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Old 23 May 2020, 23:36 (Ref:3977970)   #16
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Really this is a time for F1 to consider cutting costs. The last thing we need is for any team to pull out. And to lose a name like McLaren would not be great either.

I have a lot of faith in Zac Brown, but some things are even beyond his control. I wouldn’t be surprised to see at least a partial buying out of the team come the end of the season.
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Old 24 May 2020, 07:53 (Ref:3978008)   #17
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If what V8 Fireworks says above is true, it's not the F1 team as much as the car maker that's the problem.

But yes, your comment ties in with mine. Spending the cost of a couple of hospitals every year just so 2 lucky guys can race around the world is madness. It cannot be sustained, and soon "the public" will see through it.

The problem is, as I hinted on another thread, that scaling back the teams will cause massive unemployment in the F1 engineering market and there are precious few jobs in the real world for them to go to thanks to C19. Cutting costs are never simple.

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Old 24 May 2020, 11:37 (Ref:3978043)   #18
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If what V8 Fireworks says above is true, it's not the F1 team as much as the car maker that's the problem.

But yes, your comment ties in with mine. Spending the cost of a couple of hospitals every year just so 2 lucky guys can race around the world is madness. It cannot be sustained, and soon "the public" will see through it.

The problem is, as I hinted on another thread, that scaling back the teams will cause massive unemployment in the F1 engineering market and there are precious few jobs in the real world for them to go to thanks to C19. Cutting costs are never simple.

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By professional sport standards the drivers don't get large renumeration at all. Try football, baseball etc, those guys do get paid many times what a driver gets.
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Old 24 May 2020, 11:41 (Ref:3978047)   #19
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They still get paid quite a bit, they get enough to be set for life pretty much. Although as you say, if you compare it to say football where transfer money just seems to keep rising every few seasons, it’s not quite as bad
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Old 24 May 2020, 14:26 (Ref:3978074)   #20
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By professional sport standards the drivers don't get large renumeration at all. Try football, baseball etc, those guys do get paid many times what a driver gets.
I didn't mention the drivers in the context of ££ at all. Just running a factory of 1000 people is eye-wateringly expensive. Add in the "expense no object" ethos of engineering, the world travel with all that kit, and you've got a medium-sized hospital before you even hit the track. Every year. Just to earn your place in the club.
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Old 25 May 2020, 13:12 (Ref:3978209)   #21
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I'm sure others can correct me on this, but I have long (mis?) understood the role of a director of a company in which the public have shares is to protect shareholder value above all else - in UK law, at least. This drives the companies towards dividends and bonus culture rather than storing cash, which ultimately weakens them in moments of stress.

(Apple notwithstanding, of course)

Same in the U.S. It's a standard principal/agent problem but the director is there to see to the best interests of the shareholders, be they large and/or smaller shareholders. This is, imo, the law of unintended consequences of linking executive bonus structure to stock performance. Executives are often (not all btw, but many) concerned with improving stock performance without actually improving company performance. Share buybacks are one such result.
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Old 25 May 2020, 13:16 (Ref:3978211)   #22
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If what V8 Fireworks says above is true, it's not the F1 team as much as the car maker that's the problem.

But yes, your comment ties in with mine. Spending the cost of a couple of hospitals every year just so 2 lucky guys can race around the world is madness. It cannot be sustained, and soon "the public" will see through it.

The problem is, as I hinted on another thread, that scaling back the teams will cause massive unemployment in the F1 engineering market and there are precious few jobs in the real world for them to go to thanks to C19. Cutting costs are never simple.

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I should clarify, the funding issue above is specifically related to McLaren the auto manufacturer, not the F1 team. I'm certain somehow they are considered separate entities though it appears the F1 team has already pledged assets. This makes me think that one or the other (F1 team or Auto Manufacturer) is a special interest entity with separate and segregate assets which have been pledged to fund their operations and, one would expect, their return.
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Old 25 May 2020, 13:22 (Ref:3978212)   #23
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If the F1 team were to be in peril from the financial woes besetting the road car division it would not surprise me to see Zac Brown involved in a management take over. I see him as the same type of person as Toto Wolfe in that regard.
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Old 25 May 2020, 13:39 (Ref:3978213)   #24
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All of this shouldn't come as much of a surprise, and is possibly/probably the reasoning behind Ron Dennis' falling out with his very long time partners when he initiated a potential sale of the holding company which the partners rejected.
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Old 25 May 2020, 23:39 (Ref:3978307)   #25
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JayEmm on cars again: https://www.youtube.com/watch?v=k0uUqUXaPJ4

Skip to 32 mins in, sums up what the problems are.

In essence they don't know whether they are a volume car maker or an exclusive car maker, their quality control sucks, they have apparently guaranteed high residual market values that make owning the cars relatively affordable, then discounting the cars heavily to sell them thus ruining the high residual projections. How to guarantee a buyer never buys a second McLaren.

I am not clear whether the high residual guarantee to the finance houses generates a further liability to McLaren or if it only nests with the buyer?
If McLaren have guaranteed the residual values with the finance companies, then there is a large liability that McLaren will have to pay out on the cars it has sold.
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Old 26 May 2020, 11:49 (Ref:3978381)   #26
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McLaren cuts 1,200 jobs..

https://www.racefans.net/2020/05/26/...uding-f1-team/
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Old 26 May 2020, 13:18 (Ref:3978406)   #27
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I am not clear whether the high residual guarantee to the finance houses generates a further liability to McLaren or if it only nests with the buyer?
If McLaren have guaranteed the residual values with the finance companies, then there is a large liability that McLaren will have to pay out on the cars it has sold.
My take from that same video is that McLaren is on the hook for any delta on residual guarantee.

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Ouch. Based upon that article that is over 1/4 of their entire workforce. It is now clear why McLaren was at the front of trying to continue to push the cost cap even lower.

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Old 26 May 2020, 13:40 (Ref:3978419)   #28
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Ouch. Based upon that article that is over 1/4 of their entire workforce. It is now clear why McLaren was at the front of trying to continue to push the cost cap even lower.

Richard

The BBC are reporting that only about 70 of the 1200 to lose their jobs will be from the F1 team. However, further job losses from the team are expected next year following the FIA mandated budget cuts. Something that will also be replicated by some/many of the other teams.
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Old 26 May 2020, 14:06 (Ref:3978426)   #29
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The BBC are reporting that only about 70 of the 1200 to lose their jobs will be from the F1 team. However, further job losses from the team are expected next year following the FIA mandated budget cuts. Something that will also be replicated by some/many of the other teams.
Article above says same. I was thinking mostly about McLaren as a whole. Using the numbers above (4000 vs. 1200) that is 30%, but other sources are reporting 25% cut. Given it sounds like the 4K number is approximate and the 1200 is probably more accurate, I assume total employed is roughly 4800? Not sure where the discrepancy is when reported by different news agencies (total number or percentage cut).

Regardless, 25% or 30% that is a huge cut. Also, while they break out F1, I think McLaren group is three components. F1, Automotive and Electronics (McLaren Applied make the standard ECU for example)

The F1 side took a smaller percentage hit, so the remainder took a larger hit. I can imagine the Automotive side going bankrupt? With debtors being owners looking for their adjustment via residual guarantee? Would McLaren Automotive have had some type of insurance policy to cover a shortage on the residual or did they carry that risk fully?

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Old 26 May 2020, 14:10 (Ref:3978428)   #30
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The BBC are reporting that only about 70 of the 1200 to lose their jobs will be from the F1 team. However, further job losses from the team are expected next year following the FIA mandated budget cuts. Something that will also be replicated by some/many of the other teams.
last time there were mass redundancies (the collapse of the 3 new teams) it had a knock on effect on other motorsport. not through more redundancies but suddenly it became difficult for up and coming staff to get work because ~f1 staff were around. imagine formula e might absorb some of the losses from the motorsport side, particularly if they're on the design side rather than the track side.

in f1 terms the 3 smaller teams going under was the kickstarter for several of the big teams to do "we'll have them so nobody else will" recruitment.
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