Williams F1 reveal £42.5million loss for 2014

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Williams F1 released their 2014 annual report in which the F1 team showed a £42.5million loss and the entire group recognizing a £34.3million loss. That’s a big number but we have to keep in mind that the success of the 2014 season in prize money hasn’t hit the balance sheet yet and the team are upbeat about the coming payday as well as new sponsors for 2015 which will shore up the balance sheet.

Mike O’Driscoll, Group Chief Executive Officer, said;

“The decision to invest in the team has been more than validated, with a third place finish in the 2014 Constructors’ Championship, up from ninth in 2013. Mid-way through 2013 we set out on an ambitious turnaround strategy to reinvigorate the Formula One team, create a strong and profitable Advanced Engineering business, and divest non-core activities. In 2014 we made very good progress against those objectives, investing significantly in people, facilities, and technology which we believe will provide a solid foundation for the future.

“The financial performance of the Group in 2014 reflected the poor on-track results of the prior three years, which resulted in a marked deterioration in commercial rights and sponsorship income. Last year was also adversely impacted by the costs of relocating our Advanced Engineering activities. Our much improved performance in the 2014 Championship will be seen in higher commercial rights and sponsorship income in 2015, coupled with improved performance from our Advanced Engineering division. Our ambition in 2015 is to consolidate the progress we made last year, continue building the necessary foundations for future sporting and commercial success, and consequently to materially improve our financial results for the coming years.”

There is no doubt that the moves made with their Advanced Engineering group was contributory to the expense structure and the hiring of new personnel added to the payroll expense but I wonder just how much of the loss could be attributed to the new Mercedes hybrid engine supply contract as we know that the smaller teams were paying upwards of $30 million for the supply. I don’t recall Williams announcing a big influx of cash that would have offset their new engine supply contract which could be double or triple the cost of the year prior.

Certainly the poor performance in 2013 and lack of prize money doesn’t help but they had that in 2013’s financials as well. They did take a on-time write down of a sponsor investment and showed that in 2013’s numbers but I suspect the new engine supply plays a large role in the loss. I may be wrong but it’s a hunch I have given the impact we’ve seen in other teams.

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Negative Camber

Not to state the obvious but if a large part of this is due to a new engine supply contract for $20-30 million, then in Williams F1’s case, they supply expense may have paid off as they built a great car to take advantage of that engine and will reclaim the expense in prize money earning which are seriously increased due to their 2014 finishing position. I suspect their 2015 results will be much different.

MIE

Is the Mercedes that much more expensive than the Renault?
I would have thought that the big difference was the loss of Maldonado’s sponsorship, while only having the prize money from 2013. As you say, the results for this year should be much improved from a financial point of view (increased sponsors and much better results in 2014).

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