Force India in late payment row - not the only one
Discussion
Hmmm....there is something not quite right about Force India's finances.
This is a team owned by one of the richest guys on the planet yet the team is still reliant on large bank loans?
When Force India pulled out of FOTA and lodged and unconditional entry with the FIA, Mallya claimed it was because he was forced to do it in order to keep his lenders happy. If Mallya and his companies are so rich as reported to be, then why does he/they need bank loans for his team? The cost of running the F1 team should amount to little more than petty-cash to him and his companies. And on the back of stories about Force India's unpaid bills, it all seems a bit strange to me......
From Autosport, at the time, Mallya said;
"Basically F1, like in the case of any other business, relies on its bankers to provide ongoing capital support. As you would in any business, you go to the bank and demonstrate sources of income, the sources of income are from sponsorship and the disbursement of revenue from FOM arising out of the television income that you are fully aware of.
"Both these sources of income, which are sources of comfort for banks to lend money, would have been under threat if our entry was not accepted. So therefore we were legally advised that Force India might breach our banking covenants if we went down the route of a conditional entry and did not lodge an unconditional entry as always. All of this was completely shared with FOTA."
This is a team owned by one of the richest guys on the planet yet the team is still reliant on large bank loans?
When Force India pulled out of FOTA and lodged and unconditional entry with the FIA, Mallya claimed it was because he was forced to do it in order to keep his lenders happy. If Mallya and his companies are so rich as reported to be, then why does he/they need bank loans for his team? The cost of running the F1 team should amount to little more than petty-cash to him and his companies. And on the back of stories about Force India's unpaid bills, it all seems a bit strange to me......
From Autosport, at the time, Mallya said;
"Basically F1, like in the case of any other business, relies on its bankers to provide ongoing capital support. As you would in any business, you go to the bank and demonstrate sources of income, the sources of income are from sponsorship and the disbursement of revenue from FOM arising out of the television income that you are fully aware of.
"Both these sources of income, which are sources of comfort for banks to lend money, would have been under threat if our entry was not accepted. So therefore we were legally advised that Force India might breach our banking covenants if we went down the route of a conditional entry and did not lodge an unconditional entry as always. All of this was completely shared with FOTA."
touring fan said:
Hmmm....there is something not quite right about Force India's finances.
No doubt the same reason Jag / Land Rover's new owners need to borrow money to keep JLR alive or CVC's need to pay £250,000,000.00 a year to its backers............... why risk your own capital when you can borrow from somebody else. Tom Walkinshaw was considerd one of the wealthiest people in the country until TWR went bust 
If they ordered an item and it was not fit for use, or not as described they can withhold payment until the issue is fixed. Which sounds exactly like what they are doing. It sounds like the supplier has refused to fix the problem and is demanding payment and has gone legal.
It's not a money/finance issue, but just a legal one.
It's not a money/finance issue, but just a legal one.
I dragged this subject up again because it is widely reported that Fisi may drive for Ferrari at Monza, due (in part) to the fact that Force India owe Ferrari a lot of money from the 2008 season.
And again I say - there is something just not right about that team.
How come Force India/Vijay Mallya - one of the (allegedly) richest guys in the world - owes a lot of money to Ferrari from last year, owed money to their motorhome supplier, had to get a bank loan for his F1 team and it has been reported that the team owe a fair bit of money within the sport?
Very, very curious.....
And again I say - there is something just not right about that team.
How come Force India/Vijay Mallya - one of the (allegedly) richest guys in the world - owes a lot of money to Ferrari from last year, owed money to their motorhome supplier, had to get a bank loan for his F1 team and it has been reported that the team owe a fair bit of money within the sport?
Very, very curious.....
Strange indeed, but I also notice in general that people with lots of money still prefer to use someone elses cash wherever possible, and this appears to be the same. Its still a massive risk I guess at the moment. Its been one drama after another with the F1 political circus this year. I think I'd want a bit more stability and peace of mind before throwing my own cash at it.
The wealthy also seem to adopt the opinion of 'Only pay when you are forced to' and if theres a few quid tacked on for court/solicitors fees then its probably already been offset by the interest earned in their own bank account.
The wealthy also seem to adopt the opinion of 'Only pay when you are forced to' and if theres a few quid tacked on for court/solicitors fees then its probably already been offset by the interest earned in their own bank account.
A911DOM said:
Strange indeed, but I also notice in general that people with lots of money still prefer to use someone elses cash wherever possible, and this appears to be the same. Its still a massive risk I guess at the moment. Its been one drama after another with the F1 political circus this year. I think I'd want a bit more stability and peace of mind before throwing my own cash at it.
The wealthy also seem to adopt the opinion of 'Only pay when you are forced to' and if theres a few quid tacked on for court/solicitors fees then its probably already been offset by the interest earned in their own bank account.
+1The wealthy also seem to adopt the opinion of 'Only pay when you are forced to' and if theres a few quid tacked on for court/solicitors fees then its probably already been offset by the interest earned in their own bank account.
At the risk of making sweeping generalisations, some of the tightest people I know are those who are, supposedly, wealthy. But it's often because their 'wealth' isn't in liquid form, and is tied up in assets. Hence their propensity to borrow money or delay payment as long as possible.
Nick M said:
At the risk of making sweeping generalisations, some of the tightest people I know are those who are, supposedly, wealthy. But it's often because their 'wealth' isn't in liquid form, and is tied up in assets. Hence their propensity to borrow money or delay payment as long as possible.
I fully understand that trait - however when your motorhome in the F1 paddock is seized, or your driver is sent to another team because of the money you owe them, then surely something is not quite right.....?Edited by touring fan on Tuesday 1st September 17:03
touring fan said:
Nick M said:
At the risk of making sweeping generalisations, some of the tightest people I know are those who are, supposedly, wealthy. But it's often because their 'wealth' isn't in liquid form, and is tied up in assets. Hence their propensity to borrow money or delay payment as long as possible.
I fully understand that trait - however when your motorhome in the F1 paddock is seized, or your driver is sent to another team because of the money you owe them, then surely something is not quite right.....?Edited by touring fan on Tuesday 1st September 17:03
A911DOM said:
The wealthy also seem to adopt the opinion of 'Only pay when you are forced to' and if theres a few quid tacked on for court/solicitors fees then its probably already been offset by the interest earned in their own bank account.
It's not only the wealthy- but multi national corporations do this, such as the Big three. It's carefully calculated to pay at the last minute- to save on minute parts of interest. It's unfair when it's a big company and they're pushing their small suppliers almost to the point of bankrupcy however.It doesn't take much reading about the global financial crisis to realise that there are a large number of supposedly rich people and wealthy organisations who actually are massively indebted, to the point that it could be argued that many of the people and organisations are actually worthless, one example from this weekend being that De Beers is renegotiating a $1.5bn loan. Whilst I know nothing of Malya's finances or those of his various businesses it is quite likely that he has effectively mortgaged one business to pay for the next, and continued to do so throughout his various operations. I don't know if that makes him one of the richest people around, ultimately that depends upon the balance left if you take the level of debt away from the realisable value of the businesses. Unfortunately for most of us there has been a realisation that in many instances this was a negative and that is part of the overall financial problem. The key, of course, is to make sure you owe the bank a large amount of money - as has often been said, if you owe a bank £10,000 you have a problem, if you owe them £10 million, they have a problem. Think big!!
sjn2004 said:
Was there a instance a few years back were Eddie Jordan blocked the access road to the Force India factory over an unpaid debt?
That was about 18 mos ago.AIUI, the dispute was not about money, but rather about right-of-way across some property adjacent to the FI works which Jordan had retained when he sold the racing operation to Midland.
touring fan said:
Nick M said:
At the risk of making sweeping generalisations, some of the tightest people I know are those who are, supposedly, wealthy. But it's often because their 'wealth' isn't in liquid form, and is tied up in assets. Hence their propensity to borrow money or delay payment as long as possible.
I fully understand that trait - however when your motorhome in the F1 paddock is seized, or your driver is sent to another team because of the money you owe them, then surely something is not quite right.....?Edited by touring fan on Tuesday 1st September 17:03
skwdenyer said:
Out of interest, have the "motorhome police" been back? It was widely said at the weekend that Force India "did not have their usual motorhome" at the meeting; was that because they'd had it seized?
After a bit of digging about, this seems to be the story about the motorhome. BTW, it wasn't at Spa 'officially', because of insufficent time between to the two Grand Prixs. However rumours are saying it's because Spa is close to Germany and Colin may have knocking on the door again....from a google search said:
The Force India team is positive that it will retain possession of its motorhome after German police officers arrived at the Nürburgring on Friday afternoon. It is believed that the officers were looking to take possession of the team's hospitality unit, supposedly bought by former team owner Colin Kolles and not fully paid for by Force India.
With Force India having bought out the Spyker team ahead of last season, reports in the Nürburgring paddock suggest that the motorhome in question was purchased by the Futurecom company, a name also behind a current DTM team, owned by Colin Kolles who was head of Force India until last year.
Word at the circuit on Friday indicates that, despite numerous discussions having allegedly taken place between Futurecom and Force India, the motorhome is still officially owned by the former, which demanded possession under German law once the F1 fraternity arrived in the country.
With Force India having bought out the Spyker team ahead of last season, reports in the Nürburgring paddock suggest that the motorhome in question was purchased by the Futurecom company, a name also behind a current DTM team, owned by Colin Kolles who was head of Force India until last year.
Word at the circuit on Friday indicates that, despite numerous discussions having allegedly taken place between Futurecom and Force India, the motorhome is still officially owned by the former, which demanded possession under German law once the F1 fraternity arrived in the country.
touring fan said:
Hmmm....there is something not quite right about Force India's finances.
This is a team owned by one of the richest guys on the planet yet the team is still reliant on large bank loans?
The rich aren't used to spending their own money, they prefer to use somebody else's.This is a team owned by one of the richest guys on the planet yet the team is still reliant on large bank loans?
heebeegeetee said:
touring fan said:
Hmmm....there is something not quite right about Force India's finances.
This is a team owned by one of the richest guys on the planet yet the team is still reliant on large bank loans?
The rich aren't used to spending their own money, they prefer to use somebody else's.This is a team owned by one of the richest guys on the planet yet the team is still reliant on large bank loans?
It's highly unusual for a high-profile multi-billionaire to have large debts lying around unpaid....and, for example, be forced to let one of his drivers go (i.e. Fisi to Ferrari) in order to satisfy one of those debts. Doesn't anyone else find it rather strange that Mallya would not simply pay the debt to Ferrari instead?
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