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Administrators confirm no Marussia F1 team in Austin – new buyer in the wings?
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Marussia F1 team
Posted By: James Allen  |  27 Oct 2014   |  11:57 am GMT  |  150 comments

The administrators appointed to the Marussia F1 team have issued a statement this morning confirming that the team will not take part in the US Grand Prix next weekend.

It adds that the team is still operating and the administrators are assessing the company’s long term viability, while no staff have been let go at this point and salaries have been paid to the end of the month.

This latest unwelcome development for F1 follows the collapse of Marussia’s back of the grid rivals Caterham, which also went into administration this month.

The administrator, Geoff Rowley, said “With the Marussia F1 Team now in administration, the joint administrators have assessed that, given the current financial circumstances of the Group, it is not viable for the Marussia F1 Team to participate in the next race, the 2014 Formula 1 United States Grand Prix, due to take place this weekend in Austin, Texas.

The Company will continue to operate while the joint administrators assess the longer term viability of the Company in its present form.

With the Marussia F1 Team now in administration, the joint administrators have assessed that, given the current financial circumstances of the Group, it is not viable for the Marussia F1 Team to participate in the next race, the 2014 Formula 1 United States Grand Prix, due to take place this weekend in Austin, Texas.

The Company will continue to operate while the joint administrators assess the longer term viability of the Company in its present form.

No redundancies have been made following the Company’s entering into administration and all staff have been paid in full to the end of October. The ongoing staff position will however be dependent on whether the Company can secure new investment in the limited time available.”

According to a report in the Daily Telegraph there is at least one interested party, which is negotiating with Marussia at the moment, but the two sides are some way out in valuation. The Telegraph reports that Baljinder Sohi and Sonny Kaushal have been in discussions with Marussia’s CEO Andy Webb for three weeks. It is not clear at this stage what impact the administration will have on this process and the valuation.

“We are very close to a deal,” Sohi told the Telegraph. “But it has to be the right price. We have put in a serious offer and we will see what happens.”

Andrey Cheglakov, Bernie Ecclestone

Marussia has been bankrolled to this point by Russian Andrei Cheglakov, but it seems he lost enthusiasm for continuing to write cheques.

Any new owners will have to take on Marussia’s debts, including to Ferrari for the supply of power units. But there is a significant prize fund due to the team if it can retain its 9th place in the Constructors’ championship, which came from Jules Bianchi’s points scoring run in Monaco in May. This makes the team potentially more attractive to investors. But it’s a moving target: imagine if Sauber scores points this weekend in Austin, or more likely at Interlagos, where anything can happen..

The team is also still reeling from Bianchi’s horrific accident in Japan earlier this month. He remains in a critical but stable condition in hospital.

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1

F1 needs as many teams as possible. If you keep losing the back markers they’ll be nothing left to beat! How about just sharing the constructor’s money evenly; that would be a massive boost to the lower ranked teams?

2

The problem with F1 is not lack of money.

The problem is that a very large amount leaves the sport every year to pay the commercial rights shareholders, principally CVC and others. They have received dividend payments in excess of $300m pa simply because the paid out a large sum of money to Bernie and Co to buy in.

They contribute nothing to the running of the show so they are essentially parasites. CVC alone are rumoured to have taken $4Bn out of F1, many times what they paid for their original stake.

In my view, F1` would not be in trouble now if the breakaway series had gone ahead and the Teams had then invited Bernie in to run it. That was a huge mistake.

While upwards of $300m-$500m of revenue continues to be drained off every year and the remaining income is distributed is such a lopsided way, it will be impossible for a healthy number of teams to make it onto the grid.

3

Whilst discussions regarding the split of the FOM money is worthwhile, isn’t the bigger issue the lack of sponsorship across the field? Even storied teams like McLaren are struggling to find sponsors.

4

James,

Is there any kernel of truth in the rumours that liabilities from the Bianchi accident pushed Marussia over the edge?

5

Could be. Difficult to say. Very sad indeed.

6

James:

How many times has Caterham received a constrictors payout? And what’s the value? Somewhere around $40 USD? I’ve seen different figures.

7

Well $10 million a year for the new teams’ fund. And then for finishing in the Top Ten on several occasions, around $30 to 40m each time.

8

So fair to say they’ve received somewhere in the neighborhood of $160 million since they’ve been on the grid?

Obviously that’s less than what the big three spend each year, but to me it also makes it harder to feel for Caterham. With that money (and some sponsors GE/Airbus) and pay drivers they’ve never been able to make any progress.

Without looking at the data, seems like they’ve gone backwards since 2010.

9

The post mentions the receivers are assessing the long term viability of the business in its present form. If its correct that insolvency results in the loss of the F1 entry rights then the business is unlikely to be attractive to a new owner seeking such a route into F1. In which case the receivers would have the classic role of maximising asset value on a prudent basis so that creditors would receive ?p in the £.

10

I don’t have a problem with there only being 9 teams. You just need to look at the funding model from last year to see that the bottom two teams between them get about 60% of the amount of the 9th placed team. There would be a much stronger field if that extra money (say 5m per team) were split equally amongst the bottom teams.

To make up the numbers the top two teams (plus ferrari) could be obliged to contribute 3 cars each. Any cost caps associated with the physical chassis (eg construction) as well as the transport allowance would be increased by the physical cost of the chassis only – development caps would remain the same as for the other teams. Drivers would be permitted to change chassis as long as the regulated parts (engine, gearbox and tyres) are moved across. This would mean that teams with a third car have an additional ‘spare’ chassis for the weekend. Any other team (at their discretion) would be allowed to enter a third car under the same conditions, in order of grid position, until a limit of 24 cars is reached.

This would lead to an exciting season as teams could still comfortably develop within season using a third car, whilst still keeping profit margins viable for the smaller teams. This sounds at least as good as (if not better than) the current situation where two teams of mobile chicanes clog up the back of the grid and generally crap up the race for everyone else.

11

Sorry should have read as the extra money from only having 9 teams is split up equally across all teams, not just the bottom ones.

12

At least when Honda pulled the pin on F1, they knew the real value of a failed F1 team. Sold for a pound.

Arguing over valuation of Marussia? If it’s not a pound or less, what’s the argument? The buyer wants to be paid to buy them?

13

Honda were not in administration, they just chose to pull out so they could set their own price just leaving Brawn and Fry (remember him anyone?) to take over the running costs and pay the bills. The administrators for the two currently failed teams have a responsibility to try to get back at least some money for the creditors, and pay their own fees which I believe are paid out before the existing creditors get a look in.

14

With Caterham and Marussia out, the grid will only have 18 cars. So will this mean the number of cars being knocked out in Q1 and Q2 will change? Will this mean the four slowest cars will be knocked out in Q1 and Q2 respectively? From 18 to 14 to 10?

15

I think Ecclestone and his partners need to look at the way they financially structure rewards for grid position or perhaps it’s becoming an unworkable business model. Did the money they pay out take account of cost increases this year particularly as sponsors are harder to find. I suspect not! A budget cap is a very difficult thing to introduce because there has been huge investment over the last few years to get to where we are. I think the only way a cap can be introduced is say over ten years as a phased introduction. This of course will put some teams at a disadvantage depending on there relative position so it needs to be coincidental with movement towards a much simpler formula. It’s quite ridiculous to want a budget cap and then introduce to most expensive formula perhaps ever in the sport. F1 needs to get back to basics it it’s going to work long term in the future.

16

What F1 needs and what F1 will get may be rather different unless the governing body were to go into administration rather than the teams(!) – though I suspect their nest is too well feathered for that to happen. That 100 million they got from McLaren is probably still helping to keep the wolf from the door and they may not have a lot of incentive to get financial control of the sport back from CVC. Power corrupts.

17
Adrian Newey Jnr

James – its a shame so many of your readers are so quick to dismiss the hard work and passion of the directors and staff of Caterham and Marussia. Booth and Lowden, especially are to be congratulated for the work they have achieved with only the smallest of budgets. This is far more impressive when you look at the mega bucks spent by the leading teams with their supposedly far better drivers getting paid millions! To only be a few seconds off the pace is an amazing achievement that shouldn’t be knocked as so many seem to want to do.

When you next see some of the Caterham and Marussia staff, please thank them from this fan of an underdog.

18

Why not split the money equally among all the teams,not only the top dogs all teams are there to puton a show,including the the little minnows.Ecclestone wants a third car how much money is that going to cost,why not deferr the extra money to the small teams.

19

Sauber and force India are being said to be next, though I thought FI had got the money problems fixed.

20

James,

I believe their is some sort of arrangement that Bernie must have a certain amount of cars/teams on the grid to maintain control of F1. Sauber and Force India I believe are both struggling financially, if they told Bernie that they have had enough and will not compete in Abu Dhabi would this create a huge headache for Bernie.

Gene Haas has great racing teams and is extremely wealthy but he must be looking at this with some interest wondering what is going on in F1.

21

James, sorry, alittle off question, what are the rumors of Alonso staying at Ferrari because of two yrs left on contract and the £50mil to quit the reds offered by the managment to make way for the rumored signing of Sebastian..with this and possible non payment for the marussia power plant i can see the board not being happy and because of this they are now pushing for a three car team?

22

Hats off to Todt and friends for mandating greener engines that cost double what the old engines cost. James, I checked the regs, nothing mentioned about quali with less than 22 cars. Will there even be a first session? Vettel said he doesn’t plan to go out at all during quali, will start from pit lane.

23

that’s nonsense: how much cost the PU? about 20m? that’s a lot of money, but, how big Marussia budget was? like 60m? ok, one third on the engine seems too much, but do you think 10m would make a BIG difference in their financial situation? and if that’s so, wouldn’t be better to redistribute the TV revenue in a more equal share than it’s right now? somehow RedBull, and Ferrari manage to spend almost 450m each one each year! that’s almost more than 5 times marussia AND caterham together!

24

First part of qualifying will be entertaining ;(

25

If Sauber also disappear and all remaining teams run 3 cars, the grid will be made up of 12 Mercedes, 6 Renault, 3 Ferraries and 3 Hondas. I am sure Ferrari will complain that Mercedes have too big an advantage and will be unfair competition. So can’t see it happening.

26

“I am sure Ferrari will complain that Mercedes have too big an advantage and will be unfair competition”

Because that totally isn’t the situation right now 😉

Ferrari will do what Ferrari does best which is say that they should be winning while Mercedes will do what they do best which is actually winning.

Time for Ferrari to put it’s collective big boy pants on.

27

Might be worth sparing a thought for the “ordinary” people with ordinary salaries and mortgages etc caught up in this.

28

Come on guys really.

No one cock the gun at the head of the owners Caterham / Marussia and there would be more to fall of the bed you bet.

They knew full well what they are getting in to, F1 is not the sport that can be financed by a chook raffle at your local pub, it need money , big flow of money with no guaranties of ever recoup it, perhaps its FAI foult for allowing the transfer of entry with out diligence of long term viability.

The great man Enzo Ferrari made the road cars to support his venture in to motor sport.

29

and the great Enzo started his F1 team as.. a costumer for Alfa…

30

Not sure why but I’ve always had a softer spot for Marussia than Caterham, probably because they were born out of Manor (a “proper” racing outfit, although they never raced under the name) and I think in Bianchi they had a genuine star. Now it looks like neither the team nor Bianchi’s career will survive. I know it’s business but I can’t help but feel it’s a shame.

33

Absolutely agree.

34

havent they designed the lateral crash structures mandatory for all cars this year?

35

Interesting, never heard of that before. Assuming that’s true it’s quite a feather in their cap. Unfortunately I don’t think it will count for much…

37

Haven’t heard anything about that…

38

James can you comment or clarify.

Manor racing (marrussia) are in administration and I read that that will void tgr contract they may have and cancels their f1 entry. If so, the team will not get their prize money and a team without an entry is worthless. Therefore is it likely (if that is correct) anyone would bother with marrussia?

I understand that catheram keep their entry as that’s not owned by the company in administration?

furthermore, as a well respected f1 writer throws out for consideration, could marrussia management leave the team. Buy catheram (whish has f1 entry) pick up old marrussia assets on the cheap and also inherit 10th place in constructors giving the new catheram owners some cash?

39

It is sad on a sentimental level to see these teams going under. But with all the goodwill in the world they have been “mobile chicanes” most of the time and have not brought much to F1. Hopefully this opens the way for some 3 car teams. Or, to put it this way – would you rather see Kamui in a Caterham or in a 3rd Williams? Or hypothetically speaking, Jules in a Marussia or in a 3rd Ferrari? For me it is clear!

40

@Owen

hypothetically speaking…

If we have 3 car teams next year and the current levels of competitiveness are maintained, we would have the following results on most race days:

The best that Ferrari could hope for (assuming no reliability issues or crashes) would be 10th place, McLaren a dizzy 13th, and the likes of Force India 16th and Toro Rosso more like 19th.

Does that look like you imagined ?

41

You only have to look at MotoGP to see how well that works out. 2 teams and a lot of also rans.

42

Does failing to compete in a race affect their eligibility for prize money at the end of the year?

43

Why would anyone want to buy either Caterham or Marrussia? The old adage of “Whats the best way to make a small fortune out of Formula 1? Start with a large one! ” has never been truer. With the current rules and regulations running around at the back – spending a fortune on developing technology that has no relevance to the audience, with fuel and tyre saving tactics and little to no TV time unless your car breaks down or crashes makes no sense. More exciting racing to be had in GP2 I’m afraid.

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