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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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1

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.

2

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

3

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

4

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.

5

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.

6

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

7

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?

8

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

9

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/

10

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.

11

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

12

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.

13

What sort of price would we be looking at?

14

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.

15

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.

16

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.

17

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?

18

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

19

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).

20

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.

21

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?

22

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.

23

They have been returning a profit for several years.

24

This made me laugh. Ta.

25

Surely every business with shareholders has that balance to keep?

26

“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!

27

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.

28

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

29

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.

30
NamedMyKidAyrton

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.

31

To whom do I make out my check?

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