Some of 9 remaining F1 teams circling the drain
The nine remaining teams in Formula One motor racing have been dealt a fresh blow after last week’s sudden announcement that Honda, the Japanese car manufacturer, will be pulling out of the sport.
A new study by the German division of Dun & Bradstreet, the business intelligence group, has questioned the creditworthiness of the majority of F1’s teams by revealing that on average only two of them paid their bills on or before the due date in 2008.
The D&B F1 Paydex study ranks the teams based on their payment behavior and financial statements, and highlights those that are running healthy businesses and those that may be the next to reverse out of the sport.
Leading the pack is Toyota, which, on average, pays its invoices five days before they are due, with only 11 per cent of its bills being late.
It is followed by Toro Rosso and Red Bull Racing, which both pay 99 per cent of their bills on time – unsurprising given that the teams share the common ownership of the Red Bull drinks company.
Toro Rosso ranks higher than its sister team, however, since it pays its bills on the due date, whereas Red Bull Racing’s invoices are settled one day late.
In spite of its seemingly healthy results, even Toyota’s future participation cannot be guaranteed.
Its shares have lost 52 per cent of their value over the past year and the group recently announced that net income to the end of March 2009 would reach Y550bn (£4bn) – a 68 per cent drop on last year.
After Honda, Toyota has spent more than any other car manufacturer in F1 – an estimated £700m over the past five years – and yet it has never won a race.
With prudence the criterion by which successful companies are being measured, staying in F1 could devalue Toyota and cause shareholders to demand that it cuts the program.
At the other end of the results spectrum are the teams that could be forced to leave F1 if their businesses fail to perform.
The British Williams team is the only one not to be owned by a billionaire or a car manufacturer and it occupies the penultimate place on the ranking. On average, its bills are paid 11 days late – the same delay as those paid by the moribund Honda team.
Over 2006 and 2007, Williams burnt up losses of £50m and its owners, Frank Williams and Patrick Head, took two consecutive pay cuts of £800,000. The team’s net debt trebled to £25m last year but it still seems in better health than Force India, which occupies the last spot on the ranking.
Force India is owned by Vijay Mallya, the Indian airlines billionaire.
A total of 99 per cent of Force India’s invoices are paid late and, on average, arrive 75 days after they were due. More at FT.com