Only 2 days ago I posted the article “What current F1 teams I would and what teams I would not miss ?” I listed three current teams that I believe F1 can’t afford to loose. Yesterday the news broke out that one of those three – Williams – was close to giving up.
Not that long ago (2002-2003) Williams were still one of the top teams fighting for race wins and top championship places. But following the split with their engine partner BMW during 2005 season there were not too many reasons to celebrate for the Grove based team. Williams moved from the top 3 towards midfield (and lower midfield) with regular points and an odd podium here and there being the most they could hope for.
It did look rather well for them ahead of 2008 season though. The car seemed to be quite competitive during winter season, the space on the car was decently filled up with sponsor logos. Unfortunately some of them left (Lenovo, Petrobras), others got caught up in collapse of Iceland’s economy (Baugur group – All Saints, Mydiamonds, Hamleys…) and we all could read about the troubles of RBS. Add to this mix the fact that the team has been loosing money for at least 3 years in the row (details further below) and the recipe for disaster is almost complete. Adam Parr, the team’s CEO, to FT.com:
“I think it would be fair to say we have reached a point where further borrowing is not acceptable to the board of this company.”
Following the departure from F1 of Honda many predicted that Williams (without manufacturer or a billionaire backing) is the team in the biggest danger. Reading all that came out yesterday only confirms those predictions. But as it worked out, the demise of Honda and the cost cutting action that followed proved to be blessings for Williams, at least for now. Sir Frank Williams:
“[Given] the financial pressure we are under, the consequent changes to the rules to reduce the cost of racing are a major benefit.”
It also emerged that Bernie Ecclestone advanced payment of £14.5 million to Williams – the money the team would eventually receive after signing the new Concorde Agreement.
“It’s a prepayment. They are entitled to some back-payments only due for payment when they sign the Concorde. We said to them we will pay you now.”
Hearing about Ecclestone forking out millions in advance and ahead of contracts being signed suggests that the situation at Williams was serious. It looks like Ecclestone really meant it when he said this few days ago:
It’s bad for me to say this, but the only team we would really say we would miss is Ferrari. I wouldn’t want to lose McLaren for sure. I wouldn’t want to lose Williams.
It is funny to think that while Williams races with Toyota engines it may be thanks to Honda (end their exit) that the team is still around …
According to Financial Times Williams team cost about £100m last season, three times as much as 10 years ago, made a £21.4m loss in 2007, on top of a £27.7m loss the previous year, and its net debt for 2007 tripled to £24.7m. Sir Frank Williams:
We 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’ve lost in the last two years, or three, I think, but we have the reserves and resource to manage that.
At the moment according to Adam Parr, more than 60% of Williams’ sponsorship target was committed for 2009 and RBS (for what it is worth) was tied to two more years of a three-year sponsorship deal. They clearly still have some job to do …