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A1GP in serious trouble UPDATE #3 Rumor on the street is that the A1GP series asked Bernie Ecclestone for $120 million to keep the series afloat but that Bernie turned them down.  This rumor comes from an unknown source and we are trying to verify it, though we don't expect anyone in the A1GP series will answer it.  We do know that the series continues to bleed red-ink profusely.

12/08/06 Ever since the news in late September that Sheikh Maktoum was stepping down as Chairman and Director of the A1GP series we predicted the series was in serious trouble.

According to reports, there are at least two teams that won’t be back on the grid while yet another won’t be taking part in this week’s Indonesian event. Team Singapore, already in financial difficulties that required them be taken over and run by A1GP themselves, will not be on the grid at all. Added to that it is rumored that Team Turkey and Team Greece are likely finished.

Under new director Tony Teixeira there are reports of corrupt politics involved behind the scenes.  The bottom line is that all the money wasted on a new series would have been much better spent in Champ Car, which was trying to develop a "country" type system of their own.  Instead they went off and did their own thing and are losing a reported $200 million per year.  Man the lifeboats, this ship is taking on water fast.

09/29/06 After admitting to losing $200 million last year, now comes word that the guy who started A1GP, Sheikh Maktoum Hasher Maktoum Al-Maktoum, and invested money in it, has quit. The sheikh is currently the chairman of the company that runs the series but it has now emerged that he is planning to sell his controlling interest in the business and is thus unlikely to remain involved.

"I'd like to thank all investors," he continued. "It is clear that A1, in and of itself, can attract and has attracted money, so I think A1 will continue to do so even without the involvement of myself, my family, or Dubai."

Recall that we told you a year ago that most of the money invested in A1GP is South African money.  However, the Sheikh also had a major investment and was the head figure.  The very astute Maktoum is no dummy, if he's bailing on the series he started, it does not bode well for A1GP.

Reflecting on the past four years and the sale of his position, Sheikh Maktoum said, "I am happy that I have built the series with fans in mind. I feel like I have fulfilled my promise to them by bringing A1GP from concept to reality and am confident that the World Cup of Motorsport will go from strength to strength. I would like to thank all those stakeholders, including Tony Teixeira as first investor, who shared in my vision, enthusiasm and commitment.  Having devoted all my efforts to making A1GP the success it is today, this transaction will allow me to devote more time to my Dubai International Holding Company which currently manages a substantial portfolio of assets and new ventures and which continues to actively pursue other significant investment opportunities." 

Commenting on the departure of Sheikh Maktoum, A1GP Deputy Chairman Tony Teixeira said, "Without the benefit of Sheikh Maktoum's vision and financial support, A1GP would not be as strong as it is today.  We send our thanks to Sheikh Maktoum and know that as a keen motorsport enthusiast he will continue to support A1GP. He will always be welcome at any event." 

It is anticipated that the all cash transaction will complete within thirty days whereupon Sheikh Maktoum will step down as Chairman and Director of A1GP.

06/06/2006 We have long maintained that the A1 Grand Prix series was a financial nightmare and with so few fans in attendance, its days numbered. That theory has now been verified.
A1 Grand Prix lost $212m in its first season of operation, Tony Teixeira, deputy chairman of A1GP has told financial news service Bloomberg.

"We made a loss of $212 million. I expected it to be half that. We weren't ready for the unknowns including the cost of transportation, promoting races. The biggest challenge is promoting the events. We have dropped races in Germany and Portugal (for the second season) because we were very disappointed" with their promotion.

"We finished the season with an average TV audience of 9.5 million, which is more than expected. We're aiming for 14 to 16 million for next season.

"We want to raise $200 million for the season." Nomura arranged debt financing of $120 million and "we're looking for $80 million more.

"We don't want to run short of funds at any time. We're hoping to make a small profit, we won't go mad, of $15 to 20 million.

"There's no doubt" next season will take place. "One reason we haven't fixed the schedule is we want to make sure it's as permanent as possible from year to year."

"We're aiming for November or the first week of December for our IPO. It's a tight deadline. We hope to raise $500-600 million. We'd have liked to do it later rather than sooner but to get on proper TV channels you need to spend money."

"Everybody is a bit nervous about commodities. They're looking for something new, a bit sexy. Our costs, $200 million, are a fraction of Formula One which spends about $4 billion. After that, everything is clear blue sky."

Teixeira added that the series' second season would be financed by a loan of $120m, made available by Nomura Holdings, and hoped to raise $80m through the sale of shares in the series, presently held by venture capitalist company RAB Capital, Teixeira, series founder Sheik Maktoum and the British, Canadian, New Zealand and South African seat holders.

Teixeira said he was "very disappointed" with the promotion of events in Germany and Portugal, and these will be dropped.

The bottom line is that to fly cars all over the world like A1GP does is very expensive and if attendance is low race promoters cannot afford to pay for these transportation costs. So they want to float an IPO so they can burn though investors cash instead of their own.

Also, trying to promote a series globally is expensive, so this 'World Cup of Motorsports" will flow more red ink and no smart investor is going to fund this for many more years before pulling the plug.

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