2021 Mclaren F1 Team

[CjC]

https://www.mclaren.com/group/news/arti ... n-applied/


Applied Technologies being sold...

How come only find out it was up for sale after it’s been sold? If I knew that it was up for sale I would have bought it!!

[Mclarensenna]

If it was sold, it means it wasn't generating enough revenue as a business. All this means now is that McLaren will have to buy their electronic units for their F1 car, just like every other team.

Is it a strategic move? As in with the cost cap they can buy the parts they need cheaper than if they developed the parts themselves?

[the EDGE]

Is it a strategic move? As in with the cost cap they can buy the parts they need cheaper than if they developed the parts themselves?

Under the cost cap agreement all of the suppliers are subject to the same auditing process as the teams, so no, that is not possible

[Jolle]

If it was sold, it means it wasn't generating enough revenue as a business. All this means now is that McLaren will have to buy their electronic units for their F1 car, just like every other team.

Not really. The owners have simply decided to cash in their investment to re-invest in their core business

MAT will continue to be based at the MTC, and be run by the same people, so will clearly have an excellent relationship with McLaren in developing technologies for them, which of course they will pay more for, but will also receive income for rent which will more than pay for ECUs

It’s all part of their strategy to be the best racing team & best super car manufacturer

I think you're looking at this deal with a bit of pink glasses (or orange ones in this case). McLaren is still in quite a pickle. They had to lend a lot of money to do the Mercedes buyback, buy out Dennis and the investments in the car business. Lots of those loans were relative short term (2-5 years) and refinance them is an ongoing process. So far they sold a bunch of shares to an investor (can't remember his name, but it was one of the car loving families, around 300mln), had to sell and leaseback their building, sell off a bunch of history cars, a last moment load of the owners and now the sale of AS. None of these things has anything to do with the excellence of the race team or anything, just illustrates how difficult it is to operate a small car manufacturer, without a high volume company behind you and "old money" (like Ferrari or AMG). At his moment McLarens outstanding loans are more or less covering what they are worth.. so, it's really a dime on it's side.

[the EDGE]

If it was sold, it means it wasn't generating enough revenue as a business. All this means now is that McLaren will have to buy their electronic units for their F1 car, just like every other team.

Not really. The owners have simply decided to cash in their investment to re-invest in their core business

MAT will continue to be based at the MTC, and be run by the same people, so will clearly have an excellent relationship with McLaren in developing technologies for them, which of course they will pay more for, but will also receive income for rent which will more than pay for ECUs

It’s all part of their strategy to be the best racing team & best super car manufacturer

I think you're looking at this deal with a bit of pink glasses (or orange ones in this case). McLaren is still in quite a pickle. They had to lend a lot of money to do the Mercedes buyback, buy out Dennis and the investments in the car business. Lots of those loans were relative short term (2-5 years) and refinance them is an ongoing process. So far they sold a bunch of shares to an investor (can't remember his name, but it was one of the car loving families, around 300mln), had to sell and leaseback their building, sell off a bunch of history cars, a last moment load of the owners and now the sale of AS. None of these things has anything to do with the excellence of the race team or anything, just illustrates how difficult it is to operate a small car manufacturer, without a high volume company behind you and "old money" (like Ferrari or AMG). At his moment McLarens outstanding loans are more or less covering what they are worth.. so, it's really a dime on it's side.

And I think you’re trying to see things where none exist

Yes investors such as Ron Dennis and Merc have left, and obviously withdrew the cash they had invested in the business

Therefore new investors are coming to replace these. Nothing new there

Yes like every company in the world, coronavirus took its toll, and like many businesses McLaren have had to seek short term finance

One big thing to note here, is the investment required to start McLaren automotive. This is run into hundreds of millions, if not billions.

Now, like every sensible business they are looking at where their money is tied up & where they want to spend their money in the future

[Jolle]

Not really. The owners have simply decided to cash in their investment to re-invest in their core business

MAT will continue to be based at the MTC, and be run by the same people, so will clearly have an excellent relationship with McLaren in developing technologies for them, which of course they will pay more for, but will also receive income for rent which will more than pay for ECUs

It’s all part of their strategy to be the best racing team & best super car manufacturer

I think you're looking at this deal with a bit of pink glasses (or orange ones in this case). McLaren is still in quite a pickle. They had to lend a lot of money to do the Mercedes buyback, buy out Dennis and the investments in the car business. Lots of those loans were relative short term (2-5 years) and refinance them is an ongoing process. So far they sold a bunch of shares to an investor (can't remember his name, but it was one of the car loving families, around 300mln), had to sell and leaseback their building, sell off a bunch of history cars, a last moment load of the owners and now the sale of AS. None of these things has anything to do with the excellence of the race team or anything, just illustrates how difficult it is to operate a small car manufacturer, without a high volume company behind you and "old money" (like Ferrari or AMG). At his moment McLarens outstanding loans are more or less covering what they are worth.. so, it's really a dime on it's side.

And I think you’re trying to see things where none exist

Yes investors such as Ron Dennis and Merc have left, and obviously withdrew the cash they had invested in the business

Therefore new investors are coming to replace these. Nothing new there

Yes like every company in the world, coronavirus took its toll, and like many businesses McLaren have had to seek short term finance

One big thing to note here, is the investment required to start McLaren automotive. This is run into hundreds of millions, if not billions.

Now, like every sensible business they are looking at where their money is tied up & where they want to spend their money in the future

There is a lot of info on their official filings, where I based my analysis on. They are around 2 billion in debt with relative short term loans and have to refinance about 500 million per year on average. These are not investment into the company but refinances. Not uncommon for a relative startup but selling off assets is less of a choice then you make it out to be. They are still somewhat in survival mode.

[Mclarensenna]

I think you're looking at this deal with a bit of pink glasses (or orange ones in this case). McLaren is still in quite a pickle. They had to lend a lot of money to do the Mercedes buyback, buy out Dennis and the investments in the car business. Lots of those loans were relative short term (2-5 years) and refinance them is an ongoing process. So far they sold a bunch of shares to an investor (can't remember his name, but it was one of the car loving families, around 300mln), had to sell and leaseback their building, sell off a bunch of history cars, a last moment load of the owners and now the sale of AS. None of these things has anything to do with the excellence of the race team or anything, just illustrates how difficult it is to operate a small car manufacturer, without a high volume company behind you and "old money" (like Ferrari or AMG). At his moment McLarens outstanding loans are more or less covering what they are worth.. so, it's really a dime on it's side.

And I think you’re trying to see things where none exist

Yes investors such as Ron Dennis and Merc have left, and obviously withdrew the cash they had invested in the business

Therefore new investors are coming to replace these. Nothing new there

Yes like every company in the world, coronavirus took its toll, and like many businesses McLaren have had to seek short term finance

One big thing to note here, is the investment required to start McLaren automotive. This is run into hundreds of millions, if not billions.

Now, like every sensible business they are looking at where their money is tied up & where they want to spend their money in the future

There is a lot of info on their official filings, where I based my analysis on. They are around 2 billion in debt with relative short term loans and have to refinance about 500 million per year on average. These are not investment into the company but refinances. Not uncommon for a relative startup but selling off assets is less of a choice then you make it out to be. They are still somewhat in survival mode.

2 billion in debt is huge. Any idea how much Mclaren is actually worth?

[mwillems]

I didn't know we were two billion in debt, i'll need to revisit their accounts.

We are heavily in debt though, and the business has clearly decided to focus on automotive by selling stakes in everything else.

They have sold stakes in the F1 team, sold applied entirely and sold the MTC.

A large part will be for debt. But how much is based on a predicted upturn in sales and a return to the aggressive strategy to take advantage of it.

One way of course to deal with your debt ratio, after lowering debt, is to grow your revenue, and what we are probably seeing is them getting in a position to focus on that.

[flmkane]

If I were Ron Dennis I'd buy back into McLaren asap. 400 mill in wealth and probably tens of millions in liquid assets.

Buy back into McLaren.

[flmkane]

If it was sold, it means it wasn't generating enough revenue as a business. All this means now is that McLaren will have to buy their electronic units for their F1 car, just like every other team.

Not really. The owners have simply decided to cash in their investment to re-invest in their core business

MAT will continue to be based at the MTC, and be run by the same people, so will clearly have an excellent relationship with McLaren in developing technologies for them, which of course they will pay more for, but will also receive income for rent which will more than pay for ECUs

It’s all part of their strategy to be the best racing team & best super car manufacturer

I think you're looking at this deal with a bit of pink glasses (or orange ones in this case). McLaren is still in quite a pickle. They had to lend a lot of money to do the Mercedes buyback, buy out Dennis and the investments in the car business. Lots of those loans were relative short term (2-5 years) and refinance them is an ongoing process. So far they sold a bunch of shares to an investor (can't remember his name, but it was one of the car loving families, around 300mln), had to sell and leaseback their building, sell off a bunch of history cars, a last moment load of the owners and now the sale of AS. None of these things has anything to do with the excellence of the race team or anything, just illustrates how difficult it is to operate a small car manufacturer, without a high volume company behind you and "old money" (like Ferrari or AMG). At his moment McLarens outstanding loans are more or less covering what they are worth.. so, it's really a dime on it's side.

There's a nuance here. You don't get to be old money or a big company with a deep assets portfolio if you sell of parts of your business, especially long term fixed capital investments such as the MTC or applied tech. This is bad idea and it'll bite them back like it bit Williams.


McLaren no longer exist just to race, they are in the business of making profits. Can't sell off the building you make cars in just to run the cars at a track.

Furthermore it wasn't "McLaren" that bought back shares from Ron it was Ojjeh and Mumtalakat. Ojjeh is dead but Mumtalakat has very deep pockets. They should not have placed McLaren in debt to buy out investors, rather they should have dug into their own pockets.

If these guys are running McLaren I doubt if they'll ever win a championship again.

[Jolle]

Not really. The owners have simply decided to cash in their investment to re-invest in their core business

MAT will continue to be based at the MTC, and be run by the same people, so will clearly have an excellent relationship with McLaren in developing technologies for them, which of course they will pay more for, but will also receive income for rent which will more than pay for ECUs

It’s all part of their strategy to be the best racing team & best super car manufacturer

I think you're looking at this deal with a bit of pink glasses (or orange ones in this case). McLaren is still in quite a pickle. They had to lend a lot of money to do the Mercedes buyback, buy out Dennis and the investments in the car business. Lots of those loans were relative short term (2-5 years) and refinance them is an ongoing process. So far they sold a bunch of shares to an investor (can't remember his name, but it was one of the car loving families, around 300mln), had to sell and leaseback their building, sell off a bunch of history cars, a last moment load of the owners and now the sale of AS. None of these things has anything to do with the excellence of the race team or anything, just illustrates how difficult it is to operate a small car manufacturer, without a high volume company behind you and "old money" (like Ferrari or AMG). At his moment McLarens outstanding loans are more or less covering what they are worth.. so, it's really a dime on it's side.

There's a nuance here. You don't get to be old money or a big company with a deep assets portfolio if you sell of parts of your business, especially long term fixed capital investments such as the MTC or applied tech. This is bad idea and it'll bite them back like it bit Williams.


McLaren no longer exist just to race, they are in the business of making profits. Can't sell off the building you make cars in just to run the cars at a track.

Furthermore it wasn't "McLaren" that bought back shares from Ron it was Ojjeh and Mumtalakat. Ojjeh is dead but Mumtalakat has very deep pockets. They should not have placed McLaren in debt to buy out investors, rather they should have dug into their own pockets.

If these guys are running McLaren I doubt if they'll ever win a championship again.

It (the Dennis buyout) was specifically mentioned in the chamber of commerce official filings a few years ago (I went trough a decade of them in some spare time), so it’s not speculation.

[flmkane]

I think you're looking at this deal with a bit of pink glasses (or orange ones in this case). McLaren is still in quite a pickle. They had to lend a lot of money to do the Mercedes buyback, buy out Dennis and the investments in the car business. Lots of those loans were relative short term (2-5 years) and refinance them is an ongoing process. So far they sold a bunch of shares to an investor (can't remember his name, but it was one of the car loving families, around 300mln), had to sell and leaseback their building, sell off a bunch of history cars, a last moment load of the owners and now the sale of AS. None of these things has anything to do with the excellence of the race team or anything, just illustrates how difficult it is to operate a small car manufacturer, without a high volume company behind you and "old money" (like Ferrari or AMG). At his moment McLarens outstanding loans are more or less covering what they are worth.. so, it's really a dime on it's side.

There's a nuance here. You don't get to be old money or a big company with a deep assets portfolio if you sell of parts of your business, especially long term fixed capital investments such as the MTC or applied tech. This is bad idea and it'll bite them back like it bit Williams.


McLaren no longer exist just to race, they are in the business of making profits. Can't sell off the building you make cars in just to run the cars at a track.

Furthermore it wasn't "McLaren" that bought back shares from Ron it was Ojjeh and Mumtalakat. Ojjeh is dead but Mumtalakat has very deep pockets. They should not have placed McLaren in debt to buy out investors, rather they should have dug into their own pockets.

If these guys are running McLaren I doubt if they'll ever win a championship again.

It (the Dennis buyout) was specifically mentioned in the chamber of commerce official filings a few years ago (I went trough a decade of them in some spare time), so it’s not speculation.

Sorry I didn't mean to imply you were speculating. I used the quotes to say that I dont think Ojjeh and Mumtalakat should have put the entity McLaren in debt to buy put a fellow shareholder. They should have used their own funds or taken loans at their own risk.

[Jolle]

There's a nuance here. You don't get to be old money or a big company with a deep assets portfolio if you sell of parts of your business, especially long term fixed capital investments such as the MTC or applied tech. This is bad idea and it'll bite them back like it bit Williams.


McLaren no longer exist just to race, they are in the business of making profits. Can't sell off the building you make cars in just to run the cars at a track.

Furthermore it wasn't "McLaren" that bought back shares from Ron it was Ojjeh and Mumtalakat. Ojjeh is dead but Mumtalakat has very deep pockets. They should not have placed McLaren in debt to buy out investors, rather they should have dug into their own pockets.

If these guys are running McLaren I doubt if they'll ever win a championship again.

It (the Dennis buyout) was specifically mentioned in the chamber of commerce official filings a few years ago (I went trough a decade of them in some spare time), so it’s not speculation.

Sorry I didn't mean to imply you were speculating. I used the quotes to say that I dont think Ojjeh and Mumtalakat should have put the entity McLaren in debt to buy put a fellow shareholder. They should have used their own funds or taken loans at their own risk.

Well, the years before (2010-2012) Ojjeh and Mumtalakat got a promise from Dennis that if they bought back the 40% of Daimler shares, he would find another investor for those shares and would basically buy them all out. When that fell trough, they were just so fed up and apparently didn’t want to invest another big chunk after the Daimler buyback.

[mwillems]

I think you're looking at this deal with a bit of pink glasses (or orange ones in this case). McLaren is still in quite a pickle. They had to lend a lot of money to do the Mercedes buyback, buy out Dennis and the investments in the car business. Lots of those loans were relative short term (2-5 years) and refinance them is an ongoing process. So far they sold a bunch of shares to an investor (can't remember his name, but it was one of the car loving families, around 300mln), had to sell and leaseback their building, sell off a bunch of history cars, a last moment load of the owners and now the sale of AS. None of these things has anything to do with the excellence of the race team or anything, just illustrates how difficult it is to operate a small car manufacturer, without a high volume company behind you and "old money" (like Ferrari or AMG). At his moment McLarens outstanding loans are more or less covering what they are worth.. so, it's really a dime on it's side.

There's a nuance here. You don't get to be old money or a big company with a deep assets portfolio if you sell of parts of your business, especially long term fixed capital investments such as the MTC or applied tech. This is bad idea and it'll bite them back like it bit Williams.


McLaren no longer exist just to race, they are in the business of making profits. Can't sell off the building you make cars in just to run the cars at a track.

Furthermore it wasn't "McLaren" that bought back shares from Ron it was Ojjeh and Mumtalakat. Ojjeh is dead but Mumtalakat has very deep pockets. They should not have placed McLaren in debt to buy out investors, rather they should have dug into their own pockets.

If these guys are running McLaren I doubt if they'll ever win a championship again.

It (the Dennis buyout) was specifically mentioned in the chamber of commerce official filings a few years ago (I went trough a decade of them in some spare time), so it’s not speculation.

Yes this is correct, they paid in instalments to Ron and made the last payment in the end of Financial Year 2019.

Latifi also came in and his £200m investment covered most of the £275 payment to Ron so that wasn't a huge burden on Mclaren in the end. If that Latifi money got swallowed up by the business and wasn't used to cover Ron's Payment, then it's down to the business model of the time, not the weight of Rons payoff.

[mwillems]

Not really. The owners have simply decided to cash in their investment to re-invest in their core business

MAT will continue to be based at the MTC, and be run by the same people, so will clearly have an excellent relationship with McLaren in developing technologies for them, which of course they will pay more for, but will also receive income for rent which will more than pay for ECUs

It’s all part of their strategy to be the best racing team & best super car manufacturer

I think you're looking at this deal with a bit of pink glasses (or orange ones in this case). McLaren is still in quite a pickle. They had to lend a lot of money to do the Mercedes buyback, buy out Dennis and the investments in the car business. Lots of those loans were relative short term (2-5 years) and refinance them is an ongoing process. So far they sold a bunch of shares to an investor (can't remember his name, but it was one of the car loving families, around 300mln), had to sell and leaseback their building, sell off a bunch of history cars, a last moment load of the owners and now the sale of AS. None of these things has anything to do with the excellence of the race team or anything, just illustrates how difficult it is to operate a small car manufacturer, without a high volume company behind you and "old money" (like Ferrari or AMG). At his moment McLarens outstanding loans are more or less covering what they are worth.. so, it's really a dime on it's side.

There's a nuance here. You don't get to be old money or a big company with a deep assets portfolio if you sell of parts of your business, especially long term fixed capital investments such as the MTC or applied tech. This is bad idea and it'll bite them back like it bit Williams.


McLaren no longer exist just to race, they are in the business of making profits. Can't sell off the building you make cars in just to run the cars at a track.

Furthermore it wasn't "McLaren" that bought back shares from Ron it was Ojjeh and Mumtalakat. Ojjeh is dead but Mumtalakat has very deep pockets. They should not have placed McLaren in debt to buy out investors, rather they should have dug into their own pockets.

If these guys are running McLaren I doubt if they'll ever win a championship again.

Why do you think it's a bad idea? Unlike Williams, they have a major motor manufacturing business behind them that will likely take off again.

Mclaren are getting cash in the bank and creating security for Automative and for the F1 team, these are the two core essentials for what the group want to achieve. Sustainability and success on track to promote success and the brand off track, which in turn funds success on track... and on and on. They don't have the means to secure all of their assets and pay their debts. Well, I suppose they could be aggressive again like they were pre-pandemic, but they have to build into their business model the very real idea that there could be another shutdown.

Can they get bailed out again...? It's a very real risk that Mclaren may not have been able to take another blow like they did last year, and so creating a solid financial base for those assets that they can afford to, in my opinion, is absolutely the right idea.

In fact I'd say that if they faced another shutdown then they would face foreclosure or the sale to parties who may not have the fans best interests at heart or the same goals as the current owners.

I just hope Mclaren can use this to get sustainable and secure for what the future might throw, so that it can grow and thrive when it can, because the Mclaren brand will always be able to do that when economic conditions are right. Right now, there is too much risk to do anything other than make sure asses are covered.

Edit: One thing Ojeh and his partners did which I fully appreciate is that they understood the power of the brand, protected it and grew it, they understood that it above all else was central to Mclarens success. Honda was a huge loss but they took that decision because it was killing the brand. The financial loss to the team was worth it. Kudos for making those hard decisions and for that brand today still being top dollar, despite everything the company has been through.