Champ Car driver Justin Wilson got his real big break in
racing when he was offered to drive in Formula One. However, he
was expected to bring money but he didn't have enough so he sold shares
in himself to raise the funds in a novel concept.
I caught up with the head of Wilson's Investors Club,
Stephen King in Montreal this past weekend to learn more about the club.
MARK CIPOLLONI: I'm here today in
Montréal, Canada, with Stephen King, head of the Justin Wilson's
Investors Club, is that correct?
STEPHEN KING: I organize it, yes, that's right. The Investors Club was
set up after Justin Wilson plc came into existence. There are about 900
investors in Justin. It was felt that it would be good to have something
whereby people have a bit more involvement. The Investors Club is
separate to, but supported by the directors of Justin Wilson plc. My
role is to coordinate what goes on, to look after the website, and to
raise the investors tours for UK investors to come over to watch some of
the races in the U.S., Canada, et cetera.
Q. How did this come about? In America here, we don't see too much of
that kind of thing.
STEPHEN KING: It was a one-off of its time. Justin had the opportunity
in 2003 to go into Formula One. The only way he could do that was to
bring money into Minardi. Because it's very difficult to get
sponsorship, it was felt that Jonathan Palmer, who is Justin's manager,
felt the way to do that was through this novel scheme whereby Justin
sold shares in himself to the public. He raised £1.2 million,
approximately, most of which was used to fund the driving for Minardi.
He impressed quite well in his first season in Formula One to the point
that the last five races, he left Minardi and moved into Jaguar.
Unfortunately, Jaguar then got into a situation where they required a
pay driver, and the entry level for F1 drivers had gone up to such an
extent that Justin was priced out.
Justin then moved over here. He looked at his options. Champ Car was
obviously an option for him. He moved in with Mi-Jack Conquest for a
season. During the course of that, Carl Russo was keeping tabs on
Justin's performance, saw that he was good at what he did and would be
suitable for RuSPORT in its second year. So Justin went over to RuSPORT
in 2005, finished third in the championship points, and here he is this
year third place again.
Q. You mentioned there's 900 members in this club.
STEPHEN KING: Yes. When the scheme was set up, it was available to
anybody to subscribe. The minimum subscription was £500. Most people put
in either 500 or a thousand. Some people put in a lot more than that.
The vast majority are private individuals, but there are one or two who
have done it on a corporate basis.
Q. Why did these people get involved? What was their incentive?
STEPHEN KING: With very few exceptions, indeed, the motivation wasn't to
make money. There was a tax break in that it was under the enterprise
investment scheme, which means that you get about 20% of your
contribution offset against your tax liability. But most people did it
because they wanted to support a British driver. He'd won the F-3000
championship - only British driver to do that. He was having difficulty
trying to make it into F1. It gave people involvement. At the weekend
when they're watching whether it's Monaco or Nurburgring or something,
they can say, you know, I'm involved in this, I'm part of the story of
that driver and how come he's racing around that circuit.
Q. Are they mostly racing fans of some sort?
STEPHEN KING: I would say almost all are racing fans. There wouldn't be
anybody that came into it expecting to make money, and therefore they're
all doing it. It's a decision of the heart rather than the head to
invest that money.
Q. Interesting. Do they, as part of this Investors Club, get to
be inside the sport more? Do they get access to things?
STEPHEN KING: They get access because the Investors Club is recognized
by RuSPORT as being a legitimate organization, if you like, affiliated
to Justin. We're able through the kindness of RuSPORT to make places
available in hospitality. We book hotel accommodations for our people
through the same agent that deals with the team. So we can sort of fast
track investors in.
Q. I see.
STEPHEN KING: I think those that have come over, they just appreciate
how good Champ Car is compared to Formula One. You can get close to the
drivers, to the venue. Everyone is friendly.
Q. Can I ask, has there been any return at all on the investment yet?
Any money come back the other way?
STEPHEN KING: The way the scheme was set up in year
one the whole point of it was to spend that money on the F1 drive. It
was no surprise at the end of the first year there was no money there at
all. The way the scheme is set up, the shares have a life of 10 years
from the day of issue. What will happen is progressively, as Justin's
income accrues, shareholders will get up to £2 for each £1 they put in
and thereafter 10% of any surplus. For the first year, -the year ending
December 31st, '05, was the year the company first made a surplus. This
year it will do the same as well. Hopefully over the next two, three,
four years, there will be income accruing to the Justin Wilson plc which
can then be shared out to investors.
Q. Very interesting. So this was kind of like a -- this is a novel
concept even in Europe?
STEPHEN KING: It's a one-off. Nobody's ever done it before. It was tried
a year or so later by a man called Sam Hancock. His scheme didn't get
the minimum subscriptions, so he had to abandon it. As I said at the
outset, I think it was of its time. You couldn't get an F1 drive for
that sort of money. There's no way an individual could raise the funds
necessary to fund a drive.
Q. Very interesting. So if for some reason Justin doesn't earn enough
money in the 10 years to pay off all the investors?
STEPHEN KING: Such is life. And I think people will say -- even now,
there isn't a formal marketplace for the shares. It's not like you go to
the Stock Exchange and trade them. There are one or two people who
either they decided they want to move out of that and into something
else, and there are people who will buy up those residual shares. Again,
nobody's doing it to make money. At the end of it, if you paid £500 for
a part of that, you go 10 years, you don't get anything back, you can't
say you haven't had your money's worth because you've had that person
help that driver's career.
Q. When he announced he was going to come to Champ Car, does the
Investors Club have -- did they ask for their opinion on it? Any say in
where he races?
STEPHEN KING: No. The Investors Club is something that is automatically
available at no cost to people who are investors. It's just a way of
communicating with them, to enable them to get a bit more involvement.
But they don't have any authority over what Justin does. Justin
obviously is very mindful of his investors and he's interested in what
they have to say, and he appreciates the fact that investors are behind
him. And he would not be in this position had he not had that
investment, so he's very committed to the Investors Club and the
individuals as well.
Each year we have an annual general meeting, a formal meeting, which is
at Brands Hatch, which is a venue -- one of the venues Jonathan owns.
Justin comes along and once the formal business of the meeting is over,
there's socializing. We can all take our own private cars around the
track. It's all good fun.
Q. Are all the investors British?
STEPHEN KING: The vast majority are because Justin is British, and
therefore it was British investors. But there are a couple this side of
the Atlantic, there's some in Australia, there's one in New Zealand. So
it is international, but the vast majority are UK based.
Q. There's some rumors about a possible race or two in Europe next year
with Champ Car. Give the investors something to come out for that?
STEPHEN KING: There have always been rumors. The Investors Club, of
course, would love it because it would be a home race and it's quite a
trek to come across the Atlantic as many times a season as I've been
doing. But I think the realities are the series has to make it viable
and you probably need to have back-to-back races to do that. Whether
it's going to happen or not, I don't know. But, yes, it would definitely
be nice from an investor's point of view.
Q. Very interesting. I appreciate the time you've taken for our readers
to tell us what this is all about, how it all came about. I hope you
eventually make return on your own investment. If not, hopefully you
enjoy the opportunity, the experience.
STEPHEN KING: We hope we do. If anyone wants to look at
www.JWIC.co.uk, the Investor Club's
website. There is a shareholders area that you do need membership access
for. But a lot of it is available to the general public to have a look
at. Of course, there's Justin's own
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