-established control of the Surrey group last month, usurping team principal and chief executive Martin Whitmarsh. Mr Dennis is a 25 per cent shareholder in McLaren.

The team has held exploratory talks with Chinese investors. “The net is cast wide,” he said, when asked about the discussions. “It’s a question of the quality of the investor.”

Ron wouldn't want - or need - equity partners to inject capital if he had his usual sponsor cashflow. If he could retain his 25% he would, but he and the other shareholders will have to give up a chunk to get new money in the door, and he's going to be doing it at a time of weakness.

The fact they have set a theoretical budget is neither here nor there if they don't have the money.

Wow, you've gone to a lot of trouble to make a simple point - the team spends money so it needs money coming in. Forgive me if I've misunderstood and you've said more than that.

But these accounts are old, and the fact is that we don't know the current situation. I'm sure that the team would prefer to have a title sponsor - what business wouldn't prefer there to be more money coming in? - but when Eric says 'We are not in a position where we are struggling to get money, we are perfectly fine, and with Honda coming on board, even more so' I've no reason to disbelieve him. Their determination not to sell themselves cheap on the title sponsor seems to back this up.

The search for equity investors may have more to do with buying out current shareholders than capital injection.

[Thunder]

http://www.formula1.com/news/headlines/ ... 16069.html

That sounds promising and explains why there was no Part 2 of the Upgrade Package in Silverstone.

[SidSidney]

Wow, you've gone to a lot of trouble to make a simple point - the team spends money so it needs money coming in. Forgive me if I've misunderstood and you've said more than that.

It comes down to that - what doesn't in business?

But these accounts are old, and the fact is that we don't know the current situation.

They are the latest published accounts, and we do actually know a bit more from the management changes, the lack of signage on the car, the lack of early announcement of a sponsor, press statements about Automotive's results and comments about the need for new equity from Dennis. We can make fairly good guesses.

but when Eric says 'We are not in a position where we are struggling to get money, we are perfectly fine, and with Honda coming on board, even more so' I've no reason to disbelieve him.

Me neither. He was perfectly open about Lotus' financial woes. I just take his comments in a broader context of other information, and comments from his boss.

Their determination not to sell themselves cheap on the title sponsor seems to back this up.

The world has changed, TV figures have dropped 30% in Italy and Germany, McLaren isn't at the front, nor do they have superstar drivers, and they have some stronger commercial competition for the dollars. I believe they will succeed, but it will not be super easy, and nobody is paying rate card on sponsorship these days. At some point - if nobody is signing at rate card - they will be forced to take whatever they can get just to stop the outflow.

The search for equity investors may have more to do with buying out current shareholders than capital injection.

That's not what Ron Dennis said and as you say, I have no reason to disbelieve him.

[j2004p]

Reading between the lines of EB's statement I'd say Mclaren are probably the ones most likely to gain from the banning of FRIC as the consensus on here appears to have been that they have been the least successful at implementing it (therefore hurt less from removing it)

[iotar__]

Reading between the lines of EB's statement I'd say Mclaren are probably the ones most likely to gain from the banning of FRIC as the consensus on here appears to have been that they have been the least successful at implementing it (therefore hurt less from removing it)

We don't really care = we're delighted

[CHT]

Honda acquiring mclaren?

http://www.cnbc.com/id/101821779

[Waffle]

It comes down to that - what doesn't in business?

Precisely what I mean.

IThey are the latest published accounts, and we do actually know a bit more from the management changes, the lack of signage on the car, the lack of early announcement of a sponsor, press statements about Automotive's results and comments about the need for new equity from Dennis. We can make fairly good guesses.

They're the latest accounts, but they're still old. The fact remains that we don't know the situation inside the team at the moment. Automotive are making a profit, and IIRC that profit's ahead of schedule. They would have always planned to make a loss at the beginning. As you've pointed out before, automotive is a separate business from the race operation anyway. And what does management change have to do with the financial position? More to do with results on the track, surely.

but when Eric says 'We are not in a position where we are struggling to get money, we are perfectly fine, and with Honda coming on board, even more so' I've no reason to disbelieve him.

Me neither. He was perfectly open about Lotus' financial woes. I just take his comments in a broader context of other information, and comments from his boss.

By 'taking his comments in a broader context' you seem to mean discounting them because they flatly contradict your position. They really can't be clearer in saying the McLaren does not have financial difficulties.

Their determination not to sell themselves cheap on the title sponsor seems to back this up.

The world has changed, TV figures have dropped 30% in Italy and Germany, McLaren isn't at the front, nor do they have superstar drivers, and they have some stronger commercial competition for the dollars. I believe they will succeed, but it will not be super easy, and nobody is paying rate card on sponsorship these days. At some point - if nobody is signing at rate card - they will be forced to take whatever they can get just to stop the outflow.

Maybe so, but the point is they don't seem to be in a hurry. They could get sponsor tomorrow if they dropped their asking price. Their behaviour would be different if they were financially stressed. I'm not reading into that too much by itself, but it does seem to give credence to Eric's comments.

The search for equity investors may have more to do with buying out current shareholders than capital injection.

That's not what Ron Dennis said and as you say, I have no reason to disbelieve him.

I can't see anything in the quote from the FT that you give that suggests that he's looking for a capital injection. All I can see is that he's looking for investors. I can't read the article because it's behind a firewall. Would you care to quote the relevant part?

[SidSidney]

IThey are the latest published accounts, and we do actually know a bit more from the management changes, the lack of signage on the car, the lack of early announcement of a sponsor, press statements about Automotive's results and comments about the need for new equity from Dennis. We can make fairly good guesses.

They're the latest accounts, but they're still old. The fact remains that we don't know the situation inside the team at the moment.

I don't agree with that statement, but it's fine that you believe that.

Automotive are making a profit, and IIRC that profit's ahead of schedule. They would have always planned to make a loss at the beginning. As you've pointed out before, automotive is a separate business from the race operation anyway. And what does management change have to do with the financial position? More to do with results on the track, surely.

<shrug>

1. I only raised Automotive because someone said Automotive was paying for the McLaren Group. It's not, it's the opposite.
2. Senior management change is almost always linked to weak financial performance. In this case they also had weak track performance, and I would argue in the case of McLaren they are not independent things - if McLaren had won 3 WCC on the trot I doubt they be lacking a title sponsor today, or that Martin Whitmarsh would be gone.

By 'taking his comments in a broader context' you seem to mean discounting them because they flatly contradict your position. They really can't be clearer in saying the McLaren does not have financial difficulties.

1. As I said from the start, I don't have a position. I am just looking at their numbers. I don't have any axe to grind. I could have posted about this for Williams or Caterham. It just seemed relevant to McLaren.
2. I see contradictory signals. One (new) guy says everything is fine, the other (old) guy says he wants to raise capital, the books say they probably need to inject cash if the operational cost burns at that rate. We will find out in due course.


I've presented their numbers and several pieces of hard information, and speculated about what it means. I think I can see the connection between several things. I may be right, I may be wrong - I'm often wrong. You seem to have a strong feeling about this. Do you have anything other than that Boullier quotation to support an alternative point of view? I don't want to argue (in the nasty sense) - I'm quite open to reasonable opinions based on data. Can you show us something to indicate how they will go from a 2012 165M GBP F1 budget to a 200M-250M GBP 2014-15 budget (which is what Boullier said they were spending) without new money, even assuming they sign a Vodafone-sized sponsor?

[mclaren_mircea]

How will Mclaren perform in Germany? It should be more suited than Austria and Great Britan because we have more low speed corners, and very few high speed corners, one serious long straight, and on the Red Bull team thread, I read that the track requires good mechanical grip.
The banning of FRIC may just cut Williams advantage that they have over Mclaren of -300... [-o<

[AnthonyG]

Actually I have over-estimated the cash available - you will see that McLaren racing has only 240K (yes, K!) cash at the bank, but lots of financable receivables. The Group only has another 2.5M in the bank - peanuts. They need to be sure debtors (sponsor/Formula One Management) pay on time.

That's something a lot of F1 teams have I think, exept for Toyota they were all notoriously late-payers if I recall an article of 2008. (?)

[SidSidney]

Just changing topic slightly I noticed this snippet today from a Jun 17 2014 interview:-

"Although he doesn’t want to talk about it, it’s clear that Martin Whitmarsh and Antony Sheriff – who ran the F1 team and the Automotive unit – were not delivering the Dennis vision. They no longer work for McLaren. ‘The company wasn’t going in the right direction,’ explains Dennis."

http://www.carmagazine.co.uk/News/Searc ... on-Dennis/

So Whitmarsh is no longer at McLaren at all? I knew he had been sidelined, but not that he had left completely (although that was always the most likely outcome, former CEO's don't typically like to hang around). Any ideas?

[SidSidney]

Actually I have over-estimated the cash available - you will see that McLaren racing has only 240K (yes, K!) cash at the bank, but lots of financable receivables. The Group only has another 2.5M in the bank - peanuts. They need to be sure debtors (sponsor/Formula One Management) pay on time.

That's something a lot of F1 teams have I think, exept for Toyota they were all notoriously late-payers if I recall an article of 2008. (?)

I am pretty sure you are right, which is why nobody will go to the EU again to complain about TV rights etc. Bernie has suggested that if the EU investigated, he would have to put the money theoretically owed to the teams into an escrow account pending the outcome of the investigation... obviously hardly anybody at the back of the grid with a grievance about money/budgets etc can afford that kind of cashflow hit, and he knows it.

[onewingedangel]

I've written a blog post with some thoughts on the changes at McLaren:

http://bit.ly/1sLxjEa

[mclaren111]

Very well written Sir !!!!!!!!!

[trinidefender]

Seems McLaren will be removing the FRIC system for Germany:

http://www.autosport.com/news/report.php/id/114963