Is McLaren about to file for insolvency???

[flemke]

ThePackMan said:

SSO said:

Porsche guy said:

Given his contacts, I think whatever Flemke writes about McL must be spot on.

It is certainly very much in line with everything I have heard.

Because all companies always share anything negative with customers....oh, wait..

Very true, although it does depend on whether you're talking to a salesman trying to sell you something or to an insider whom you have known for years and who has no axe to grind.

[andrew]

flemke said:

ThePackMan said:

SSO said:

Porsche guy said:

Given his contacts, I think whatever Flemke writes about McL must be spot on.

It is certainly very much in line with everything I have heard.

Because all companies always share anything negative with customers....oh, wait..

Very true, although it does depend on whether you're talking to a salesman trying to sell you something or to an insider whom you have known for years and who has no axe to grind.

there's an insider at mclaren who doesn't have an axe to grind ???

[flemke]

andrew said:

flemke said:

ThePackMan said:

SSO said:

Porsche guy said:

Given his contacts, I think whatever Flemke writes about McL must be spot on.

It is certainly very much in line with everything I have heard.

Because all companies always share anything negative with customers....oh, wait..

Very true, although it does depend on whether you're talking to a salesman trying to sell you something or to an insider whom you have known for years and who has no axe to grind.

there's an insider at mclaren who doesn't have an axe to grind ???

It depends on the context. Every human being has their own axe to grind in some respects, but when someone whom you have known for years tells you something from which they have apparently nothing to gain, it is usually credible.

[anonymous-user]

andrew said:

flemke said:

ThePackMan said:

SSO said:

Porsche guy said:

Given his contacts, I think whatever Flemke writes about McL must be spot on.

It is certainly very much in line with everything I have heard.

Because all companies always share anything negative with customers....oh, wait..

Very true, although it does depend on whether you're talking to a salesman trying to sell you something or to an insider whom you have known for years and who has no axe to grind.

there's an insider at mclaren who doesn't have an axe to grind ???

Lol

[anonymous-user]

flemke said:

andrew said:

flemke said:

ThePackMan said:

SSO said:

Porsche guy said:

Given his contacts, I think whatever Flemke writes about McL must be spot on.

It is certainly very much in line with everything I have heard.

Because all companies always share anything negative with customers....oh, wait..

Very true, although it does depend on whether you're talking to a salesman trying to sell you something or to an insider whom you have known for years and who has no axe to grind.

there's an insider at mclaren who doesn't have an axe to grind ???

It depends on the context. Every human being has their own axe to grind in some respects, but when someone whom you have known for years tells you something from which they have apparently nothing to gain, it is usually credible.

Even hugely successful companies have troubles, look at Amazon, Tesla, Facebook (just three off the top of my head). I could probably talk to an “insider” at any one of those and get a rose tinted version, or they could be totally negative. More likely is a balance between good and bad, because that reflects life, business, relationships etc etc. Yes, even McLaren...

[cgt2]

anonymous said:

[redacted]

Anyone catch Zak Brown jumping like a jack rabbit immediately after when the Crown Prince called in the middle of a live interview.

Norris is looking like a great discovery.

[flemke]

anonymous said:

[redacted]

And even better today!

[Porsche guy]

flemke said:

anonymous said:

[redacted]

And even better today!

McL are back....:

[The Surveyor]

anonymous said:

[redacted]

Aren't you a little ray of negative sunshine...

First race of the season and one swallow doesn't make a summer and all that.... But Red Bull failed to finish, failed to score any points by failing to get either of their cars over the finish line at their home race track and your first reaction is to say how brilliant Honda are, and how McLaren will only go backwards

[flemke]

anonymous said:

[redacted]

I'm not sure that the recent resurgence of Honda shows anything about McLaren one way or the other. It was clear that from 2015-17 Honda let down McLaren massively. After the shockingly poor test at Barcelona in early 2017 (Honda's third year back), Honda and McLaren agreed a series of targets and deadlines for improvements in their PU. In the next few months, according to reports, Honda failed to achieve every single target. That had a lot to do with McLaren's decision later in the season to end their deal.
The huge advantage that Honda and Red Bull had when Honda switched to the latter from McLaren was that Red Bull were able to use Toro Rosso as their crash-test dummy. Toro Rosso's 2018 results were sacrificed in order to experiment with the Honda PU and finally start to get it right. Most racing teams, including McLaren, would not be willing to forsake at least one full season (and potentially more) in order to enable its engine/PU supplier to get its act together.

[anonymous-user]

Back to the question of profitability. I’m not sure that a spend cap will be a magic wand for any team struggling financially. Team sponsors (not owners) most likely won’t want to spend the same pre-cap figure if they know that the team are now spending x% less on opex and development etc. a sponsor would probably try and negotiate a pre cap, post Covid reduction in sponsorship, which will definitely impact team sponsorship revenue going forward.

What it will mean is a leveling of the playing field in terms of costs/resources Small team vs big team. But the tricky money dynamic will remain IMHO.

[flemke]

ThePackMan said:

Back to the question of profitability. I’m not sure that a spend cap will be a magic wand for any team struggling financially. Team sponsors (not owners) most likely won’t want to spend the same pre-cap figure if they know that the team are now spending x% less on opex and development etc. a sponsor would probably try and negotiate a pre cap, post Covid reduction in sponsorship, which will definitely impact team sponsorship revenue going forward.

What it will mean is a leveling of the playing field in terms of costs/resources Small team vs big team. But the tricky money dynamic will remain IMHO.

I'm afraid I can't agree.
When a company is assessing whether and what to pay for sponsorship, they don't care how profitable the proposed medium of their advertising is. They care about the value they will receive. Surely they would be willing to pay more for space on a car that is more competitive and gets more media coverage. This will tend to create more of a balance of sponsorship income as between the wealthy teams and the smaller ones - which is the point of the cost cap. This is not to say that sponsors don't care about how much they pay - of course they do - but they don't care about whether the party they are paying is rich or poor.
Whether Covid and the recession cause a cyclical decline in sponsorship funding would be a separate question.

[anonymous-user]

flemke said:

ThePackMan said:

Back to the question of profitability. I’m not sure that a spend cap will be a magic wand for any team struggling financially. Team sponsors (not owners) most likely won’t want to spend the same pre-cap figure if they know that the team are now spending x% less on opex and development etc. a sponsor would probably try and negotiate a pre cap, post Covid reduction in sponsorship, which will definitely impact team sponsorship revenue going forward.

What it will mean is a leveling of the playing field in terms of costs/resources Small team vs big team. But the tricky money dynamic will remain IMHO.

I'm afraid I can't agree.
When a company is assessing whether and what to pay for sponsorship, they don't care how profitable the proposed medium of their advertising is. They care about the value they will receive. Surely they would be willing to pay more for space on a car that is more competitive and gets more media coverage. This will tend to create more of a balance of sponsorship income as between the wealthy teams and the smaller ones - which is the point of the cost cap. This is not to say that sponsors don't care about how much they pay - of course they do - but they don't care about whether the party they are paying is rich or poor.
Whether Covid and the recession cause a cyclical decline in sponsorship funding would be a separate question.

Back in 2010 the global viewing figures for F1 were around 130 million more than in 2019. Pile onto that the impact of C19, global relevance of F1, the internet, social media marketing etc. brands have a lot more avenues to pump their spend than they did 10 years ago and they can now directly monitor the ROI. Of course You can always try to get a bigger share of a shrinking cake (by getting better race results) but that’s always hard financially.

[flemke]

ThePackMan said:

flemke said:

ThePackMan said:

Back to the question of profitability. I’m not sure that a spend cap will be a magic wand for any team struggling financially. Team sponsors (not owners) most likely won’t want to spend the same pre-cap figure if they know that the team are now spending x% less on opex and development etc. a sponsor would probably try and negotiate a pre cap, post Covid reduction in sponsorship, which will definitely impact team sponsorship revenue going forward.

What it will mean is a leveling of the playing field in terms of costs/resources Small team vs big team. But the tricky money dynamic will remain IMHO.

I'm afraid I can't agree.
When a company is assessing whether and what to pay for sponsorship, they don't care how profitable the proposed medium of their advertising is. They care about the value they will receive. Surely they would be willing to pay more for space on a car that is more competitive and gets more media coverage. This will tend to create more of a balance of sponsorship income as between the wealthy teams and the smaller ones - which is the point of the cost cap. This is not to say that sponsors don't care about how much they pay - of course they do - but they don't care about whether the party they are paying is rich or poor.
Whether Covid and the recession cause a cyclical decline in sponsorship funding would be a separate question.

Back in 2010 the global viewing figures for F1 were around 130 million more than in 2019. Pile onto that the impact of C19, global relevance of F1, the internet, social media marketing etc. brands have a lot more avenues to pump their spend than they did 10 years ago and they can now directly monitor the ROI. Of course You can always try to get a bigger share of a shrinking cake (by getting better race results) but that’s always hard financially.

Sure, but that is a different thing - competing products/services from which a sponsor can choose.
The question was whether, because some teams' cost bases will go down substantially, that will mean that sponsors will insist on paying a team less because it will cost that team less to compete.

[anonymous-user]

flemke said:

ThePackMan said:

flemke said:

ThePackMan said:

Back to the question of profitability. I’m not sure that a spend cap will be a magic wand for any team struggling financially. Team sponsors (not owners) most likely won’t want to spend the same pre-cap figure if they know that the team are now spending x% less on opex and development etc. a sponsor would probably try and negotiate a pre cap, post Covid reduction in sponsorship, which will definitely impact team sponsorship revenue going forward.

What it will mean is a leveling of the playing field in terms of costs/resources Small team vs big team. But the tricky money dynamic will remain IMHO.

I'm afraid I can't agree.
When a company is assessing whether and what to pay for sponsorship, they don't care how profitable the proposed medium of their advertising is. They care about the value they will receive. Surely they would be willing to pay more for space on a car that is more competitive and gets more media coverage. This will tend to create more of a balance of sponsorship income as between the wealthy teams and the smaller ones - which is the point of the cost cap. This is not to say that sponsors don't care about how much they pay - of course they do - but they don't care about whether the party they are paying is rich or poor.
Whether Covid and the recession cause a cyclical decline in sponsorship funding would be a separate question.

Back in 2010 the global viewing figures for F1 were around 130 million more than in 2019. Pile onto that the impact of C19, global relevance of F1, the internet, social media marketing etc. brands have a lot more avenues to pump their spend than they did 10 years ago and they can now directly monitor the ROI. Of course You can always try to get a bigger share of a shrinking cake (by getting better race results) but that’s always hard financially.

Sure, but that is a different thing - competing products/services from which a sponsor can choose.
The question was whether, because some teams' cost bases will go down substantially, that will mean that sponsors will insist on paying a team less because it will cost that team less to compete.

That was the question, but it’s going to be pretty difficult to extract one specific element from all these headwinds to making an F1 team financially viable going forward. I think I’m getting the feeling that at least we both agree on that?

[flemke]

ThePackMan said:

flemke said:

ThePackMan said:

flemke said:

ThePackMan said:

Back to the question of profitability. I’m not sure that a spend cap will be a magic wand for any team struggling financially. Team sponsors (not owners) most likely won’t want to spend the same pre-cap figure if they know that the team are now spending x% less on opex and development etc. a sponsor would probably try and negotiate a pre cap, post Covid reduction in sponsorship, which will definitely impact team sponsorship revenue going forward.

What it will mean is a leveling of the playing field in terms of costs/resources Small team vs big team. But the tricky money dynamic will remain IMHO.

I'm afraid I can't agree.
When a company is assessing whether and what to pay for sponsorship, they don't care how profitable the proposed medium of their advertising is. They care about the value they will receive. Surely they would be willing to pay more for space on a car that is more competitive and gets more media coverage. This will tend to create more of a balance of sponsorship income as between the wealthy teams and the smaller ones - which is the point of the cost cap. This is not to say that sponsors don't care about how much they pay - of course they do - but they don't care about whether the party they are paying is rich or poor.
Whether Covid and the recession cause a cyclical decline in sponsorship funding would be a separate question.

Back in 2010 the global viewing figures for F1 were around 130 million more than in 2019. Pile onto that the impact of C19, global relevance of F1, the internet, social media marketing etc. brands have a lot more avenues to pump their spend than they did 10 years ago and they can now directly monitor the ROI. Of course You can always try to get a bigger share of a shrinking cake (by getting better race results) but that’s always hard financially.

Sure, but that is a different thing - competing products/services from which a sponsor can choose.
The question was whether, because some teams' cost bases will go down substantially, that will mean that sponsors will insist on paying a team less because it will cost that team less to compete.

That was the question, but it’s going to be pretty difficult to extract one specific element from all these headwinds to making an F1 team financially viable going forward. I think I’m getting the feeling that at least we both agree on that?

The commercial environment will be quite difficult for some time to come, and of course that will be aggravated by these annoying greens who insist on making everything 'relevant' and would like to eliminate internal combustion engines from the face of the earth.
Saying that, I think the forthcoming cost cap will help the show enormously and if anything make F1 more viable financially. In fact, in the lead-in to last Sunday's race I thought I heard a commentator mention that an eleventh team has applied for entry next year - was that right?

[anonymous-user]

flemke said:

ThePackMan said:

flemke said:

ThePackMan said:

flemke said:

ThePackMan said:

Back to the question of profitability. I’m not sure that a spend cap will be a magic wand for any team struggling financially. Team sponsors (not owners) most likely won’t want to spend the same pre-cap figure if they know that the team are now spending x% less on opex and development etc. a sponsor would probably try and negotiate a pre cap, post Covid reduction in sponsorship, which will definitely impact team sponsorship revenue going forward.

What it will mean is a leveling of the playing field in terms of costs/resources Small team vs big team. But the tricky money dynamic will remain IMHO.

I'm afraid I can't agree.
When a company is assessing whether and what to pay for sponsorship, they don't care how profitable the proposed medium of their advertising is. They care about the value they will receive. Surely they would be willing to pay more for space on a car that is more competitive and gets more media coverage. This will tend to create more of a balance of sponsorship income as between the wealthy teams and the smaller ones - which is the point of the cost cap. This is not to say that sponsors don't care about how much they pay - of course they do - but they don't care about whether the party they are paying is rich or poor.
Whether Covid and the recession cause a cyclical decline in sponsorship funding would be a separate question.

Back in 2010 the global viewing figures for F1 were around 130 million more than in 2019. Pile onto that the impact of C19, global relevance of F1, the internet, social media marketing etc. brands have a lot more avenues to pump their spend than they did 10 years ago and they can now directly monitor the ROI. Of course You can always try to get a bigger share of a shrinking cake (by getting better race results) but that’s always hard financially.

Sure, but that is a different thing - competing products/services from which a sponsor can choose.
The question was whether, because some teams' cost bases will go down substantially, that will mean that sponsors will insist on paying a team less because it will cost that team less to compete.

That was the question, but it’s going to be pretty difficult to extract one specific element from all these headwinds to making an F1 team financially viable going forward. I think I’m getting the feeling that at least we both agree on that?

The commercial environment will be quite difficult for some time to come, and of course that will be aggravated by these annoying greens who insist on making everything 'relevant' and would like to eliminate internal combustion engines from the face of the earth.
Saying that, I think the forthcoming cost cap will help the show enormously and if anything make F1 more viable financially. In fact, in the lead-in to last Sunday's race I thought I heard a commentator mention that an eleventh team has applied for entry next year - was that right?

Looking at football they already have their version of a spend cap in financial fair play. But all the big teams flout these rules to the limit, usually over stepping them, most of the time unpunished (PSG, man City, Real Madrid, Barca etc). Maybe it will work in F1, but the history of F1 is also littered with rules being broken.

[flemke]

ThePackMan said:

Looking at football they already have their version of a spend cap in financial fair play. But all the big teams flout these rules to the limit, usually over stepping them, most of the time unpunished (PSG, man City, Real Madrid, Barca etc). Maybe it will work in F1, but the history of F1 is also littered with rules being broken.

The situation in football - which is an utter disgrace - is not as bad as in Formula One because going into a match there is always the chance that a minnow will defeat a whale: This season Levante defeated Barca, Watford beat ManU, Dijon beat PSG.
That doesn't happen in F1. The three richest F1 teams have won the last 140 races in a row.

I have been saying for a long time that F1 needed technical inspectors who were absolutely fair but absolutely ruthless, similar to the way it works in NASCAR: none of these legalistic mare's nests such as DAS, the spirit might be one thing but you might be able to interpret the language a different way, blah, blah, blah. The regulator should be able to say, 'We don't like that so you're not running it', and that would be the end of it.

Of course that was not possible in the regime of Mosley (and probably that of Balestre), because it was an open secret that the regulator favoured some teams over others. With an honest regulator, however, it should be possible for the technical (including financial) regulations to be enforced by a benevolent dictator. If that were the reality, the sport and the fans would benefit.

Edited by flemke on Wednesday 8th July 19:57