Is McLaren about to file for insolvency???

Is McLaren about to file for insolvency???

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Discussion

IMI A

7,679 posts

156 months

Tuesday
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Skim read that piece. I know the people behind Carbotech. If perhaps one of the creditors holding security I would not want to be on the wrong side of them. Opportunists a word that springs to mind. Not a good situation. Conversely I see the value of the cars going up if the worst happens.

Taffy66

3,791 posts

57 months

Tuesday
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RunEveryInchOfTheWorld said:
How did they spend so much money so quickly!
Businesses fail because they run out of cash rather than lack of profitability..These businesses generally waste money on a daily basis year in, year out out of sheer ignorance,complacency and sheer unwillingness to make much needed changes to survive.
.McLaren lacks the ability to adapt to change which is the first rule of evolution and hence long term survival..

TB993tt

1,840 posts

196 months

Tuesday
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IMI A said:
Skim read that piece. I know the people behind Carbotech. If perhaps one of the creditors holding security I would not want to be on the wrong side of them. Opportunists a word that springs to mind. Not a good situation. Conversely I see the value of the cars going up if the worst happens.
I forgot Carbotech yes they would need to be onside hehe

I agree with you about the cars going up if they go bump.

Buzz84

790 posts

104 months

Tuesday
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McLarenGuru said:
Yes production has stopped all together on sports series. 720s will be manufactured until late 2022, early 2023. Only customer ordered 720S will be built this year, to give dealers the chance to clear current stock. A wise move in my opinion.
The Sports series hasn't stopped yet, they are still building 600LT and 620R

RunEveryInchOfTheWorld

288 posts

4 months

Tuesday
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Taffy66 said:
RunEveryInchOfTheWorld said:
How did they spend so much money so quickly!
Businesses fail because they run out of cash rather than lack of profitability..These businesses generally waste money on a daily basis year in, year out out of sheer ignorance,complacency and sheer unwillingness to make much needed changes to survive.
.McLaren lacks the ability to adapt to change which is the first rule of evolution and hence long term survival..
Sounds about right.

SSO

819 posts

146 months

Tuesday
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jtremlett said:
think you forget that he was in charge for much of the time since their last championship win. He was also in charge when they started road car production (12C onwards). In any case, whilst they clearly had financial issues pre-Covid and massively exacerbated by Covid, disaster is too strong a word. They are not going to go bust. One way or another there are enough investors around who will bet on them long term and will cover them short term.
Agree, McLaren will not be allowed to go bust. Major shareholders (Bahrainis) have too much already invested to allow that to happen. I recently posted two articles on both McLaren's and Aston's business situations. In many ways Aston is on much more trouble.

Ferruccio

1,193 posts

74 months

Tuesday
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SSO said:
McLaren will not be allowed to go bust. Major shareholders (Bahrainis) have too much already invested to allow that to happen..
The Bahrainis have a country to sort out.
Never mind an F1 team and small sports car manufacturer.

PompeyReece

874 posts

44 months

Tuesday
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Even if they did go bust, I can't see someone not stepping in and buying them. Surely?

IMI A

7,679 posts

156 months

Tuesday
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TB993tt said:
IMI A said:
Skim read that piece. I know the people behind Carbotech. If perhaps one of the creditors holding security I would not want to be on the wrong side of them. Opportunists a word that springs to mind. Not a good situation. Conversely I see the value of the cars going up if the worst happens.
I forgot Carbotech yes they would need to be onside hehe

I agree with you about the cars going up if they go bump.
Maybe I'm being unfair but met main (then) Austrian backer ages and ages ago must be over 10 years ago hence maybe very different today but he struck me as a pretty sharp businessman. If they can pick up Mcl for buttons they will in my view but may not even be the same owner any more. By way of example just looked at Carbotech website founder airbrushed out. Don't think he got bean. Very mean.

flemke

22,441 posts

192 months

Tuesday
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RunEveryInchOfTheWorld said:
jtremlett said:
RunEveryInchOfTheWorld said:
Clearly he was doing something right, considering they have never won a championship again and are now facing financial disaster...
I think you forget that he was in charge for much of the time since their last championship win. He was also in charge when they started road car production (12C onwards). In any case, whilst they clearly had financial issues pre-Covid and massively exacerbated by Covid, disaster is too strong a word. They are not going to go bust. One way or another there are enough investors around who will bet on them long term and will cover them short term.
He put Whitmash in charge and worked on road cars. Whitmash wanted to reduce Hamiltons salary from £20m to £10m to match Buttons. As they had both won 3 races each the season before and wanted driver parity. Mercedes offered Hamilton £20m and he went. Whitmashes quotes afterwards were absurd, such as "Hamilton does not want to win anymore races" IIRC.
According to reports at the time, in 2012 Ferrari were paying Alonso €30m/yr and McLaren were paying both Hamilton and Button €16m/yr.
https://www.crash.net/f1/news/180405/1/f1-2012-dri...
According to Whitmarsh after Hamilton had signed with Mercedes,
'We made Lewis an offer - an offer, which I believe is more money than any other driver at the moment is being paid.' That implies that McLaren offered Lewis more than €30m, or at the very least a lot more than the £10m that you suggest.
https://www.sportsmole.co.uk/formula-1/mclaren/new...

RunEveryInchOfTheWorld said:
Mercedes then reduced their stake in Mcl and went from priority partners to customers, which was when Honda were came in.
Your history is wrong. Mercedes sold their shares in McLaren in early 2010. Hamilton did not sign with Mercedes until late 2012.
When Mercedes sold their shares back to McLaren in 2010, part of the agreement was that McLaren would continue to receive (but now pay for) a supply of Mercedes engines through 2013, with options to continue as a Mercedes customer for the following two years until the end of 2015. McLaren elected to use the Merc power plants for the first but not the second of those two option years.

RunEveryInchOfTheWorld said:
Ron forced them in a year too early in order to try and build something for the future. But that and Alonso's return into a well established hybrid era were little efforts against a changing wind.

Which brings us to now. The F1 team is now a mid, lower bottom-end team.
Last year McLaren finished behind 3 teams and ahead of 6 other teams (including a full factory team). It is not obvious how that would make them 'a mid, lower bottom-end team'. scratchchin

RunEveryInchOfTheWorld said:
Customer engines and paid drivers, does this sound familiar?
Yes, it sounds like every independent team that is good enough to attract top drivers and well-funded enough not to require paying drivers.

RunEveryInchOfTheWorld said:
Mortgage against the assets and loans. Considering Mcl own their HQ and are now selling the building to rent it back, shows a lack of long term vision and short term props.
To the contrary, the reason that McLaren have this problem is precisely because they (Ron in particular) had a long-term vision, which was to broaden and diversify away from being just a racing business that was vulnerable to the whims of a deranged lunatic such as Max Mosley.
The execution of that vision has been flawed, and now seriously exacerbated by the pandemic that took the world by surprise, but one cannot criticise McLaren for lack of vision.

RunEveryInchOfTheWorld said:
I can imagine this being a downward spiral.

Just to clarify, i really have enjoyed watching Mcl growing. It was Ron's vision and he really did build something brilliant. And I hate seeing the decline. However the management are poor and the ethos even worse. i.e. We are Mclaren, i.e We are Williams. This arrogance will be the ultimate dismiss.
Yes, there was arrogance, and some may still be there (btw, do you think there just might be some arrogance at Mercedes, Ferrari and Red Bull?), but there was a 180° turnaround after the 2018 season and McLaren Racing's ethos has been transformed.

ralphrj

2,981 posts

146 months

Wednesday
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flemke said:
When Mercedes sold their shares back to McLaren in 2010, part of the agreement was that McLaren would continue to receive (but now pay for) a supply of Mercedes engines through 2013, with options to continue as a Mercedes customer for the following two years until the end of 2015. McLaren elected to use the Merc power plants for the first but not the second of those two option years.
According to their own accounts for 2014 the decision to not use the Merc power supply in 2015 cost McLaren £35m in termination costs and restructuring.

In the same year they paid Martin Whitmarsh £10m in compensation following his termination.

For me, 2014 was the year the wheels fell off.

RunEveryInchOfTheWorld

288 posts

4 months

Wednesday
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ralphrj said:
flemke said:
When Mercedes sold their shares back to McLaren in 2010, part of the agreement was that McLaren would continue to receive (but now pay for) a supply of Mercedes engines through 2013, with options to continue as a Mercedes customer for the following two years until the end of 2015. McLaren elected to use the Merc power plants for the first but not the second of those two option years.
According to their own accounts for 2014 the decision to not use the Merc power supply in 2015 cost McLaren £35m in termination costs and restructuring.

In the same year they paid Martin Whitmarsh £10m in compensation following his termination.

For me, 2014 was the year the wheels fell off.
I strongly believe Whitmarah was one of Mclaren Racings worst episodes. They never, ever recovered from there.

Ferruccio

1,193 posts

74 months

Wednesday
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ralphrj said:
According to their own accounts for 2014 the decision to not use the Merc power supply in 2015 cost McLaren £35m in termination costs and restructuring.

In the same year they paid Martin Whitmarsh £10m in compensation following his termination.

For me, 2014 was the year the wheels fell off.
Nice work if you can get.
Like some football clubs.

AndyC_123

813 posts

109 months

Wednesday
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Do they make any money in F1?

Does it make any difference in road car sales? Lambo seem to do ok?

BobToc

330 posts

72 months

Wednesday
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McLaren is an average company with a bad capital structure. If they end up going through a restructuring they’ll just rejig the balance sheet, they won’t disappear.

12pack

1,063 posts

123 months

Wednesday
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Ferruccio said:
The Bahrainis have a country to sort out.
Never mind an F1 team and small sports car manufacturer.
Well they certainly are a bit....
https://www.bloomberg.com/news/articles/2020-07-01...

Cheib

18,748 posts

130 months

Wednesday
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AndyC_123 said:
Do they make any money in F1?

Does it make any difference in road car sales? Lambo seem to do ok?
They’ve been losing money in F1 I believe...its been one of the problems. I think I read they’ve sold off some of the old F1 cars in the last few years to cover costs

flemke

22,441 posts

192 months

Yesterday (00:37)
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AndyC_123 said:
Do they make any money in F1?

Does it make any difference in road car sales? Lambo seem to do ok?
Lambo are not really comparable as a car manufacturing company as they have VAG's balance sheet, bargaining power with suppliers, and substantial economies of scale and commonality of parts all working to their advantage. To produce cars retailing at roughly the same price, it probably costs Lambo only two-thirds as much as it does McLaren, if not even less than that.

As to whether McLaren make any money in F1, from approximately 1980 to 2010 they made a ton of money in F1. Racing was in effect their only business and yet it enabled them to build a world-class headquarters, have one of the biggest budgets in racing, and make former mechanic Ron Dennis a multi-multi-millionaire.

In more recent years, however, they have not been a works team, they no longer have had a title sponsor, they lost important secondary sponsors, and their prize money has declined. During this relatively short period, racing has been unprofitable for them.

Under the forthcoming cost cap, it is expected that F1 will be profitable for them.

Ferruccio

1,193 posts

74 months

Yesterday (13:23)
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flemke said:
AndyC_123 said:
Do they make any money in F1?

Does it make any difference in road car sales? Lambo seem to do ok?
Lambo are not really comparable as a car manufacturing company as they have VAG's balance sheet, bargaining power with suppliers, and substantial economies of scale and commonality of parts all working to their advantage. To produce cars retailing at roughly the same price, it probably costs Lambo only two-thirds as much as it does McLaren, if not even less than that.
When Lamborghini started, he never raced.
Simply because he knew he couldn’t afford it.

ThePackMan

127 posts

21 months

Yesterday (13:40)
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I wonder what will happen when they burn through the £150M credit line? I’d imagine a business of their size and scale will go through it pretty fast.