Williams may have scored points rarely in 2022, but the team did enjoy a notable off-track success. Towards the end of last year the District Court of the Central District of California agreed the team’s former sponsor Rokit must pay them over £26.2 million.
The decision was the latest stage of a dispute between the two parties which came to light when Williams announced they had split in May 2020, following their first season in Rokit’s colours.Rokit describes itself as a creator of innovative technology and premium products, with a range of smartphones, drinks, payment cards and e-bikes among the items it has sold. It is also heavily involved in motorsport sponsorship, having been the primary sponsor for Formula E, IndyCar and World Superbikes teams as well as having its logos appear on all cars in W Series and British Formula 4 and supporting individual drivers such as Nicolas Hamilton, the brother of Formula 1 champion Lewis Hamilton.
Documents published following the court’s decision shed light on what happened. Williams’ case revolved around three agreements between the two companies. The first covered team sponsorship and started in January 2019 and the second began on the first day of 2020 and applied to a partnership with the Rokit Group’s drink brand. Both were due to conclude at the end of 2023.
The second agreement came to a sum of £11 million for each year, with sponsorship instalments of £4 million for January 1st and March 1st, and £3 million by June 1st.
A third ‘Oral Agreement’ totalling $1 million was also made in February 2019 – before Williams had even started a race in Rokit colours. The documents state that was put into writing by Jonathan Kendrick, chairman of the Rokit Group, who emailed Williams’s then-deputy team principal Claire Williams to “confirm I am giving a 1m dollar bonus payable at the end of the year for the team”. Williams sent an invoice for this shortly before the final race weekend of the year in November.
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A second email from Kendrick to the team about payment came three months later, after two of that year’s payment dates had passed, confirming the next bank transfer would be late and adding, the documents states: “anyway pls can you confirm the exact amount and can we send it in dollars (do you have a dollar account) as that’s even easier for me as if I ask them to exchange I just don’t want excuses for a delay”.
“The total is therefore £18m and the additional $1m for the bonus you had previously offered,” read their reply. “If you would like to pay in US$ you can pay in to the account below and use the prevailing US$/GB£ exchange rate which is $1.30 per £1.00. This would result in a US$ payment of $24.4m (being £18m *1.30 = $23.4m), and adding the $1m bonus.”
This time a prompt response came from Rokit “however, this document did not result in money arriving with the Claimant [Williams],” noted the London Court of International Arbitration (LCIA) when this matter later reached it.
“This is a most curious state of affairs as it appears, on its face, to be a bona fide instruction by a customer to its bank to effect a transfer.”
The team wrote to the firm chasing payment of the five invoices in April 2020, “affording them the opportunity to cure and pay the invoices”. There was no progress, and on May 28th a follow-up message was sent by Williams saying it was terminating the first two agreements. A day later, the team announced that decision to the world.
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Three weeks on from that, Williams’ solicitors contacted Rokit, presenting a ‘Without Prejudice Save as to Costs’ of the payments owed. This offer provided Rokit with a tweaked number to pay to avoid the matter having to progress to legal proceedings.
Williams said they could settle with Rokit paying £13.5 million for the three instalments of one year of the first agreement, and £11 million for the second agreement, and said it would “refund any amounts that is secures by way of Replacement Sponsors in respect of the 2020 season”, and that they would not pursue the $1 million bonus or compensation for any legal costs.
But Rokit did not reply, and Williams enquired again with mention to that they had heard that the Rokit Group was now looking to sponsor Mercedes. In July, Rokit responded to Williams’ solicitors, saying: “…Your client is proposing that we pay £13.5m, for what? We look forward to receiving confirmation once you have commenced arbitral proceedings…”.
Williams therefore sought legal action to secure its sponsorship money, which commenced in 2021. The LCIA hearing took place on May 28th, and it was determined that Williams were entitled to their claims, with an additional £693,443.84 payable in interest at the rate of 4% over the base rate of the Bank of England. The claims not only covered the contractual cost of the two agreements, but also other costs that occurred due to the sponsorship deal with Rokit. They are broken down as below to the date of termination:
- A claim of debt from Williams against Rokit, for the agreements £18 million
- Damages from Williams against Rokit £6.5 million
- A claim of debt of the ‘Oral Agreement’ £770,000
- Damages for replacing Rokit as sponsor in light of their breach £126,837
- Show car invoices £30,834
- The branding and rebranding costs of the team with Rokit’s logo £21,660
Williams started the next stage of recovering the money by filing a costs submission to the US District Court for the Central District of California in August 2021 so the LCIA’s decision could be enforced. By November 2021 a further sum of over a quarter of a million dollars had been added to the sum owed to cover additional legal costs.
In September 2022, a notice of service of court was issued in California that “The Petition to Confirm Foreign Arbitral Award is now set for hearing on November 28, 2022” between the two companies. The hearing “confirmed all respects of the London court’s decision, meaning Rokit is to pay £26,220,094.25 and $1 million, along with costs occurred in this proceeding.”
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2022 F1 season
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- FIA confirms all 10 F1 teams complied with 2022 cost cap
- Steiner “not ashamed” of panning “slow” Schumacher in Drive to Survive
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- Hamilton sees diversity gains in F1 years on from his ‘traumatising’ experience of racism
S
5th January 2023, 7:54
Dodgy business dealings in F1?
Well, I never….
Jason (@jasonj)
5th January 2023, 8:28
I don’t know much about Rokit, but after checking out their website, I thinks it’s more likely they fold than pay Williams. They operate Rokit Gear, which is just their logo on generic shirts, jackets and hats, but the most interesting aspect is on their linked Facebook page, they have 5 likes and 22 followers. It appears unlike F1 drivers, Rokit doesn’t have the resources to buy likes.
Jason (@jasonj)
5th January 2023, 8:33
After slightly more investigation, they also have Rokit Life, on Facebook they have roughly 7,100 likes / followers with no engagement. So they do know how to buy likes, they just ran out of resources for Rokit Gear.
OOliver
5th January 2023, 12:59
I don’t get how established F1 teams have got Fairies to invest or sponsor their teams. I will like to learn how they do it.
SjaakFoo (@sjaakfoo)
5th January 2023, 15:48
I mean, I’m sure you’ve gotten some of those nigerian prince e-mails that you immediately delete.
F1 teams appear to reply to those and buy into them fully, like all the time.
OOliver
5th January 2023, 20:52
When your Prince keeps asking you to pay for the coffee because he always seems to forget his wallet, shouldn’t that be a red flag.
Wil-Liam (@wil-liam)
5th January 2023, 9:11
someone should please tell me. how much has rokit paid so far? or they never paid a penny and got “free” sponsporship?
Kringle
5th January 2023, 9:59
And considered pulling the same trick to Mercedes it seems.
So what’s going on here? Rokit inflate the price of their brand by creating a logo on photoshop, sponsoring teams then flogging the business to some poor soul before the teams catch-up with you for payment?
I wonder how the cash flow is for those in the other formulae. They will surely be reading the proceedings with sweat upon their brows.
Proesterchen (@proesterchen)
5th January 2023, 10:39
They seem to have paid their original 2019 sponsorship but failed to pay the separate 2019 bonus and any of the 2020 instalments they agreed to in their two (one old, one new) sponsorship contracts.
hunocsi (@hunocsi)
5th January 2023, 11:11
@proesterchen @wil-liam Yes the timeline seemed confusing on first read because of this:
I first thought the „three months later” meant May 2019 after the February 2019 email (as it was referred to as the second email) but now I figured it refers to the November (2019) mentioned at the end of the previous paragraph, so the payments must have stopped late 2019/early 2020. So they probably paid £13.5 million for the first year of the first contract.
jason hocking
6th January 2023, 9:19
yes they clearly paid in full in 2019 so to say they didn’t pay at all isn’t really fair. its clear the dispute is around 2020 when to my knowledge their was no actual racing because of covid. cars sat in the garage which hardly gives sponsors any value.
David (@nvherman)
8th January 2023, 12:44
No actual racing? Might want to mention that to Lewis Hamilton, and indeed anyone else who watched the 17 races that season
Ferdinand
5th January 2023, 11:35
First sign a sponserdeal before they have money to spend. Than find an investor to pay for the marketing an create mergendise before ever creating a decent product people would want.
Strange business, but not unknown in F1.
Scott (@scott6428)
5th January 2023, 14:40
Yes reminds me rich energy. They get the exposure and hope to use that to generate capital. No wonder they prefer the drivers bring the sponsors ! I bet latiffis people didnt miss a payment.
jason hocking
5th January 2023, 14:53
i read they paid in full in 2019. Maybe there was a falling out over covid for 2020, no one raced
David (@nvherman)
8th January 2023, 12:45
I’ll say this again to make sure you see this: No actual racing? Might want to mention that to Lewis Hamilton, and indeed anyone else who watched the 17 races that season
P Carter
5th January 2023, 15:25
Failure to pay WSeries was a large part of why they couldn’t finish their season. Just google Rokit and you’ll find some very interesting stores. Seems a certain fake energy drink bearded boos is still doing the same. Currently saying he’s going to buy Coventry City FC. How are these people not in prison?
bernasaurus (@bernasaurus)
5th January 2023, 15:32
I find this very insightful. I’ve often wondered what are the figures involved in sticking a sticker on an F1 car in the modern age. I’m surprised that Williams could command tens of millions considering where they were at the time. But I guess they couldn’t when the cheque didn’t arrive.
Claire may have had her faults, but this must have been an incredibly stressful time, you can do due diligence, but sometimes you just have to take people at their word. All the stuff that happened after this at Williams can’t have been fun.
Jacky Ickx Rockx
6th January 2023, 0:37
Rokit is John Paul DeJoria, the serial entrepreneur behind Paul Mitchell hair care and Patron tequila. He starts brands and slaps names on things like other people breathe or eat sandwiches. I don’t know how they make any money off anything in their Rokit portfolio of boring dross, but they must’ve found a way. I love how his profiles always mention he was homeless but it happened to be in a “20 year old Rolls-Royce”, which today would be like a 2002 model; not exactly cardboard boxes. I think he slept in the Roller just to put all that in his bio later in his career. He’s also been married to a Playboy Playmate from Weekend at Bernie’s for 30 years. It’s the distinctly LA offshoot of the American Dream. He should be a joke but he’s worth almost as much as Beardy Branson. Little bit less now, sounds like.
Jacky Ickx Rockx
6th January 2023, 0:54
OK, maybe they haven’t figured out a way to make money off that ROKiT garbage. Lawsuits and broken promises everywhere: https://www.sportico.com/business/sponsorship/2022/rokit-nfl-nba-deals-1234690627/
DeJoria seems more like an enabler with a trusted face and known name. ROK stands for Return of Kendrick, the CEO who proposed making employees (of which it seems there have only ever been 60 or so) wear badges denoting how useful they are to him. These people are on another plane of BS and grossness, I swear. They act as childish as Elon but have actually never produced anything original. He’s a tire salesman.
Hairs_
6th January 2023, 15:04
In fairness, neither has Elon.
Jacky Ickx Rockx
6th January 2023, 17:26
It’s not like he engineered it himself but he does own the company who made a rocket that can turn backwards and land on a boat. Less impressed with shooting the Tesla Roadster into space. I remember NASA doing something like that except they landed it on the moon, got out, and drove it around. Three times. 50 years ago.
Ciaran (@ciaran)
6th January 2023, 10:20
I won’t pretend to be an expert in law, but when an arbitration court describes something as “a most curious state of affairs as it appears” then something has gone fascinatingly wrong!
Also curious to see that even at these echelons of business, grammar and formality completely escape the execs’ emails :D
bernasaurus (@bernasaurus)
6th January 2023, 12:09
@ciaran Yeah, the emails jumped out at me also. Even though they’re talking about tens of millions of pounds. They read like text messages from when I was 16 on my Nokia. We had to abbreviate ‘please’ because that would cost 15p more than ‘plz’. I would have thought the execs wouldn’t have that problem today.
Chris Horton
6th January 2023, 11:37
What is with these clown companies? Rich Energy, Rokit etc. What a bizarre concept.
Stewart
6th January 2023, 13:31
No Company however they are formed should never ever receive the Exalted status of being a Limited Company until they have demonstrated a responsibility of sound financial accounts for five years.
That way, when you see titles such as “Ratsplat Dingle and Wobbly Ltd., you at least know their directors have been genuine and above board for quite some time.
But it would also stop fly-by-night start ups because the Directors would be Jointly and Severally Liable for any Debt accrued by the Firm – PERSONALLY !
This would root out the bad apples long before they came into any position where they could leave someone in the lurch , expecting their country’s Civil Services to foot the bill.
David (@nvherman)
8th January 2023, 12:52
You clearly don’t understand company law. With Limited companies, unlike sole traders and partnerships, the information on the company, its directors and anyone holding more than 25% of the shares is available to check for free on the Companies House website.
Also, any finance they have via Banks etc may still be the responsibility of the directors, they can choose to make this post of their terms