Racing Point Force India to keep prize money; lose points

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Photo by: www.kymillman.com/f1

When a team spins off track and into administration, there are a lot of balls to juggle and details to iron out. When a driver’s father buys the team and it isn’t the team you’re driving for, questions about an immediate or delayed switch to your dad’s team arise. When an acquisition turns from share sales to full asset acquisition, the legal realities change. When a team isn’t the same team, retaining its point sand prize money is brought under scrutiny of the legal verbiage of the FIA legal contracts. This all happened to Force India and it all has to be resolved.

First up, the prize money the team are desperate to retain, rumored to be in the $70M range, is a major issue for a team as small a Racing Point Force India (a new name for Sahara Force India). Williams and McLaren were reticent to allow the retention of the prize money as this is, effectively, a new team via new owners. We weren’t sure if they would retain that prize but it seems they will.

Somehow, negotiations were done and everyone has agreed to allow RPFI to retain its prize money according to team principal Otmar Szafnauer.

“The remaining nine teams have signed a document that enables us to keep the money that Sahara Force India earned in years past,” said Szafnauer.

“The biggest consequence is that we start from zero points, we forego the [2018] points because they belong to Sahara Force India, which is not an entrant anymore.

“We will do the best we can and try to score as many points as we can in the remaining races, and see where we end up at the end of the season. And that will determine some of the prize fund for the following year.”

The prize money is huge but so are the points and losing all points gained so far means they are not likely to retain their 4th place success they’ve had over the last two seasons so this will mean that the prize money for next season will take a serious hit. The goal now is to score as many points as possible in order to mitigate that impact. The team is playing serious catch up.

“It started off as a share sale that then transferred into an asset sale, for reasons that I don’t quite understand,” he said.

“Once that happened we needed a new entry into F1, and to gain a new entry in a short period of time takes a lot of work.

“Fortunately with the support of the FIA, FOM, and our fellow competitors, our colleagues within the community, we got it done. I’ve got to thank the teams for supporting us.”

It’s an interesting one…originally set for a share purchase but turned into an asset acquisition which changes the complexion in a massive way. My hunch is that if they investment group, led by Lawrence Stroll, were going to buy the shares, the assets and liabilities would have come with them but usually company purchases are handled with an asset acquisition leaving liabilities to original shareholders. This is a choppy situation and leaves some creditors in the wind so I am very curious as to if we will see Vijay Mallya still in the news in a few weeks/months over unpaid liabilities to suppliers.

Importantly, what liabilities were dodged by Stroll’s move as a asset acquisition that leaves the Indian banks and creditors to Mallya empty handed as they would have viewed the team as collateral? Interesting to see how this will play out over time.

There is also the issue of drivers and who will be retained for 2019 but also who might come on board in 2018. Lance Stroll has a contract at Williams but Claire hinted to potential changes saying:

“There are a lots of twists and turns in F1, aren’t there?” she said. “We’ve seen that over the past few weeks alone. We’ll have to wait and see what the future brings.

“It might be odd if Lawrence owns one team with his son in another, but hey, this is F1.

“At the moment, Lance is contracted to us, he is driving for us this weekend, and as soon as we have more information then we will share that.”

Sergio Perez says his future is secured but no word about Esteban Ocon and that’s interesting given he’s a Mercedes supported driver and the team is powered by Mercedes power units. If Lawrence Stroll wants his son in the seat, that may be an interesting and challenging conversation. Time will tell but interesting driver decisions have to be made. Ocon to Williams (also Mercedes-powered) and Stroll to Force India this season?

So no points, this year’s prize money, Perez and Ocon currently in the seats, Lance Stroll hinting that he might switch teams, Claire Williams saying anything is possible and the team’s name change to signify an asset acquisition, not a share purchase. It’s all very complex but time will tell as to whether Lawrence and team can juggle all the balls without dropping any of them.

Hat Tip: Autosport

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Tom Firth

Ok so are getting the prize money Force India previously got. It seems are getting the Column A payments from now on out as well and so the only loss will be some of their projected Column B performance money but that won’t hit until after 2019. Worked out alright then as far as the team itself is concerned.

Tom Firth

As for Williams, I’m sure if the right amount of cash finds itself into their coffers, Lance’s contract will suddenly be meaningless…

jtr

In addition to Claire’s comments, Lance Stroll was also cagey in his press conference yesterday and deflected a question about whether he’ll finish the season in the Williams. All signs are pointing to that move happening sooner rather than later. Lawrence didn’t buy the team because he likes Perez and Ocon, he bought it to get his son into a faster car. I don’t really see this team being the right place going forward for either of Ocon and Perez. Force India have been probably the most fun team in the midpack the last few years because of the intense… Read more »

TarheelPup

Coincidentally it seems Daddy’s Money/Forced Purchase Ra…I mean Racing Point/Force India Racing has just made a $70 million dollar offer to Williams to let Lance out of his contract. Just a coincidence I’m sure.

jtr

Seventy million?! Stroll isn’t worth nearly that much money. Williams is of course going to be happy to take the money, taking his dad’s money was half the point of keeping Lance around in the first place.

It’s a good thing Lawrence Stroll is a multi-billionaire, because he’s burning through cash FAST even by auto racing standards.

TarheelPup

Twas a joke based on the team suddenly finding an extra $70 million in it’s pocket.

Chuck C

They also mentioned during FP1 today that they do not get to reset the components pool, so I would bet that was part of the compromise: they can keep the money, but the lose this year’s point and they also will probably be taking lots of grid penalties.

MIE

As one of the Mercedes customer teams, they have used the lowest number of power unit elements coming into this race, and have fitted fresh units here. There are just about the least likely team to get any grid penalties (Williams being in the same position).