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GP Week : Issue 216
F1 >>> BUsinEss story as six months later the Telegraph also broke the news that LDC had given the team a loan before selling its stake. When the team collapsed LDC was owed $20.2m comprising the loan and interest. It was far from the only outstanding sum. At the top of the list of more than 200 creditors was Ferrari which is owed $25.4m for supplying engines to Marussia. Next up is $10.9m due to McLaren for providing wind-tunnel and simulator ser vices. Other high profile names on the list of creditors included computer company Dell, which is owed $613,100, delivery service DHL, which is due $73,572 and even F1’s governing body the Fédération Internationale de l’Automobile (FIA). Those who will be hit hardest are not the big names but the majority of Marussia’s creditors as they are small and medium-sized businesses. They supply key services to F1 such as catering firm Freeman’s Hospitality, which is owed $1m, whilst Italian seat belt manufacturer Sabelt is due $7,802. The majority of the creditors are unsecured meaning that they have no rights to the team’s assets if their bills remain unpaid. In December a report from Geoff Rowley, managing partner at Marussia’s administrator FRP Advisory, said that there is “insufficient property to enable a distribution to be made to unsecured creditors.” He added that the only payment they are entitled to is a basic sum of $627,117 which comes to just over 1 Cent in the Dollar when distributed amongst the $48.1m of trade creditors. It remains to be seen whether they will get any more than this now that the team has emerged from administration. The red ink began to accelerate in the year to 31 December 2013 when Marussia made a net loss of $16.9m on revenue of $93.8m. It didn’t let up last year when its net loss came to $44.8m on revenue of $37.9m over the eight months to 31 August. Illustrating the gulf in budgets between the top and bottom of the grid, Ferrari’s F1 contract entitles it to a minimum amount of guaranteed annual prize money which comes to more annual revenue than Marussia had in 2013. The team’s main source of funding was investment from Marussia’s ultimate owner Russian businessman Andrei Cheglakov. However, it also received $10.7m annually from British driver Max Chilton, whose father is Grahame Chilton, the former chairman of reinsurer Aon Benfield. Company documents reveal that the team went into administration when “it was apparent to the directors that Andrei Cheglakov was not able to inject sufficient funds to pay all historical creditors.” In early November most of the team’s 170 staff were made redundant but hopes were soon raised that they could be back in business. The optimism was fuelled by sightings of Ferrari personnel dressed in Marussia shirts at the track in the run up to the season-ender in Abu Dhabi. As Marussia used Ferrari’s engines the Italian marque provided a group of personnel, wearing team colours, to work on them at every race. The reports of the Marussia- clad staff suggested that Ferrari was preparing for the team’s arrival but it was not to be. Marussia’s race team was reportedly on its way to the airport for the flight to Abu Dhabi when it was forced to turn back. It fuelled rumours that Ecclestone had given the team the red light. However, like so many stories in F1, it was nothing but a conspiracy theory. American business magazine Forbes revealed that, in fact, the brakes were put on the team’s revival when a key investor withdrew support. It didn’t just prevent the team from racing in Abu Dhabi but also left it with a $45,000 bill. “On Tuesday 18 November 2014, I received a commitment by a prospective investor to inject sufficient cash into MGPR to enable the team to race in Abu Dhabi,” said Rowley, one of the joint administrators at FRP. “To enable this to happen, the race team had to be reformed and arrangements made to travel to the race. A significant amount of work was carried out over a 24 hour period by both MGPR’s staff and the joint administrators; however, ultimately the prospective investors were not able to provide sufficient funds. The prospective investor agreed to pay the costs of the staff (and ancillary costs) in this period, although at the date of this report, these total £29,443 [$45,129] and remain unpaid.” If the team had raced in Abu Dhabi it would have made it more attractive to sell as a going concern. However, Rowley said that “with the withdrawal of the potential investor, I reverted to the asset sale strategy.” In mid-December FRP sold nearly 1,000 items owned by Marussia in an auction at the team’s factory in Oxfordshire, south-east England. The equipment included steering wheels, gearboxes and race suits. The team even lost the factory itself which was taken over by American tycoon Gene Haas. He is it using as the European headquarters for his F1 team which will launch in 2016. His arrival drove Manor to Sheffield where it was based before Marussia invested in it. Over the past few weeks it had to re-hire and buy equipment back in a race to get to the Grand Prix. It raised questions about why Manor’s investors were so keen to get their hands on a team that others, such as Haas, turned down. Haas is far richer than Fitzpatrick andhadaneedforanF1teamashehas committed to racing in 2016. However, he decided not to buy Marussia whereas Fitzpatrick piled in. Why? Although many of Marussia’s assets were sold the team retained one very valuable right – its entitlement to around $52m in prize money for finishing ninth in 2014. This is paid in instalments on the last business day of every month during the F1 season from March to November with the final payment due on the last business day of the following February. It means that if Manor makes it to the end of the season it will pick up enough money to cover a great deal of its budget. Prize money is only paid to the top 10 teams and as there are only 10 this year all Manor needs to do is finish last to become entitled to enough money to cover a lot of its 2016 budget. It explains why the teams voted against Manor using a modified version of its 2014 car this year. If Manor exits F1 “the money that they should have got gets distributed amongst the teams that are racing,” Ecclestone told the Independent. After Australia, that situation is looking increasingly likely. As ever in F1, money is the driving force. rIGHT Graeme Lowdon, Chief Executive Officer Manor GP and John Booth, Manor GP Team Principal. 29 GPWEEK.com // 29 GPWEEK.com // PARTNERS: