x

Abu Dhabi, UAEFriday 22 June 2018

McLaren onboard for F1 revenue restructuring

Racing group majority owned by Bahrain's Mumtalakat wants level playing field

McLaren driver Fernando Alonso of Spain at the Austrian Formula One Grand Prix this month. McLaren Group, majority owned by Bahraini outfit Mumtalakat, is open to the idea of overhauling revenue payments. AP : Darko Bandic
McLaren driver Fernando Alonso of Spain at the Austrian Formula One Grand Prix this month. McLaren Group, majority owned by Bahraini outfit Mumtalakat, is open to the idea of overhauling revenue payments. AP : Darko Bandic

McLaren are open to restructuring Formula One's revenue distribution to make payments less skewed to bigger teams and help smaller ones become more competitive, according to executive director Zak Brown.

"We're prepared to make some short-term sacrifices for the long-term gain of the sport," Brown told reporters at the Austrian Grand Prix.

"While I don't think we need to go to a flat revenue structure, clearly it is too out of balance compared to other sports and that's why we have this out of balance race results."

The news comes just days after The National reported that Bahrain’s main sovereign wealth fund will set a new course for the McLaren race car group after wresting full control from Ron Dennis, who announced his official retirement after nearly four decades in the driver’s seat.

The US$11 billion Bahrain Mumtalakat Holding Company, which had resisted two attempts by Mr Dennis to buy out its 50 per cent shareholding, as well as the quarter stake owned by his long-time business partner, Saudi Arabia-born Mansour Ojjeh, said after Mr Dennis’ announcement that it would address the company’s future shortly.

“There will be time in the near future to outline our plans,” said Sheikh Mohammed bin Essa Al Khalifa, the executive chairman of McLaren Group, the name the company has reverted to, incorporating McLaren Automotive and McLaren Technology Group, which owns McLaren Racing (competing as the McLaren Honda team).

“The coming months and years will be an extremely exciting time in the story of McLaren,” said Sheikh Mohammed, who is a Mumtalakat board member and senior adviser to the Bahraini Crown Prince Salman bin Hamad Al Khalifa.

Mumtalakat did not disclose the value of the deal, but the group is estimated to be worth about £900 million (Dh4.26 billion).

Mercedes, Ferrari and Red Bull are the only teams to have won Formula One races since Lotus triumphed in Australia in March 2013.

Brown said he aimed to "put Formula One first and McLaren a really close second", and smiled when asked whether all the other teams shared his view: "I doubt it."

Ferrari, champions Mercedes, McLaren and Red Bull currently receive special annual payments to reflect past success and their importance to the sport. Williams also get a smaller 'heritage' payment.

Ferrari, the only team to have been in the championship since it started in 1950 and the most successful, get a special long-standing bonus of around $68 million.

McLaren, still the sport's second-most successful team despite not having won a race since 2012, finished sixth overall in 2016.

However, projected figures published by autosport.com in May showed they stand to be paid US$97m in 2017 compared to the $72m that Force India will receive for finishing fourth.

That still pales in comparison to the $180m paid to Ferrari and $171m going to champions Mercedes. At the end of the scale, newcomers Haas will get only $19m, according to Autosport.

Formula One's underlying revenues are estimated at $1.38bn, with the teams sharing approximately 68 per cent.

"This is a time where I think we need to work together to grow the sport," said Mr Brown.

"I’ve been asked questions on 'do you think you get the right slice of the pie?’ 68 per cent now. Of course I’d love us to have 75 and I’m sure [the F1 owner] Liberty would love to have maybe 55.

"I think the percentage is less relevant if we can double, triple our group or the size of the pool."

Liberty Media, which completed its takeover of Formula One in January, have said it wants to rebalance revenue payments once commercial agreements with teams expire in 2020.

"We've got tracks going bust, we have teams going bust and then some people getting really rich. The poor guys need to at least be able to make a living," said Mr Brown.

"We need to get that water pipe up to where at least if you are at the back of the grid you can make a living and your franchise is worth something and you have the opportunity to move forward.

"I think it would be great to have an underdog team win a couple of times a year."

* Reuters