Williams told the world it had the budget in place to compete in F1 in 2009 and 2010 at the launch of its FW31 earlier this week.
But the true scale of its financial plight has been made clear as it emerged that part of that money came in the form of a ?é?ú14.5m advance from Bernie Ecclestone, as he struggles to prevent another team leaving Formula 1.
The Financial Times (reg. req.) claims similar sums of money are owed to each of the teams and are due to be paid when the new Concorde Agreement is signed:
A total of ?é?ú130m has been set aside as an incentive for F1?óÔé¼Ôäós nine teams to sign the Concorde Agreement, the contract that binds them to race in F1 but which expired at the end of 2007.
The teams now race in F1 under a Memorandum of Understanding (MOU) agreed in 2006 with CVC, the private equity group that has majority control of F1, but this is not legally binding.
The MOU increased the teams?óÔé¼Ôäó annual prize money from 25% to 50% of the sport?óÔé¼Ôäós underlying profits and these payments began last year. But the teams have not signed a new contract, prompting Mr Ecclestone to say: ?óÔé¼?ôWe have no contract and no invoice so why are we paying them??óÔé¼?Ø
The report claims the payments are worth 20% of Williams revenues, suggesting a total of ?é?ú72.5m ($99.7m). Williams had the eighth largest budget of the 11 teams that started the 2008 F1 season, with ?é?ú116.6 ($160.6m).
The Williams FW31 broke cover on Monday with several sponsors from 2008 missing. Three companies owned by the Baugur investment group – Hamleys, All Saints and MyDiamonds.com – have all left. Lenovo has moved its sponsorship to McLaren and Petrobras has also gone. One of its most prominent sponsors, RBS, saw its share price collapse this week.
Another article in the Financial Times adds:
Adam Parr, Williams?óÔé¼Ôäó chief executive, said the scale of the team?óÔé¼Ôäós borrowings in the past two years had reached a limit and that it would not have been able to borrow any more.
?óÔé¼?ôI think it would be fair to say we have reached a point where further borrowing is not acceptable to the board of this company,?óÔé¼?Ø Mr Parr said.
The financial health of Williams ?óÔé¼ÔÇ£ which employs 550 people in Oxfordshire and has supply contracts placed with 2,000 British companies ?óÔé¼ÔÇ£ and that of other teams have been closely watched in light of Honda?óÔé¼Ôäós shock decision last month to quit F1.
Having lost BMW as a partner in 2005, Williams has been forced to rely on sponsorship for two-thirds of its revenues. But it has recently lost Baugur, Petrobas and Lenovo as sponsors and its second biggest sponsor is the struggling Royal Bank of Scotland.
Mr Parr said more than 60% of its sponsorship target was committed for this year and that RBS was tied to two more years of a three-year sponsorship deal. Sir Frank said: ?óÔé¼?ôWe need to make a profit. To be successful and to be certain of staying in business, we need to be successful financially too. So, we need to make a profit every year. We?óÔé¼Ôäóve lost in the last two years, or three, I think, but we have the reserves and resource to manage that.?óÔé¼?Ø
Williams, whose team cost about ?é?ú100m last season, a threefold increase in 10 years, made a ?é?ú21.4m loss in 2007, on top of a ?é?ú27.7m loss the previous year, and its net debt for 2007 tripled to ?é?ú24.7m.
This week there have been fresh rumours about Toyota and Renault’s commitment to Formula 1 as the recession bites deeper. Regardless of whether or not those rumours are founded, F1 is going to have to make sure teams like Williams can continue to compete without concessions from the sport’s owners. Cutting costs in the rules is not enough – Ecclestone must be prepared to give more money to the teams.
- KERS and the argument over costs
- Ecclestone?óÔé¼Ôäós response to Montezemolo is an attempt to break FOTA?óÔé¼Ôäós unity
- FOTA wants more money for F1 teams – it should get some for circuits too
- Revenue row rumbles on
- Ferrari claims BMW blocked KERS deferral ?óÔé¼ÔÇØ F1 Fanatic – The …
- Why teams could build two cars for 2009 to get the maximum out of KERS
- FIA-FOTA agreement: Teams?óÔé¼Ôäó proposals accepted as Mosley backs down on KERS
20 comments on “Williams gets ?é?ú14.5m from Ecclestone”
24th January 2009, 12:42
No! This is very worrying – Williams are my favourite team, I might cry if they fold.
I think that sooner rather than later we will arrive at a crossroads, and Bernie Mugabe will have to decide between keeping teams on the grid, or losing control of the commercial aspect of F1. I know which I’m hoping for.
24th January 2009, 13:08
good point Jim at least someone thinks that ecclestone is turning into Mugabe
24th January 2009, 13:10
Thing is, if Ecclestone is helping teams like Williams stay on the grid, doesn’t that just give him more power? The money comes from him, after all. It makes the teams hostage to him.
24th January 2009, 13:12
So are Williams recieving this money on the basis that they will sign the Concorde agreement in the future?
If so, sounds like an interesting dilemma for Bernie [I think the Mugabe jibe is a tad tasteless by the way]. He presumably wants to apply the pressure to the teams to sign quickly and without holding out for more money, to make CVC feel less jittery, but at the same time can’t afford to see any of them leave the sport whilst the umm-ing and ah-ing goes on.
24th January 2009, 13:43
he is silently taking over Williams now is he. Well at least he kept them on the grid for 2009 which is very nice if you are talking about Bernie
24th January 2009, 14:03
Has Ecclestone done this to ensure he has future leverage over Williams? A possible way to ensure he has direct influence on Williams'(and other teams’)political decisions affecting the Concorde Agreement and other related matters?
Beneath the smokescreen of an apparent goodwill from Bernie lies something far more worrying.
24th January 2009, 14:08
Ferrari with no obvious reason(economical crisis, lack of sponsors or whatever) takes 80m$ more than supposed to get from commercial rights. Williams DESERVE EVERY PENNY!!!
24th January 2009, 14:25
Everything Bernie does has strings attatched to it. I hope his plots fail.Instead of giving extra money to Ferrari to prop his regime, Bernie should be giving more money to teams like Williams, as an act of justice, and with no hidden conditions.
A company like Williams is the heart and soul of F1 : an independent team that races in great part “for the love of sport” ( that was Mike HailwoodÂ´s motto ). I hope they could find extra income : I understand they are working on a patented mechanical KERS …. if this is succesful Wiliams could offer it for use in road cars, trucks, or even subway trains ( a lot of momentum and frequent braking ). ANY company would benefit greatly from an association with the class and prestige of using Williams F1 technology, including the GB government – to promote manufacturing jobs in the UK
24th January 2009, 16:34
Bad news, but not exactly unexpected given the problems some of Williams’ sponsors have recently encountered.
It is no one’s interests to see another team leave the grid, regardless of whether Honda is brought back from the brink. Bernie is prone to making crass, stupid comments but he probably understand this as well as anyone.
The difficulty is the involvement of CVC and the vast debts they incurred to buy into F1. At the same time that the teams are justifiably crying out for a greater share of the profits, CVC must be finding it nearly impossible to refinance its debts.
It’s in no one’s interests for CVC to fail to find a way of paying its bills while protecting the goose that lays its golden eggs. A solution has to be found.
24th January 2009, 18:12
If CVC and Bernie dissapeared overnight from the world of F1 they would not be missed. The FIA, teams, track owners, and TV companies are all made up of adult people that can sit down and decide on an ideal future for all, in a reasonable and fair way.
Teams like Williams should be treated with the maximum respect and helped unconditionally. The problems of CVC should be of no concern to the world of F1
25th January 2009, 0:35
arthur, as much as I’d like to agree with you, I just can’t.
The FIA has Max, which explains itself.
The teams have FOTA, who haven’t been on the ball as of late, to say the least.
The track owners are composed of people like the BRDC, who are still partly to blame for losing Silverstone, and the people running the Shanghai circuit, where some people were previously convicted of corruption.
The TV companies are better, but not by much. And as most are run by media conglomerates, only the bottom line matters.
The CVC owns F1; it HAS to be concerned about it. Ignoring it would be lunacy.
24th January 2009, 19:57
Y’know, I’m still not clear on this.
If CVC incurred debts ($2bn?) in buying the commercial rights to F1 . . . who did they buy it from, and where did the money go?
24th January 2009, 21:04
I wonder how much money Frank and Patrick are prepared to put in of their own private monies to save the team or if these are the reserves they talk about. FOTA need to sit down urgently to thrash out and sign up to a reasonable agreement…
24th January 2009, 23:26
There is a nice quote from a few months ago when sir Frank was asked about a chance to quit F1 (it was short after Honda pulled out) :
24th January 2009, 23:38
The biggest financial problem facing Formula One is Ecclestone. He is so power hungry and greedy, he would rather destroy the sport then admit that, the teams and the tracks, deserve more money.
25th January 2009, 12:51
Whatever Bernie’s reasons at least Williams are still on the grid, I’m not the biggest Williams fan but I’d rather have them on the grid than not.
25th January 2009, 12:52
(I’m not the biggest Bernie fan either just for the record)
26th January 2009, 0:05
Well for what it’s worth, I think Bernie’s commodity would lose value one more team down, devalueing his price to countries who want to host GP’s. As he has said himself, there is only really Ferrari whom he would miss. His portfolio would look a little thin without Williams though.
And as for his ‘professional’ reputation, losing one team in a winter is unlucky, two looks reckless and heartless (considering he takes 50% of the profit).
I’m sure there are people involved in the governance and administration of other sports who look in to F1 with the same sense of disbelief as us (that he takes such a large share).
Journeyer, as Arthur said earlier I really do think the sport could survive without Ecclestone. FOTA has stuttered a little, but it hasn’t been around long, and also Bernie is playing his best game against it all the time.
I mean, lets face it, Bernie wants the teams to feel like they have some say, but he really doesn’t want a strong FOTA, as it could make him redundant.
The reality is that F1 has been shackled with Ecclestones CVC debt. He will not pay out more money to teams as he has to service his debts, but the teams are going to go south without it.
Immovable object, unstoppable force.
He has to go, or he’ll take it all down with him.
26th January 2009, 8:11
I keep thinking of sinking ships and deserting rats. Bernie has to keep as many teams on the grid to keep F1 as a viable series in the eyes of the FIA. He also has to keep as many teams on the grid to get in the sponsorship and encourage the newer venues. Also he needs a full grid (and new venues) to show CVC that he is still worth keeping on.
However, given his comments earlier about not paying any more to the teams, and his little spat with Ferrari over what they actually get, you have to ask yourself just what his priorities are with the teams?
Is he willing to lose Ferrari, but not Williams? He was happy to see Honda go, and SuperAguri before that, but will he keep Renault on board for as long as possible?
This bears further investigation – I know that F1 is very much an ‘Old Boys Club’, but someone needs to start rattling CVC’s cage about their little Napoleon!
26th January 2009, 13:49
Bernie is just being Bernie, good bad or otherwise. As others have pointed out, even if Bernie is replaced it won’t change the reality of CVC’s debt structure and their cash flow requirement.
Just read that ING will be reconsidering it’s total $100 million dollar annual commitment to F1 advertising; half to Renault and the other half track advertising. If they fund Renault they would at the least cut their track presence, which means CVC loses more revenue. It’s got to be similar with other track sponsors as well.
We won’t see the bottom of racing advertising/marketing until next year, when Renault join Williams in leaving the sport.
Comments are closed.