Williams, the last family-owned business in Formula One, is grappling with the reality it may have to cede control to the big money that has transformed the sport into an $8bn global business.
Family scion and deputy team principal Claire Williams is one of motorsport’s few women in power, having taken effective control in 2013 of the team her father Frank Williams co-founded. She had hoped her son might follow their lead, but now sees that as unlikely, as Williams Grand Prix Holdings considers a whole or partial sale as part of a strategic review.
“Surviving is difficult for an independent team,” said Ms Williams at the group’s 100-acre headquarters in Oxfordshire. She accepts they “will probably have to operate differently” to secure investment.
The coronavirus pandemic, which stopped the F1 season before it could start, has exacerbated the strain at Williams Grand Prix Holdings, which posted a £17m loss in 2019, down from an £8m profit a year before.
Liberty Media, the US group that bought F1 in an $8bn deal in 2016, has made $1.4bn in cash available to support teams left without sponsorship and circuit income as races were suspended. But the group has itself been forced to renegotiate with lenders, securing amendments to its $2.9bn term loan and an undrawn $500m revolving credit facility, to help F1 survive the pandemic.
Against this backdrop, the hunt for investment will be a test not only of Williams’ legacy and continued appeal, but also of the broader attraction of the sport to investors as F1 racing resumes on Sunday in Austria.
“We’ve clearly not helped ourselves by finishing last two years in a row, which obviously depresses your income,” said Ms Williams.
But Williams is not alone. McLaren Group, the UK sports car maker which includes the F1 racing team, burnt through £191m of cash in the first quarter of 2020 and has cut 1,200 jobs due to coronavirus. This week it agreed a £150m financing facility with the National Bank of Bahrain, having raised £300m from existing shareholders in March.
Yet the family remained sanguine, said Ms Williams, “working in overdrive in order to protect the team” that controlling shareholder Sir Frank founded in 1977. Bankers from Allen & Co are holding digital conference calls for investors.
Williams hopes to recapture past glories. The team won 16 drivers’ and constructors’ championships in the 20 years to 1997 but no top title since, and has finished last on the grid for two consecutive seasons. The effect on its financial performance has been evident.
Revenues fell to £95.4m last year, the first year turnover has dropped below £100m since 2014. The Frankfurt-listed company is worth roughly half the price of its initial public offering in 2011, when it was valued at €243m.
In another blow, Williams said in May that it had been forced to terminate its relationship with title sponsor ROKiT early and had launched legal proceedings against the telecoms company.
It hopes to find a replacement in time for next season. The ROKiT deal was worth double-digit millions, according to a person familiar with the matter.
Conserving cash has been vital. In April, Williams completed a debt refinancing backed by existing lender HSBC and Michael Latifi, the Iranian-Canadian billionaire. The company imposed temporary pay cuts and furloughed staff, measures now reversed.
But Ms Williams pointed to structural problems as an independent team due to how F1 revenue is split: “That’s certainly been a factor as to why we [are] in the position we are today.”
Cost caps brought in by Liberty Media should increase the profitability and value of F1 teams, said Mike O’Driscoll, Williams’ chief executive, adding: “We’ve come through two tough years, not a decade of failure as it’s sometimes painted.” The team finished third in 2014 and 2015 and fifth in 2016 and 2017.
F1 has slashed the amount teams can spend in order to balance the competition, from next year introducing a cost cap that was meant be $175m but has been lowered to $145m because of coronavirus. It will fall again to $140m in 2022 and $135m in 2023.
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But the pandemic has paused revisions to the so-called Concorde Agreement, which governs how F1 and teams share revenues from television rights, promoter fees and advertising, which amounted to $1.66bn last year.
The existing contract, which expires at the end of this year, includes significant “heritage” payments, handing an advantage to the oldest teams, such as Ferrari, giving them “a whole lot more money . . . before they’ve gone racing”, said Ms Williams.
F1 chief executive Chase Carey, who replaced Bernie Ecclestone following the Liberty Media takeover, hopes to finalise the agreement once the sport is on firmer ground. Talks could resume after the first few races of the upcoming season, said Ms Williams.
“I wish that [the new regulations] had come into play five years ago,” she said. “It certainly provides a much more comfortable landscape for independent teams to be successful.”