Williams have announced they have opened a formal sale process, in light of their most recent Group financial results.
The Williams Formula 1 team has commenced formal sale proceedings, as part of a review of the options open to them as a new strategic direction. This is in light of the Williams Group (Williams Grand Prix Holdings or WGPH) suffering a further shrinking of finances in 2019. The team have also announced that their title sponsorship, signed with ROKiT prior to the start of 2019, has been terminated.
Williams are doing their utmost to survive as an independent entity in order to get to the new budget cap rules being introduced to Formula 1 in 2021, which will see a spending limit introduced. This limit will be incrementally shrunk over the next three seasons. As a result, Williams are evaluating different options open to them to ensure survival. These options include, but aren’t solely limited to, raising new capital for the business, a divestment of a minority stake in WGPH, or a divestment of a majority stake in WGPH including a potential sale of the whole Company.
Two financial advisory companies, Allen & Co. and Lazard, have been appointed to the team, with potentially interested buyers urged to approach them. Any interested party participating in the formal sale process will be required to enter into a non-disclosure agreement with WGPH on terms satisfactory to the WGPH board. The Company then intends to provide such interested parties with certain information on the business, following which interested parties will be invited to submit their proposals.
Williams emphasise that they are currently fully funded to go racing in 2020 when Formula 1 restarts, and that this review period will allow them to ensure the team’s survival into the future. At the moment, no approaches have been made to purchase the team, but there are currently ongoing discussions regarding potential investment.
These developments come as WGPH revenue shrunk to £160.2m in 2019, from £176.5m in 2018 and EBITDA deteriorated to a loss of £13m, compared to a profit of £12.9m in the previous year. This loss is attributed directly to Williams’ poor performances on track in 2019.
The Formula 1 team’s revenue shrunk to £95.4m in 2019, from £130.7m in 2018 and EBITDA was £(10.1)m last year, compared to £16.0m the previous year. Williams Advanced Engineering revenue increased to £63.7m in 2019, from £44.8m in 2018, with EBITDA up to £7.5m in 2019 from £5.1m in 2018. However, WGPH sold a majority stake in the Engineering branch late last year. “Williams Advanced Engineering growth continued in 2019, and we decided to bring external investment into the Group, through the sale of a majority stake, on 31 December 2019.” said CEO Mike O’Driscoll. “This will enable WAE to continue to deliver the innovative solutions for which it is known and respected. Whilst we are no longer a majority shareholder in WAE we hold a significant minority stake in the business and remain a key partner for them through the provision of technical and support services.”
With Williams confident that the budget cap introduction will address the spending war that has seen it plummet down the Formula 1 grid as corporate entities rose, they have acknowledging the need for restructuring in order to survive long enough to do so.
“The financial results for 2019 reflect the recent decline in competitiveness of the F1 operation and the consequent reduction in commercial rights income” continued O’Driscoll. “After four years of very solid performance in the FIA F1 Constructors’ Championship during which we claimed two third and two fifth place finishes, we endured a couple of very difficult seasons. We have implemented a significant restructuring over the last nine months and have strengthened the technical leadership team.”
“The 2020 Formula 1 season has, of course, been disrupted due to the COVID-19 pandemic, and this will have an impact on our commercial rights income this year. The Team have also served notice to terminate its relationship with its title partner, ROKiT, and major sponsor, ROK Drinks. In common with many other businesses, we have taken extensive action to mitigate, including a prolonged furlough period for much of our staff. As this awful global crisis recedes, everyone at Williams Racing is looking forward to the start of the new season.”
“There has been an enormous gap in earnings and expenditure between the three largest teams and the rest of the grid for a number of years, but we are confident that Liberty Media’s long-term vision and plans, including a first-ever cost-cap for the sport, will deliver a more level playing field for 2021 and beyond, on which all teams can compete more fairly.”