Discussion
CoolHands said:
What’s going on are they actually running out of money or is this just all some kind of battle for control shenanigans?
They’ve got to pay riciardos wages you know
They ran out of money so they borrowed some.They’ve got to pay riciardos wages you know
Then that money ran out so they borrowed some more at ludicrous interest rates.
Now that money is about to run out so they need to borrow some more.
However they need to put something up as security for the loan and their existing lenders say that only assets they have were put up as security against the first loans.
McLaren are going to default on their first loans so must win their claim against the Security Agent or they will lose both the collection of historic cars and be locked out of the factory.
C Lee Farquar said:
They have massive debts on their accounts. IIRC each car they were selling had to cover £13k in interest payments.
Can Bahrain really be short of cash or are they fed up of financing them?
Possibly both.Can Bahrain really be short of cash or are they fed up of financing them?
Bahrain can't be making much money from oil at the moment and they have been pouring money into McLaren since 2012/3 just to keep them afloat.
In times such as these, people get fidgity about their exposure to risk - creditors get tricky.
However... Two scenarios are likely:
1) McLaren are successful and can refinance as intended.
2) McLaren lose, are financially stuck and liberty find some way of propping them up as they're an integral part of F1.
However... Two scenarios are likely:
1) McLaren are successful and can refinance as intended.
2) McLaren lose, are financially stuck and liberty find some way of propping them up as they're an integral part of F1.
It reads to me as a 'relatively' straightforward matter in the immediate sense. The independent trustee of McLaren's debt wants the court to declare it is okay for McLaren to sell some of the assets whose security it administers.
On the other side the owners of the debt smell blood and wish to use the immediacy of the cash flow crunch to force McLaren into accepting a deal that's commercially favourable to them, rather than the company.
So far so good.
Except... McLaren raised nearly £300m only a few months ago and are going to have burned through it in a month's time.
Am I misremembering when I think Liberty payments to the F1 teams are up to date so far and based on last years award, rather than the effects of any shortfall that has happened this season?
My worry would be that McLaren are burning through huge volumes of cash and are going to run out of shareholders to sell more shares to and assets to borrow money against, whatever the outcome of their current restructuring.
On the other side the owners of the debt smell blood and wish to use the immediacy of the cash flow crunch to force McLaren into accepting a deal that's commercially favourable to them, rather than the company.
So far so good.
Except... McLaren raised nearly £300m only a few months ago and are going to have burned through it in a month's time.
Am I misremembering when I think Liberty payments to the F1 teams are up to date so far and based on last years award, rather than the effects of any shortfall that has happened this season?
My worry would be that McLaren are burning through huge volumes of cash and are going to run out of shareholders to sell more shares to and assets to borrow money against, whatever the outcome of their current restructuring.
TheDeuce said:
2) McLaren lose, are financially stuck and liberty find some way of propping them up as they're an integral part of F1.
This isn't really an F1 matter (it's about the whole group, of which the F1 team is just part) and Liberty won't be able to save them if the non F1 part of the business is eating all the cash. The Bahrain shareholders are only going to keep pumping in money whilst there is likely to be a return. If the core business cannot be operationally profitable, you don't keep throwing in more money for s
ts and giggles. If that was an easy option, McLaren wouldn't be arguing with hedge funds over sale and lease back of its old cars. RonaldMcDonaldAteMyCat said:
TheDeuce said:
2) McLaren lose, are financially stuck and liberty find some way of propping them up as they're an integral part of F1.
This isn't really an F1 matter (it's about the whole group, of which the F1 team is just part) and Liberty won't be able to save them if the non F1 part of the business is eating all the cash. The Bahrain shareholders are only going to keep pumping in money whilst there is likely to be a return. If the core business cannot be operationally profitable, you don't keep throwing in more money for s
ts and giggles. If that was an easy option, McLaren wouldn't be arguing with hedge funds over sale and lease back of its old cars. To your first point in the first post you made in response to mine, are liberty's backers really going to sustain their payments to prop up the sport? History suggests they will - because the potential default if they collapse is worse than the risk of more money to ensure they do not. Also, the long term prospects of liberty's asset in F1 is great, it's not damaged - it's just the short term that threatens their continued ownership of that valuable asset. So long as liberty continue to do what is best for F1 (their asset), the smart money will support them.
As for McLaren, there is no limit to how liberty might potentially back them up as an F1 team for the sake of F1. The situation is indeed made complex as the F1 team and road cars are connected and each subject to different threats - but that is a complexity, not an insurmountable block when it comes to help.
I think it's important to remember that the sums at stake are vast and the solutions to keep the show on the road will be varied and not easy to appreciate from the outside. I'm not for one moment suggesting I have any idea what will happen behind the scenes but I am predicting that McLaren will remain in F1 one way or another. And if in doubt, the owners of F1 will tip the balance. Whatever that means McLaren have to go along with..
Two things matter more than any short term refinancing: firstly F1 is weakened with McLaren. Secondly, McLaren have no road car business without F1. So there are strong reasons for liberty to support McLaren and for McLaren to accept the terms of that support - however it's delivered, and however indirectly.
My question about Liberty's payment was my understanding that they paid for the previous year, this year. In other words I thought McLaren would already have been paid their money for 2019 and the 2020 money, whatever that might look like, will be due next year.
As for the F1 team, it's a subsidiary of the group. If the group goes pop, so does the F1 team, unless someone buys it out. Liberty can't buy into the team for obvious reasons. Nor are they going to give it money for it to use on other McLaren ventures. Also, my limited understanding is that the borrowings are in the name of the group and distributed to the undertakings, rather than in the name of the undertakings alone, though I could be wrong.
As for the F1 team, it's a subsidiary of the group. If the group goes pop, so does the F1 team, unless someone buys it out. Liberty can't buy into the team for obvious reasons. Nor are they going to give it money for it to use on other McLaren ventures. Also, my limited understanding is that the borrowings are in the name of the group and distributed to the undertakings, rather than in the name of the undertakings alone, though I could be wrong.
Edited by anonymous-user on Friday 19th June 23:47
RonaldMcDonaldAteMyCat said:
My question about Liberty's payment was my understanding that they paid for the previous year, this year. In other words I thought McLaren would already have been paid their money for 2019 and the 2020 money, whatever that might look like, will be due next year.
As for the F1 team, it's a subsidiary of the group. If the group goes pop, so does the F1 team, unless someone buys it out. Liberty can't buy into the team for obvious reasons. Nor are they going to give it money for it to use on other McLaren ventures. Also, my limited understanding is that the borrowings are in the name of the group and distributed to the undertakings, rather than in the name of the undertakings alone, though I could be wrong.
Liberty’s payment is only one part. 2020 Sponsors are unlikely to be paying. Road car sales will have collapsed. Whilst furlough will have helped, as pointed out McLaren have a lot of debt to service.As for the F1 team, it's a subsidiary of the group. If the group goes pop, so does the F1 team, unless someone buys it out. Liberty can't buy into the team for obvious reasons. Nor are they going to give it money for it to use on other McLaren ventures. Also, my limited understanding is that the borrowings are in the name of the group and distributed to the undertakings, rather than in the name of the undertakings alone, though I could be wrong.
Edited by RonaldMcDonaldAteMyCat on Friday 19th June 23:47
Now, I wonder what the fire sale value of McLaren is? And, in a wild thought, I wonder what cash Ron still has lying around?
RonaldMcDonaldAteMyCat said:
My question about Liberty's payment was my understanding that they paid for the previous year, this year. In other words I thought McLaren would already have been paid their money for 2019 and the 2020 money, whatever that might look like, will be due next year.
As for the F1 team, it's a subsidiary of the group. If the group goes pop, so does the F1 team, unless someone buys it out. Liberty can't buy into the team for obvious reasons. Nor are they going to give it money for it to use on other McLaren ventures. Also, my limited understanding is that the borrowings are in the name of the group and distributed to the undertakings, rather than in the name of the undertakings alone, though I could be wrong.
Over and above the championship payments, which, yes, they've already spent ahead of receiving... Liberty do have the option to prop up teams financially. They've said that will be considered on a team by team basis.As for the F1 team, it's a subsidiary of the group. If the group goes pop, so does the F1 team, unless someone buys it out. Liberty can't buy into the team for obvious reasons. Nor are they going to give it money for it to use on other McLaren ventures. Also, my limited understanding is that the borrowings are in the name of the group and distributed to the undertakings, rather than in the name of the undertakings alone, though I could be wrong.
Edited by RonaldMcDonaldAteMyCat on Friday 19th June 23:47
The key question therefore is: are McLaren worth more to save than to lose from F1? That would depend very much on McLaren's long term trading through plan and how willing they are to play ball with liberty's future desires for F1.
Liberty have a monster asset to protect and every team is part of that. Expect the unexpected.. expect money to flow the opposite direction to usual. Just like liberty paying venues to host F1 that normally pay them.
skwdenyer said:
Liberty’s payment is only one part. 2020 Sponsors are unlikely to be paying. Road car sales will have collapsed. Whilst furlough will have helped, as pointed out McLaren have a lot of debt to service.
Now, I wonder what the fire sale value of McLaren is? And, in a wild thought, I wonder what cash Ron still has lying around?
Haha, as I typed my last reply that bought flashed across my mind. Pie and sky springs to mind and I doubt he'd have the appetite (or even that he'd capable of making the team tick these days). Now, I wonder what the fire sale value of McLaren is? And, in a wild thought, I wonder what cash Ron still has lying around?
My thoughts aren't about the F1 team not getting paid; it's the rest of the group eating money and the F1 team being a casualty of that.
Should the car business and the F1 team be split? There may be buyers who want a sports car manufacturer but not an F1 team and vice versa.
Can't help but think trying to build relatively low volumes of cars featuring cutting edge, bespoke technology, at a time when the development race is at its hottest, might not be the greatest of current ideas.
Ron is not the solution. He was the right person as a dictator running a small company racing cars, but there's no evidence he has what it takes to scale up a big one developing and building road ones.
McLaren say if they're able to sell some asset for £300m or so they will last into 2021. My question would be, what then?
Can't help but think trying to build relatively low volumes of cars featuring cutting edge, bespoke technology, at a time when the development race is at its hottest, might not be the greatest of current ideas.
Ron is not the solution. He was the right person as a dictator running a small company racing cars, but there's no evidence he has what it takes to scale up a big one developing and building road ones.
McLaren say if they're able to sell some asset for £300m or so they will last into 2021. My question would be, what then?
RonaldMcDonaldAteMyCat said:
Should the car business and the F1 team be split? There may be buyers who want a sports car manufacturer but not an F1 team and vice versa.
Can't help but think trying to build relatively low volumes of cars featuring cutting edge, bespoke technology, at a time when the development race is at its hottest, might not be the greatest of current ideas.
Ron is not the solution. He was the right person as a dictator running a small company racing cars, but there's no evidence he has what it takes to scale up a big one developing and building road ones.
McLaren say if they're able to sell some asset for £300m or so they will last into 2021. My question would be, what then?
I suspect that the road car business and Formula 1 team are linked by cross-guarantees, with each underwriting the other.Can't help but think trying to build relatively low volumes of cars featuring cutting edge, bespoke technology, at a time when the development race is at its hottest, might not be the greatest of current ideas.
Ron is not the solution. He was the right person as a dictator running a small company racing cars, but there's no evidence he has what it takes to scale up a big one developing and building road ones.
McLaren say if they're able to sell some asset for £300m or so they will last into 2021. My question would be, what then?
So no, they can't be "split"
Dermot O'Logical said:
I suspect that the road car business and Formula 1 team are linked by cross-guarantees, with each underwriting the other.
So no, they can't be "split"
Also cross pollination between the two. McLaren and Ferrari are the only two car manufacturers that can point to stuff on their cars that really has come directly from their F1 exploits.So no, they can't be "split"
If McLaren say the aero on one of their road cars achieves xx downforce at xx speed then then it's believable - the buyer knows that at some point the same guys working CFD on the F1 side will have been involved, at least to confirm the theory.
Take that direct connection away, and what exactly do McLaren road cars offer a buyer to feel 'special'? It would take away the soul of the machine.
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