Valtteri Bottas, Williams, Silverstone, 2016

Brexit affecting engine costs and sponsorship – Williams

2016 British Grand Prix

Posted on

| Written by

Claire Williams says her team is already feeling the consequence of Britain’s vote two weeks ago to leave the European Union in rising costs.

However she admitted it’s still “slightly too early to see what the long-term impacts are for us as a business”.

“There have been some short-term impacts around costs,” Williams explained during today’s FIA press conference.

Since the referendum the value of the pound has fallen to a 31-year low against the dollar and its value relative to the euro has also plunged.

“We unfortunately pay for our engine in euros,” she said. “All the hard work that we have done to bring the cost down by €4m for 2018 have been counterbalanced. Maybe Toto [Wolff] will let us pay for our engines in euros going forward, I don’t know – a conversation offline.”

The uncertain economic situation has also put potential sponsorship deals in doubt. “Sponsorship is one of our key incomes,” said Williams.

“I think with the political instability that Brexit has caused there are a lot of businesses out there that are going to have to wait and see what they do particularly with their marketing spend and that of course could have implications for us as an independent team.”

“As much as we were having great conversations prior to the referendum, those conversations are slowing down now and people are waiting to see what’s going to happen. That’s a real concern for us and I think a concern for a lot of sports teams out there. But again, I’m not going to worry too much. I think we’ll wait and see what happens.”

The process of Britain’s departure from the European Union will begin once Article 50 of the Lisbon Treaty is invoked by Britain’s parliament. This could also affect the employment rights of non-UK staff.

“For us there are concerns on the medium term once Article 50 is invoked and the implications of that around freedom of people to move in employment,” said Williams. “I think we have to wait and see the true implications of that.”

2016 British Grand Prix

Browse all British Grand Prix articles

Author information

Keith Collantine
Lifelong motor sport fan Keith set up RaceFans in 2005 - when it was originally called F1 Fanatic. Having previously worked as a motoring...

Got a potential story, tip or enquiry? Find out more about RaceFans and contact us here.

Posted on Categories 2016 British Grand Prix, 2016 F1 seasonTags ,

Promoted content from around the web | Become a RaceFans Supporter to hide this ad and others

  • 28 comments on “Brexit affecting engine costs and sponsorship – Williams”

    1. It’s okay. Given that we’re not going to spend £350m extra a week on the NHS after all, maybe the government could give a little to Williams to help them cover the costs instead.

      1. Never mind the huge loss on the GDP that’s gonna more than counter all that money they’re gonna “save”.

    2. Nah, that is a small price to pay for taking back control. Before the referendum, Brussels were constantly telling them which drivers they should hire and how big the suspension arms should be. That is not going to happen anymore.

      1. I always had the idea they were forced to retain Massa and Bottas; probably some EU bureaucrat who forced this proud British team to do so. Glad that’s over and they can finally sign Button and Palmer!

      2. Should’ve been Berniexit but he didn’t want to, so they went for Brexit …

      3. Not to forget those ugly nose.

    3. “We unfortunately pay for our engine in euros… [m]aybe Toto [Wolff] will let us pay for our engines in euros going forward”.

      So, paying for engines in Euros is bad, but you want it to continue?

      1. It should have been dollars.

        1. No, yens.

    4. if you look at a graph of the pound vs the euro from last year, you can draw a straight line from the peak in November to the drop some time ago with a reasonable degree of correlation. Aside from the fact that big money runs the EU and most markets are not beyond ‘manipulation’, I would have to say the pounds rebound from ‘brexit’ is not terribly bad. I also heard some positive points last round from Brundle or Ted, or some commentator about relying on the pound more. No matter, all change incurs costs, understanding what changes are about to occur can make you pretty wealthy if you have the disposable income and discipline plus some good luck.

      1. @xsavior, at the risk of causing an unwelcome political argument, the UK electorate doesn’t exactly face an appealing prospect in terms of their new PM. They will either get a minister who has previously advocated stripping workers in small companies of all employment rights and has openly spoken against minority rights, or they will have a minister who was only the second home secretary in legal history to earn a criminal record for contempt of court after deliberately violating a court order from the UK’s Supreme Court.

    5. if your wealth is in Pounds and the majority of your expenses are paid for in Euro then the impact of the so called Brexit vote was immediate and severe, due to the sharp drop in the value of the pound and still falling, costs went up by 10% on the first day and as high as 20% between then and now.

      Those of us who were in this position felt the effects the very next day. The rest of the UK will feel it for themselves soon enough but do not underestimate the impact of a 10-20% fall in the value of the pound when purchasing engines in euro.

    6. What do they get paid in though?

      And have they seriously not hedged against currency fluctuations?

      1. Peppermint-Lemon (@)
        8th July 2016, 21:35

        USD, so they’re benefitting from that at least

      2. I doubt many teams sit on a pot of gold just in vase the UK does something silly.

        1. No, but then that’s not the only option.

      3. “And have they seriously not hedged against currency fluctuations?”

        I wouldn’t exactly decribe it as a fluctuation. That’s like saying when a tyre explodes, they should’ve accounted for the wear.

        With regard to how they’re paid, it’s all very well being paid in dollars, but if the engine costs have to be paid up front (or relatively soon) and they don’t have the actual cash available there and then, then it’s a huge problem.

        1. Well it’s not quite that drastic but I take your point.

      4. Williams themselves might have made some provisions against currency risks but, like most of the teams in the field, they heavily rely on outsourcing work to independent suppliers and specialist manufacturers. I would not be surprised if a number of their suppliers lacked the means to hedge against currency risks and have therefore compensated for that by pushing up their prices.

        1. This is fair comment, although she is specifically talking about the price of the engine from Mercedes.

      5. Are they in a position to hedge? Most of their income comes from either sponsors or FOM, so it may come down to when the payments from those sources come in vs. when they need to pay their suppliers and staff. (Presumably the staff payments are in pounds so they won’t get hit on the exchange rate there, but the timing of payments to staff would affect when they can pay for other things.)

        With the exception of the big teams, most of F1 lives hand-to-mouth, so they may simply not have the flexibility to hedge effectively.

    7. Beyond the currency and possible sponsorship issues, how is Brexit going to potentially affect the staffing and organization of the teams? F1 is basically based in England, and that English base relies on equipment, personnel, and technology from EU countries. If you are an Italian or German engineer, does it make you less likely to take a job in Woking or Brackley, instead of a job down the road, if you don’t know what the situation will be in a couple years? Among UK industries F1 seems uniquely exposed to potential grief from Brexit.

    8. The vote was two weeks ago?? I thought it was 23 July! Darn, missed it completely, I wish there’d been some announcement on the news or something.

      /s

    9. Move to France then, Williams. Au revoir.

    10. You haven’t even left the EU yet LMAO.
      Hurry up and leave the EU already. If it doesn’t happen anytime soon you better start rioting and hanging traitors. The Merkelreich will make the process as long and painful as it can to make an example out of the brits and force other countries to keep in line. You don’t want that.
      That being said, this just further proves Williams is no longer a top team. The management should have made preparations for this scenario. I can’t feel sorry for them, when this is just another operative error added to their already existing long list in recent times. They should’ve been shaken up by those years of abysmal failures and changed their organization to be more competitive, but failed to do so. I hope JB won’t sign to them.

      1. Is this post a joke attempt?

    Comments are closed.