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Fancy owning part of an F1 team? Williams to float on stockmarket
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Fancy owning part of an F1 team? Williams to float on stockmarket
Posted By: James Allen  |  21 Jan 2011   |  12:59 pm GMT  |  71 comments

Williams plans to make a significant change to the structure of the team to secure it for the future, by announcing that he and his partners plan to float the F1 team on the stock market.

Williams objective is to “secure the long term ownership of Williams” in a way that remains true to the ideals with which Frank Williams and Patrick Head started the team in 1977. This involves remaining independent for the long term, beyond the time when Williams and Head are no longer around.

Williams and Parr plan to float the team


Consideration has no doubt been given to selling equity in the team to a third party, such as the sovereign wealth fund of a country like Qatar, for example, with which Williams has extensive business programmes. But the fact that Williams has decided to go the floatation route, indicates either that he’s been unable to find a suitable partner, or that he feels this is the only way to make sure the team stays as it is now, rather than be taken over and suffer a fate like Sauber. The Swiss team was largely sold to BMW but then when the German manufacturer decided not to do F1 it planned to close the team down. Peter Sauber was forced to take the team back if he wanted it to survive. The same could happen to Williams if the principal shareholders sold out.

Frank Williams says he’s in good health and plans to race for many years to come.

Although Parr says that the floatation would not be about raising money for the business, for example to expand or build new infrastructure as many businesses do, it surely is about raising some money for the three shareholders, so they can have some cash to show for their years off effort.

At this stage the IPO plan is only under consideration, rather than going ahead, but Williams chairman Adam Parr confirmed that a floatation is on the cards. He said it was about long term planning and to ‘future proof’ the team. This move would allow race fans to buy shares in the team, share in the profits and keep abreast of the inner workings of a leading F1 team.

“We are not as a company seeking to raise funds,” said Parr. “It may please you to know that not only do we think we can (do this) we have always had to run within our means and in 2008 and 2009 we made a profit, we did it again in 2010 and our budget for 2011 is already contracted. Overall we are in good financial health.”

It was made clear that Sir Frank Williams will remain the majority shareholder and has no plans to retire. Patrick Head will also remain a ‘substantial’ shareholding, while Toto Wolff will retain his minority shareholding.

“There comes a point where you are talking to so many people that you cannot have effective conversations without leaks. We thought it was better to explore it properly without worrying about it. Also we didn’t want rumours beginning.”

One of the issues that arises here is that transparency, as the prospectus will have to give detailed information on the team’s income and outgoings and there may be a concern among other teams and FOM about confidentiality, especially regarding the terms of the Concorde Agreement, which are kept secret for all but the stakeholders. But Parr said,

“We’ve been working intensively with our partners in this process to ensure that the level of disclosure necessary will protect the confidentiality,” he said. “We will have to show our revenues and our costs and I feel comfortable on that point. We will be transparent. This has nothing to do with the timing of any future (Concorde) agreement. We have a number of high value commercial agreements and these can last three years or five years, but they are part of the future of the business.”

Publicly listing a sports team has been done before, especially with football clubs, but it’s not in vogue currently. Most of the teams, like Tottenham Hotspur, that were listed are no longer. In the USA the Green Bay Packers NFL team has over 100,000 shareholders, but this is more of a community ownership scheme rather than a public offering, as the shares do no trade on the open market.

Meanwhile a floatation of the commercial arm of F1, FOM, has been mooted as a possible exit for private equity firm CVC at some point in the future. Bernie Ecclestone has looked at it in the past, but there has not been any talk about it recently. Williams could serve as quite an interesting test case for the sport as a whole.

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71 Comments
  1. Andy Whyte says:

    Awesome!!!

    Now to decide whether to put my savings on a house or a teeny weeny % of Williams..

    On a more serious note does this include the full group of Williams? including their kinetic energy business? if it does then it could well be a VERY sound investment.

    1. Alanis Morrisette says:

      Well, UK housing is a debt fuelled bubble and remains at least 40% overvalued IMHO – I’d wait on that one till the repos start happening once the BOE/Government stops propping up the sham it is.

      As for Williams shares, I can’t wait to read the IPO prospectus, but we’ll only have some idea of their true value after their first earnings report – the IPO will not give us the full details we’re after I suspect. It’ll certainly be interesting to look at the figures from a bona fide F1 team.

      Unfortunately, once floated Williams shares will be manipulated by the rigged market spivs who run the City and Wall Street. But they once they’ve been beaten down, or pumped up, a trading opportunity should present itself.

    2. Thank you James!

      Please keep us informed on this progression or let us know how we may independently do it. Agree completely with Andy’s thoughts above. Much appreciated.

  2. Alex T says:

    I very much look forward to reading the particulars of the IPO.

    As a long time Williams supporter, if the investment case is sound then I would consider investment. But if it is not then I would not! in particular Williams Hybrid Power and the Qatar Technology Centre are interesting assets for the future.

    The immediate question is what will be done with the money raised? Adam Parr says that the team doesn’t need the money for day to day operations. Will the current shareholders reinvest or take it out of the company? The impression I got when Totto Wolff invested was that the money had gone to Sir Frank and Patrick to deal with personal matters, rather than remaining in the team.

    1. Martin says:

      James made the point quite a while ago that Frank Williams’ health care is quite expensive. He may also have decided that he’d rather not fly on commercial planes as he has done recently. From everything in this article, it would seem clear that the IPO would be a dilution of ownership rather than any investment.

    2. seisteve says:

      Williams as a team with Frank at the Helm have gone through great times and tough times, he deserves the rewards and benefits that this flotation will provide as do all the investors.

      There are not many true teams that can be called independent, Williams, McClaren, Team Lotus, Force India… Williams has a great history and it is time that the owners got their reward for the dedication it takes to be at the place they are.

      I hope the fans get the shares because they will not want to sell them just feel part of the Williams history.

  3. F1Nutcase says:

    This sounds great JA but I doubt Bernie will allow it. His secrecy regarding the costs involved with the team and the Concord are kept for a reason….. even know it’s well known how much money he makes. Anyway if it does happen it would allow minnows like myself own a part of ,what is a massive part of my life that normally would just be a dream!

    1. Frenchie says:

      I don’t think Bernie can disallow it.

      Williams is a company registered in the UK and as such comes under British Laws when it comes to ownership rather than Ecclestone rule. BE is powerful, but I doubt he can bend legislation this much.

  4. seisteve says:

    Count me if for a few quid… This time of year I get the shakes as F1 news gets thin on the ground. To have an inside line on a team I have respected for ever with a little vested interest on their success would add a great new dimension as a F1 fan.

    Whilst not aligned to a team (but I do wear, Lotus, Williams and McClaren hats and T-Shirts) I love the sport overall which finds a focus on race day but for me this is part of a bigger picture that include politics, strategy, engineering etc.

    Put the prospectus in the post …immediately.

    1. Tim. says:

      What is a quid ?

      1. Jameson says:

        Quid is a slang term for the pound—it comes from the Latin phrase ‘qiud pro quo’ meaning ‘this for that’.

      2. NamedMyKidAyrton says:

        A pound, Tim. Sterling.

      3. seisteve says:

        The woes of an international audience… apologies.

        It is a British Pound, a £… GBP.

      4. russ says:

        “The woes of an international audience…” ???
        Damn lucky to have us stop by,more like it.

      5. seisteve says:

        Russ

        There was no insult intended… especially from a person who lives in Belgium ;-) that spend Euros and visits a UK F1 site…

        But again I used the wrong word implying that being an international site it causes misery or grief for this I again apologise… it was not intended, just an off the cuff remark.

        For the record I visit this site several time a day and enjoy reading all the comments and views from whichever country and person that cares to leave them. No insult was intended and yes I am lucky that you stopped by :-)

        Thanks

      6. Michael Grievson says:

        A quid is £1

      7. Frenchie says:

        One Pound Sterling

      8. Treebeard says:

        Is british slang for one pound i.e £1

      9. Tim. says:

        Thanks….

  5. jonrob says:

    Well the statements that they have made so far effectively kill off any idea of investment.
    “it surely is about raising some money for the three shareholders, so they can have some cash to show for their years off effort.” So in other words it’s a charity offer, you buy shares and the money goes to the directors, no thanks!

    This if it goes ahead (and I strongly urge it should not) will place Williams in the hands of the market. While the ideas of some fans owning a few shares is very cosy that is not likely to happen, there are some pitfalls.
    1) The number of shares available will be relatively small, thus small sized transactions may have a huge affect on the SP.
    2) The SP will be affected by the team’s performance and race results. Unless the good news is consistent and spaced evenly through the year the SP will fall (no news is bad news in the market)
    3) The shares will be able to be shorted by speculators, thus their value could crash in a day to almost nothing. (this is exacerbated by their being relatively few shares available thus the Beta will be very high) Whilst the majority of the shareholding will remain with Williams and co the perceived value of this will be linked to the SP.
    4) An institutional or private offering would be better and keep it off the market.

    The news now out will attract the right kind of investor in a private capacity, no need to float.

  6. daniel Mayhew says:

    This is what Champcar did at the turn of the 00′s what happen to it ? umm i wounder.
    though say that is the oprice is cheep might buy some lol

  7. S2K says:

    Williams as a company is in good financial health, no doubt of that. Williams as a F1 team isn’t in good financial health, hence the listing idea.

    At least we’ll have the chance to read their financial reports for free on the website, as it will be an obligation if they become a listed company.

  8. An interesting idea but can a team realistically expect to adapt and survive in F1′s rollercoaster world whilst having to keep public shareholders happy? It seems a tall order to me but I wish them all the best.

    The novelty of owning part of a Formula 1 team, especially one as venerable as Williams, does appeal to me, but I would never buy shares in a racing team as an investment. They’ll probably be a better prospect than most football teams, but not by much.

    Now FOM, on the other hand…

  9. Bill Johnson says:

    You sold your sould to Chavez, but that won’t be enough?

    Not interested, sorry, Frank.

    So long, and thanks for all the fish.

  10. Ben G says:

    How many shares would I need to buy for a pit pass?

  11. Would anyone want to buy shares in a company that has made large losses since the leaving of BMW and who’s best sponsor the last few years was Jenson Button (probably the largest too)? They haven’t lacked investment over the past 4 or 5 seasons so its hard to understand where its all gone wrong. New, more rounded technical director is required. Geoff Willis springs to mind!

    1. Bec says:

      Williams has made profits in the last 3 years.

    2. Paul says:

      They got rid of Nigel Mansel when he just won the title for them and could of won more. They got rid of Damon Hill again when he just won the title. Although I think Williams is a great
      team I never realy forgave them for not keeping Nigel on. So no shares for me thanks.

  12. F1 Kitteh says:

    I also read it as them unable to find a suitable private investor. For FOM to go public would make sense, the cash flow from TV is substantial and investment back into the business is more limited and stable in a sense, so it would provide a steady stream of income which is what investors desire. For a team they would presumably like to plow as much back into the business as possible to increase performance in a bid to win. Perhaps with the RRA and the hybrid business Williams can be a substantial cash generator in the future, but then a bond issue would make much more sense than a share floatation because the existing investors would be able to pocket the excess profits.

    1. NamedMyKidAyrton says:

      I wouldn’t assume all investors seek income. What about capital appreciation?

      A bond issuance could be interesting and even pretty tax efficient, but for “excess profits” you’d have to place at a relatively low coupon. For a business as volatile as F1 and with such thin balance sheets, I’d wager investors would regularly demand high single-digits, low double-digits. Can Williams F1 handle that, quarter after quarter?

  13. Charlie says:

    I think this is a great way for some of the smaller teams on the grid to keep racing while maintaining their independence.

    I’d invest; not for monetary gain, but to support a the team and to feel a greater part of the sport.

  14. James Punt says:

    Invest in a team that hasn’t won for years. Invest in a team whose income streams from FOM will not be disclosed. Invest in a team involved in a sport with an unclear future business plan (and even if it had one, you won’t be able to see it). Invest in a sport that devours money not withstanding the ‘resource restriction agreement’ which of course is as tranparent as pea soup.

    I think I will give it a miss.

  15. Gary Smith says:

    I know next to nothing about the stock market but if floatation will provide greater long term stability for the Williams team then I wish them all the luck in the world.

    Win or lose, Sir Frank and Partick are a part of the very fabric of Formula 1 and I hope their approach to racing carries on long after they are no longer part of the sport.

  16. Mr G says:

    A very astute way to go forward.
    Williams has the potential to be very successful doing so.
    The F1 operation is only a small part of the engeneering and production capability of this company, their vaste experience in Kers and Energy recovery systems, the knowledge in new energy hybrid energy system, the Qatar Technology Centre and the Conference Centre in Grove are a very significant and diverse sceanrio compare to the pure F1.
    We need to remember that Williams started as a very skilled team capable to assemble a car around an engine, a chassis producer and a very good one too
    Good luck to Williams and I will buy some shares myself if possible

  17. Stefanos says:

    This seems odd, almost desparate. What future revenues would prospective shareholders be investing in? As the football example has shown very clearly, it is the hardcore fans that lose their money because they invest with their hearts and not their minds and that’s always a bad idea. Furthermore, F1 is a very capital intensive industry and teams are in constant need of operational capital. When the IPO money run out, Williams will only be left with one option, and that is additional share offerings that will only serve to dilute the existing shareholders.

    It makes a lot more sense to float a company with future revenues, which itself owns the formula 1 team, such as Williams’ KERS company, even though this is also risky.

  18. Bec says:

    The Abu Dhabi Investment Authority, and the Mubadala Development Company are looking at CVC,

    1. James Allen says:

      I’ve often thought that they would be the ones to buy F1 if CVC made an exit

      1. Tim. says:

        VERY interesting…dynamics ….very!!!

      2. Bob says:

        Returning to Williams, though, listing is not going to benefit them in respect of long term stabilty. A better way would be to issue a bond backed by their Middle East investors, effectively a sovereign bond, and do a sale and leaseback of their factory and wind tunnel on its residual value with fixed increases which can be priced off the Qatari bond with a margin for property risk.

        Only a thought.

    2. NamedMyKidAyrton says:

      Agreed. The money is with Bernie, not the teams. As an investor, FOM or CVC are the way to go about investing in F1 – not the teams. Teams are more suited for fans who can afford to lose money.

  19. Rich C says:

    To whom do I make out my check?

  20. NamedMyKidAyrton says:

    I am not sure it would be a positive move. Despite what Williams claims as motives, floating the company does not guarantee in any way that the future will be secure.

    Shareholders will be able to sell their stake in the company the moment they feel their expectations will not be met. Some shareholders may not buy only for financial return, but most are likely to do so. And if the team struggles to gain sponsorship and prize money, the team could easily suffer a loss of confidence and financial support.

    And that’s not to mention all the practical implications of having shareholders influencing strategy for motivations other than winning races. You needn’t look further than the Lotus Team/Group/Joke fiasco.

    The only thing such a move ensures is that the existing owners will monetize their stake. And then it’s off to the roller coaster ride.

    If the IPO happens I’d be happy for Williams and Head on a personal level, but very cautious about the impact on such an illustrious team.

  21. Andy C says:

    I’ll be investing in both if they float, and I can get some shares.

    I very much doubt though the share offer would be anything other than a placing with a few larger investors.

  22. Nathan Smith says:

    Hi James,

    Hope it all goes well for Williams but I actually wanted to ask about KERS. I’ve barely seen it mentioned and it’s quite a big change. Will all teams be using KERS and if so what systems will they be using? Will McLaren and Mercedes be at an advantage due to the superior 2009 unit?

    Thanks
    Nathan

  23. Owen says:

    Where can I sign up? lol

    But transparency is an interesting issue, I suspect it would require quite an investment to get in on some of these details usually distributed to shareholders.

  24. Ambient Sheep says:

    “To ‘future proof’ the team.”??!!

    Given how notoriously short-term-ist the stock market is, I wouldn’t have thought it would have future-proofed anything!

  25. Jodum5 says:

    Sounds like a pretty daft idea. So next time they produce a turd of a car, they don’t mind their shares dropping 40%? Not sure how it works now with their private shareholders, but how will they reconcile paying dividend payments with re-investing some profits into the business?

    1. Adrian J says:

      Surely every business with shareholders has that balance to keep?

    2. Ben G says:

      This made me laugh. Ta.

    3. Stefanos says:

      I shouldn’t expect dividents, they are very rare for companies of this size. Besides, first they need to turn a profit. And for that they need to improve dramatically.

      1. Heartworm says:

        They have been returning a profit for several years.

  26. er,go says:

    I like the idea of ceding ownership to a much broader base to ensure continuity of the spirit of the outfit. The building and proving has been done, sustainability proven and retirement, more or less, of the principal architects in the near future. What better way than democracy.

  27. KGBVD says:

    What’s to stop a manufacturer (or heaven forbid, another venture capitalist firm) buying up all of the floated shares, then picking up Toto’s, Frank’s or Head’s shares when the opportunity arises?

    I fail to see how this move ensures the team’s ‘independent-ness’. With added shareholders comes an added measure of accountability and risk in terms of management. Hostile take-overs do happen.

    I’m not saying that it’ll happen with Frank holding the majority, but this ensures nothing once his shares are made public (he won’t be around forever, neither will Wolff or Head).

  28. For Sure says:

    Well, I don’t see how this will work while they are so many options and potential options like Groupon etc…

  29. Paul says:

    Or.. this is a public way to apply pressure to Qatar et al to make a decision – and get to their original desire of investment from a sovereign state…. with no real plans to go public… after all, going public involves quite a lot of Due Diligence, and once you open that to the investors?

    Unless you do a Google – institutional investors only? If you listed in certain countries you could also restrict your shareholders to certain shall we say key sponsors and provider tax efficiency?

    Or shall I get my tin foil hat?

  30. James W says:

    This sounds like the begining of the end to me. Why would an F1 team float itself on the stock market without the sufficient and necessary/adequate funding/sponsership?

    Williams is quite often the team that dares to go where no other team does before, but in this case, I think it’s a step too far. I would say that the manufacturers and airlines have won. A sad day for F1

    In reflection of this comment, I do hope I’m horrendously wrong. F1 can live without Williams, but it would NEVER be the same.

  31. WoZ says:

    Romantic ideas (such as a public floated F1 team) rarely work in the sport we love so much, it also feels like Williams and co and trying to cash out on their F1 efforts, which I don’t feel is the right thing to do and would diminish their long term legacy.

    Economics vs Romance vs Bernie = Failure.

  32. Jameson says:

    This is quite interesting. I did a bit of research, and I found articles quoting several different recent years of their financial performance–one article that was actually on the AT&T Williams website (http://www.attwilliams.com/reuters/article/906). Based on recent performance from 2008 and 2009, I’d say that the team (valued strictly from earnings) is conservatively worth somewhere in the range of £120 – £140 million. Also, I found an article in Forbes that valued the team in that range (http://www.forbes.com/2010/06/24/formula-one-valuations-business-sportsmoney-formula-one_slide_7.html).

    While I wouldn’t mind investing in a Formula 1 team, Williams wouldn’t be my choice, as I’m a McLaren fan. Also, I would have serious reservations investing (significantly) in a company that receives a significant portion of their funding from a socialist dictator that could be compelled to turn off the oil-money tap at any time.

  33. sean cleary says:

    What sort of price would we be looking at?

  34. Well, might be a trend right now: P-G Andersson’s (WRC) rally Sweden entry came courtesy of his fans who gathered some cash for the man via social networks, etc..

    It’s nothing like what Williams plans to do but the idea of general public supporting teams/drivers financially could spread. Sponsors are hard to find these days but it’s F1 teams’ own fault that they were refusing to operate on slightly more realistic budgets for many years so now the beast controls them and not the other way around.

  35. Eric Weinraub says:

    Rediculous. The team does not manufacture saleable goods nor deliver a service for purchase. What you are buying is an illusion. THe so called profits are nothing more than prize money doled out by Bernie. At any moment, phhhhhht, gone! While I have huge amount of respect for Frank, he needs to face up to the fact that there is little guarantee his team will survive after he is gone. I think only McLaren have morphed into an institution that transcends F1.

    1. Mosq says:

      Seems like you’re very close to reality, the whole F1 may collapse if CVC would treat the deal with BayernLB as a fiction: http://www.motorsport.com/news/article.asp?ID=398287&FS=F1

  36. Rich C says:

    Pardon me for going waaay off topic (again) but *here is that “pinnacle of technology” we’re always talking about!! Its probably that ’3rd car’ Monte is always going on about. Want to bet it’ll best HRT?

    http://www.foxnews.com/leisure/2011/01/21/ferraris-unveilsa-station-wagon/

  37. True Blue says:

    Maybe the way to go for Williams , get a bit of capital before the inevitable fall.
    Although 2010 was a good year compared to previous years , the writing is on the wall for F1.
    Bernie is trying to screw as much money as he can for his family before he snuffs it.
    But F1 as a spectator sport these days is dependent on the weather and crashes from over rated drivers.
    Thats why 2010 was interesting.
    Getting rid of Bernie is a start …chrissakes how much more money does he want ?
    Getting rid of Ferraris influence will be another.
    Bring back cars where the driver has the say not where people like Rob Smedley have such an influence.
    Loads more to complain about but as this is James site and source of income he will most definetly disagree

  38. Steve Selasky says:

    James, watched the sport for years (1976). It is distressing to me to see Williams resort to a floatation.

    Simply, put F1 while a the pinnacle of Motorsport is spending way too much money.

    How long before a collapse?

  39. Jeroen says:

    If the idea is that through an ipo Williams name would live on and avoid a sauber story then they are wrong.

    If say 25% gets floated that still means someone can buy the other 75% and or indeed the 25%

    Mr Williams and co need to just live with the fact that nothing in life lasts forever.

    The best route to ensure your name carries on is to race and win! So they should just focus on that and if they need personal cash to do a private sale of part of their holding ( as they already have done) or pay themselves more salary/dividends

  40. Tim says:

    I know there isn’t a direct this isn’t football, but in the NFL only the Green Bay Packers are owned by stockholders, and they are in the super bowl this year.

    The team is run by professionals and doesn’t have to answer to a crazy owner.

    For non-Americans look up Al Davis as an examples.

    I don’t think there is an equivalent in F1 these days. Where an owner is the problem.

  41. Tim says:

    I know this isn’t football, but in the NFL only the Green Bay Packers are owned by stockholders, and they are in the super bowl this year.

    The team is run by professionals and doesn’t have to answer to a crazy owner.

    For non-Americans look up Al Davis as an examples.

    I don’t think there is an equivalent in F1 these days. Where an owner is the problem.

  42. Richard says:

    Wasn’t there a failed attempt at floating one of the minor teams some years ago?

    1. john says:

      I owned shares in March plc and lost the whole investment. I have considered investing in Williams now that it is quoted on the German stock exchange but to date has not paid a dividend and I doubt if it will pay one in the near future. After all the scandals around Bernie Ecclestone – paying $100m into a German court not the be found either guilty or innocent I will steer clear of any Formula 1 IPO and also I do not like the FIA allowing a country that contravenes the Budapest Memorandum being allowed to hold an FIA even – namely Russia http://en.wikipedia.org/wiki/Budapest_Memorandum_on_Security_Assurances

  43. Erick says:

    There iis no need to think about working around include
    fireplaces, windows, walls, and the second question should be,
    ‘Do I need this thing? Rub on wall transfers are also a great way to
    add light to any dark corners lamps, mirrors and free up space by removing any unnecessary furnishing items.

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