Red Bull to buy Jaguar team

UPDATE #15 The ink will be drying today on the deal to save the Jaguar Formula One team, if last-minute negotiations are completed. The new owners are to be the ambitious Red Bull soft drinks conglomerate, which has been in the market to buy a Formula One team for some time but has been restricted to sponsoring the Sauber team and Jaguar’s rookie driver, Christian Klien. The team have to lodge their entry for the 2005 season with the FIA, the sport’s governing body, on Monday morning and it is thought that the deal was close to completion late last night, rescuing 350 jobs at Jaguar’s factory in Milton Keynes, Buckinghamshire. Jaguar’s sister business, Cosworth, the engine builder based in Northampton, is thought to be in the hands of Kevin Kalkhoven, an American entrepreneur, who will provide power plants for Formula One and the US racing series. With an engine supply secured, the sale of Jaguar can go ahead and Red Bull should be ready to make an announcement after the weekend. The Times 11/12/04 More than 300 jobs at Jaguar look set to be saved as negotiations for the sale of the Formula One team to Red Bull moved towards a successful outcome yesterday. It is expected that Ford, who own Jaguar, will conclude a sale to the makers of the energy drink, reports the Guardian Unlimited website. Red Bull has been a long-time sponsor of Formula One business but now aspires to owning its own team. Any sale will have to be completed by Monday to comply with the deadline for entries in the 2005 world championship that have to be lodged with the FIA by that date. In the past late entries have been accepted beyond the official cut-off point subject to the unanimous agreement of the other teams and it is thought that such approval is unlikely to be withheld in this case. It is believed that Red Bull will pay a nominal amount for the Milton Keynes-based Jaguar Racing – possibly a symbolic one dollar – in return for taking on the team as a going concern, though it is set to invest an estimated $400million (£217million) to run the team for the next three years. 11/12/04 This Grandprix.com article sheds a bit more light on the Red Bull buying Jaguar deal. We expect an announcement by Monday. Negotiations are in their final stages for a Red Bull buyout of Jaguar Racing. The sale must be finished by Monday in order for the team to enter next year's World Championship. It is rumored that the deal will cost Red Bull a nominal sum but will remove a major liability from the Ford Motor Company's books. The firm has already set aside money to be used to pay for the closure of Jaguar Racing and Cosworth Racing but obviously it would be better for Ford if the team was sold, both from a financial point of view and from a public relations viewpoint. If the company does not do the deal with Red Bull as many as 300 people will be out of work. 11/05/04 This rumor is about to go to 'fact.' Word here in the Champ Car paddock in Mexico City from reliable sources is that Red Bull is indeed going to buy the Jaguar F1 team and they will be running with Cosworth engines. We expect a formal announcement next week, but definitely by November 15th, the cutoff date per the Concorde Agreement. Mark C. 11/04/04 Red Bull has emerged as the last remaining hope that the Jaguar team has of remaining in grand prix racing next year, high-level insiders have told autosport.com. A sale must now be agreed with the energy drinks giant before November 15 or the team will probably be closed. A series of interested parties have come forwards in recent weeks expressing a desire to buy the team, with some also putting in bids for engine company Cosworth, but most of these have not lived up to expectations after further close analysis by the HSBC bank, which is handling the sale of the team.

A recent bid by the Brand Synergy marketing group, which has close links with Nigel Mansell, was rejected when financial guarantees could not be met. Similar interest from a Chinese consortium, which is now talking to Jordan, and the new Midland F1 team have also proved unfounded. A source close to the negotiations between HSBC and Red Bull told autosport.com: “Red Bull is the only bidder left – and we expect talks to go right to the deadline."

The fact that Red Bull is now the only remaining bidder puts in a position of strength – because it will almost certainly be able to force Ford to back down on points of the sale that have not previously been agreed. Agreement has to be reached by November 15, which is the date when entries to the 2005 F1 world championship must be lodged. Red Bull advisor Helmut Marko told Autosport: “We are still talking. There is an offer on the table, as there was before. We have no deadline. Alas, Ford seem to have been unable to clearly react to our offer." 11/03/04 This just-drinks.com article says, Red Bull could be on the starting grid of next year’s Formula One Grand Prix season, according to press reports. The Austrian energy drinks group is in the final stages of negotiations to buy Ford’s UK-based Formula One team Jaguar Racing, the Financial Times said. The newspaper cites sources close to the deal in its report. Jaguar Racing must register for the 2005 world championship by 15 November or face paying up to US$450m in closure costs, the FT said. While Red Bull is interested in buying the team, Ford has indicated that another bidder is interested in buying both Jaguar Racing and Cosworth Racing, Ford’s competition engines subsidiary. The paper said that Red Bull’s founder and chairman, Dietrich Mateschitz, is understood to be ready to call what Red Bull regards as Ford’s bluff. People close to the sale said the other potential buyer may not have financial backing for a deal. 11/03/04 [Editor's Note: We have been telling you for months that Red Bull will get the Jaguar F1 team. It's getting closer.] The sale of Jaguar Racing to main bidder Red Bull is being held up by minor points of disagreement between the two parties, Autosport Magazine reveals. The Ford-owned team has been for sale since September 17, when the company announced it was withdrawing from Formula 1. Ford has insisted from the outset that any buyer meets strict criteria, including funding the team for the next three seasons and offering guarantees over the job security of Jaguar Racing’s 350 staff. As an American company, Ford remains responsible for the welfare of its employees under any new owner for three years. Red Bull has been reluctant to comply with all of Ford’s stipulations, although it has more than met the financial requirements laid down. Its offer exceeds the $50 million (£28m) per season over three years Ford wants from a buyer. The nominal purchase price for buying Jaguar Racing, its staff and facilities and its entry to next year’s F1 championship is estimated to be around £3.5m. As the sole remaining serious bidder for Jaguar Racing, Red Bull is in a position of strength in the negotiations and is prepared to test Ford’s desire to sell the team. Ford, which is selling the team through representatives from former sponsor HSBC, wants the sale to be agreed before November 15 – the date by which entries for the 2005 championship must be submitted. 10/11/04 And although managing director Dave Pitchforth denied rumors, which developed on Sunday, that the team had already secured a deal for current backers Red Bull to take over the team, he insisted recent talks are going well. "There are various negotiations and it's not right for me to comment on them other than to tell people the process is going on" said Pitchforth. "It's not my company to sell, it's Ford Motor Company's to sell. We're nowhere near 99 percent sold because there's a process to go through and that involves banks, it involves lawyers. But all that's happening as quick as we can get it. Time is of the essence and there's a lot of good stuff going on, but there's no decision really. Obviously we already have a relationship with Red Bull and it's nice. It's not over until it's over."

09/30/04 Racereport magazine have reported that Austrian energy drink giant Red Bull bought Jaguar, with the help of Bernie Ecclestone and that Toyota will supply the team with customer engines. It was also reported that the GP2-engine manufacturer, Mécachrome, will buy Cosworth, which was denied in another report. The fate of Jaguar and Cosworth will apparently be revealed on October 15th according to the report. 09/23/04 We remind you that we told you three months ago that Red Bull was approved by Nick Shayla and Bill Ford to buy the Jaguar team (see earlier update to this rumor.) Now, after three months have passed, surprise surprise, Autosport reports in this article – Energy drinks giant Red Bull has emerged as favorite to buy the Jaguar Racing Formula 1 team, just days after its boss Dietrich Mateschitz ruled out interest in a fresh attempt to set up his own grand prix outfit, autosport.com can reveal.

Sources close to Jaguar have confirmed that Red Bull is back in talks with the team with a view to a swift purchase of the outfit, even though a deal to buy it earlier this year was scuppered at the last minute by Ford's financial chiefs in Detroit. Mateschitz is understood to have put that disappointment behind him and changed his mind about abandoning attempts to set up his own team.

He is believed to be evaluating several options for his company in F1 next year, ranging from buying the Jaguar team outright and it becoming the official Red Bull Grand Prix team, to maintaining his sponsorship of Sauber or even pulling out of F1 completely and switching his focus to United States racing. When asked about whether a buy-out of Jaguar was on the cards, Mateschitz said on Wednesday: “Nothing is impossible and everything can be done. Talks are going on and at the moment there are several possibilities we are looking at."

Although Mateschitz was originally only interested in plans for his own ‘All American F1 Team' if it could be done in conjunction with Ford, there are suggestions that his latest attempt may revolve around a supply of customer Toyota engines. The Japanese car manufacturer has made no secret of the fact that it will be happy to supply a second team in F1 if there was a genuine ‘engine crisis' and an insider at the team suggested that its engine department has already been told to gear up for customer supplies in 2005.

The major hurdle to be overcome if ‘Jaguar' is to switch to Toyota engines next year is the fact that the team has already completed much of the work on its R6 contender based around next year's Cosworth engine. The interim R5B, featuring next year's transmission and gearbox, is due to run at Jerez in Spain next week. Although it is not impossible for the team to make modifications to the car to fit a Toyota engine, the work would require considerable financial outlay. One source close to the team told autosport.com: “I think we would find it extremely difficult to install a Toyota engine by Melbourne next year. Re-jigging the car now would mean an enormous expense."

7/21/04 The Ford Motor Company announced its second quarter profits of $1.2 Billion, but Ford's automotive operations are losing money and the Premier Automotive Group (PAG), which includes Jaguar, Volvo, Land Rover and Aston Martin, posted a loss of $359 million despite increased sales. Ford warned that PAG will probably finish the year with a loss and said that it needs to undertake more restructuring at Jaguar. Whether that will affect the F1 program remains to be seen. 6/20/04 – This week's Autosport magazine reports that Red Bull has denied reports in the Austrian media that it has purchased the Jaguar Formula 1 team and that Gerhard Berger would be the team principal. “I’m the last person to hear this," said Berger. The story also suggested that Vitantonio Liuzzi and Scott Speed, leaders of the Formula 3000 International and Formula Renault Eurocup series respectively, would be driving for the team in 2005. AutoRacing1.com can tell you that although Red Bull has not bought the Jaguar team yet, they probably will. 6/29/04 – Our moles in Formula One tell us the deal for Red Bull to buy Jaguar is nearly complete, the deposit has been made and the due diligence is being carried out. We hear Cosworth will still supply engines and Ford will still own Cosworth. Mark C. 6/24/04 – AutoRacing1 has learned that if anyone buys the Jaguar F1 team, it will be Red Bull. That choice has been made by Nick Shayla and Bill Ford. Now it remains to be seen whether it happens. If not the team could be disbanded, unless another manufacturer buys it. 6/24/04 – We are bumping this rumor up to 'strong' and it may go to 'fact' before this season is over. A respected, very connected reader writes, I spoke to a friend of mine who works for PAG (Premier Auto Group – U.S. headquarters for Jaguar, Volvo, Aston Martin, Land Rover) today. I asked him if he had heard anything about what's going on with Jaguar's Formula 1 program. He said that Jaguar was pulling out of F1 after this season – there will be no Jaguar F1 program for 2005. He said that they will continue their support of Trans-Am, a series that they are more than pleased to be involved with due to the excellent return on their investment. He also said he wouldn't be surprised if Jaguar did a feasibility study in the next year or two with regard to a possible return to sports cars by racing in the 24 Hours of Le Mans. One has to think that Jackie Stewart, when he learned of Jaguar's F1 pullout recently, went to the Royal Bank of Scotland (of which he is a member) as a sports advisor and may have unleashed his trademark charm and business acumen to persuade the financial institution to begin a marketing program centered around F1. Jaguar may be leaving the F1 circus, but perhaps Jackie isn't! If Jaguar leaves, do you think Cosworth will remain as an engine supplier? If they do bail, what are Jordan and my beloved Minardi going to do for engines? Name withheld by request, Newport Beach, California 6/23/04 – This week's Autosport Magazine reports, Jaguar team chief Tony Purnell has warned fellow Formula 1 bosses that he cannot be absolutely sure the outfit will be in grand prix racing next year. With Jaguar ninth in the constructors’ standings, speculation has heightened that the team will be canned, despite public assurances from parent company Ford that it intends to continue with the project. Sources told Autosport that Purnell was recently asked in a team principals’ meeting by F1 supremo Bernie Ecclestone whether or not he could guarantee Jaguar’s participation in 2005 and he responded in the negative. In public Purnell is bullish about Jaguar’s future in the sport. “In the last week we signed off an enormous piece of work in the wind tunnel, and to sign a check like that and pull out the following week doesn’t make sense," he said.

When asked why he lacked the guarantee to tell Ecclestone Jaguar would definitely be in F1 next year, Purnell explained he was merely being honest about the situation and that there was nothing to stop a sudden change of heart from Ford about its long-term commitment.

“I try to keep everything on the straight and narrow and I have got a cast-in-stone contract I can tell you about," he said. “I would be surprised if we are not here." It remains a possibility that the team could be sold at the end of the year, but the complete closure of the outfit has been ruled out. To do so, sources claim it would cost around £120 million in contractual and redundancy payments.

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