Ongoing investigation could pose risk for McLaren’s reputation

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Photo by: www.kymillman.com/f1

I was reading an interesting article over at the Telegraph today regarding McLaren and a financial investigation. Reading the Companies House filing, I was interested to discover that McLaren are selling a select number of their Heritage F1 cars to specific buyers with deposits already made for these unique cars. The amount of money McLaren spends to retain some 180 cars is in the millions of Pounds can you can see why selling a few of them might help generate 30, 40, or 50 million dollars.

In the “Notes to Financials” section (p.55), there was a mention about an ongoing investigation that the UK government is doing concerning certain third-party companies and concerning executive and other persons who have been, or are currently, associated with McLaren. The notes do say that McLaren and its subsidiaries are not the subject of the investigation.

Now this investigation is said to have been going on for a year according to the Telegraph article and I find it very intriguing as to if this includes current owners, Bahrain Mumtalakat Holding Company, TAG Group Limited, Favorita Limited, Perlman Investments Limited, McKal Holdings Limited or Acanitt Limited. The notes don’t say and according to the Telegraph, when contacted, McLaren would not comment.

If it was former executives that might be Ron Dennis or Martin Whitmarsh as two names most prominent at McLaren in the recent past. No idea who may be involved but the notes do say that if the investigation is pursued and litigated, it could have a negative impact on the Group’s brand and reputation resulting in an impact to their financial performance. That sounds like kind of a big deal to me.

Whoever is involved, the issue is big enough to have a material effect on McLaren’s financial performance due to brand and reputation damage. Now, one side of me would argue that this may be tactical verbiage in a shareholder document to protect the team in the event there is any fallout from any investigation even if it isn’t a big deal. In order to make a claim, it would be important to recognize the risk and the date of revealing this information and recognizing that risk would be important.

Very strange days indeed and while I would not want to overplay an investigation involving McLaren, it does suggest that their reputation could be harmed if it were litigated. I would assume this is more than investigating the income of an employee who racked up gambling debts or avoided taxes etc. Then again, maybe McLaren are just being prudent and would consider even something such as that could potentially be damaging to them but my hunch is, it is bigger than that.

Hat Tip: Telegraph and Companies House

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Nige

This is very interesting to me because, if my memory serves me correctly, it was Ron Dennis who instituted the policy of McLaren not selling it’s cars when he combined McLaren with his Project 4 Racing. There is actually a great video of Lewis and Fernando going to a secret warehouse where McLaren keeps it’s past race cars (it is huge), and you will notice that they are almost all exclusively from after Ron Dennis taking over. With Ron gone, I presume that McLaren is looking to monetize these F1 cars? The question then becomes who actually owns the cars?… Read more »

Nige

Another reason I abandoned my personal Facebook! haha. I can say that the trade of heritage F1 cars is a very lucrative enterprise…. Ferrari has been selling their old cars for years (and the contracts for the sale are absolutely fascinating), and I have always been surprised that Ron didn’t want to do the same. Ferrari is very smart about it in that they don’t just sell you the car, they sell you the package to run it too (Corsa Clienti). An independent outfit can absolutely run a Cosworth DFV powered car on their own, but an engine rebuild on… Read more »