Editorial

Stephen King explains Justin Wilson's novel Investors Club
 
by Mark Cipolloni

 August 28, 2006

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Stephen King
Mark Cipolloni/AutoRacing1.com

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 website, too.

Q. Very good. Thank you very much.

STEPHEN KING: You're welcome.

The author can be contacted at markc@autoracing1.com

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