Williams for sale

[courageous]

News just come out that Williams are going to float on the stock exchange, although Sir Frank will retain a majority here is your chance to own your own F1 team!

[ECW Dan Selby]

This can't really be a positive can it? :/

Selby

[EGG]

Would this mean they'd need to publicly release an annual report of their activities/finances?

[Bonanza]

Correct me if I'm wrong, but weren't CART the last motor racing company to be on the stock exchange? I wonder how that turned out...

[davyboy]

Williams prospects must be more perilous than we imagined. I've just checked companies house and 'Williams Grand Prix Engineering Plc' was registered on 21.Dec.2010. I'm guessing the plan will be to float the company in order to raise short term cash, whch will be used to improve performance, then sell the team on to a Red Bull/Mercedes type outfit downstream.

High risk, small company floatations [like this one] need to have a significant upside downstream in order to have any chance of success.

[Casper]

I can't see where it is for sale, have you a link? What I have seen is it is being looked at and no decision has been made. Do you know more than Frank W?

Quoted from Autosport......

The Williams Formula 1 team is considering the radical step of a public flotation in a bid to secure the long-term financial health of the outfit, the British squad announced on Friday

Who in their right mind would buy shares in something that has no secure future and by that I mean they would have to guarantee me they has secured and long term entry contract with the promoters and not just a yearly one. Without that they have no future, unlike Mclaren who have diversified away from F1.

[E.B]

Originally Posted by Casper

..... Without that they have no future, unlike Mclaren who have diversified away from F1.

Williams Grand Prix Engineering is a hugely diverse operation, although not of the size as the McLaren Group activities.

Dont forget they have the Flybrid/Hybrid company ( Williams Hybrid Power )with which they have an ongoing agreement with Porsche, supplying all the hybrid aspect of the new Porsche Hybrid Road Racer (911 GT3 R), and WHP flywheel wins Powertrain Innovation of the Year at 2010 Professional Motorsport World Expo. The deal between WHP and Porsche has just been confirmed to be extended to include the new 918 Porsche Supercar.

New Energy Technology is to me a very valid area when looking to the future. They are more involved than any other F1 team is in house in the directions that the world rather than F1, is taking.

One of the projects they are deeply into is "demonstrating the potential of flywheel-based hybrid systems with the ability to deliver 30 per cent fuel savings (and equivalent reductions in CO2 emissions) at a cost of less than £1000, thus enabling the mass-market uptake of hybrid vehicles in price sensitive vehicle applications."

They also have the FIA F2 series, for which they designed and built all of the cars, and are responsible for ongoing work and development in F2. Historically of course they also built Le Mans winning cars for BMW and BTCC cars for Renault, so can turn to many other skills. They were also one of the first F1 teams to look to other specialist type industries that could utilise their own in house resources to manufacture components and prototype parts within the likes of the aero industry.

Of course they also have the Qatar Technology Centre and all that might involve. I know one such project they are involved in, is developing a larger version of the Williams MLC flywheel, one which is capable of storing more energy and handling greater power.

When I say more power we are talking transit system levels of power.... they are working on systems such as the braking of trains approaching stations wastes energy which can be captured and stored in the flywheel and used for future acceleration. Another aspect is the huge costs moving rail networks away from dependency on diesel power ie the cost of electrification particularly of remote or physically challenging areas such as tunnels and cuttings. Hybrid trains store sufficient energy on-board to self-propel through these sections. It is estimated that the future potential market for Williams MLC flywheel technology alone is in the order of US$ 250m in the next three years. Not bad for a division of a secondary business.

Recently SFW and PH sold a 10% stake in the Williams business to Toto Wolff, who I am sure with his multi faceted business interests will be able to provide other non F1 involved work.

Sorry about the long read, but my point is, far from 'Caspers' belief of Williams being F1 centric and thus worthless to an investor, Williams have for many years been working on diversifying their F1 core and bias into other areas.... I would suggest they are one of the more likely to survive.

They have a structure of businesses which seams to absorb small losses caused by a downturn of F1 fortunes. And certainly neither Patrick nor Sir Frank are ever going to be short of a quid family wise. They still seem to appear on the Wealthiest UK businessmen.

[Oldtony]

And just think EB the extra business they could have had if they hacn't taken the decision to be the ones to veto customer chasis in F1.
Or am I just a cynic?

[Eccles]

Whilst investing in anything like this is certainly risky, I can also appreciate the merits of investing in Williams. There is a great post above that enhances on this, but Willaims are well known for their engineering knowledge, rather than just being an F1 team. As long as you are investing in the whole business rather than just an F1 team, then this is certaining interesting.

I could certainly see a day when the F1 team is sold off for a nice amount of cash or just becomes a sub division of what could become a much bigger engineering/consulting organisation.

[E.B]

Originally Posted by Oldtony

And just think EB the extra business they could have had if they hacn't taken the decision to be the ones to veto customer chasis in F1.

I think we have shared that pov from when it was news OT. It was potentially tailor made for their strengths. Dont start me.....

Originally Posted by Oldtony

Or am I just a cynic?

A cynic? Not a rare breed around here thankfully.

[davyboy]

Originally Posted by Eccles

Whilst investing in anything like this is certainly risky, I can also appreciate the merits of investing in Williams. There is a great post above that enhances on this, but Willaims are well known for their engineering knowledge, rather than just being an F1 team. As long as you are investing in the whole business rather than just an F1 team, then this is certaining interesting.

I could certainly see a day when the F1 team is sold off for a nice amount of cash or just becomes a sub division of what could become a much bigger engineering/consulting organisation.

Their recent trading history has turned a small profit. Most of their turnover has been derived from sponsors and F1 TV money. With the departure of much of their advertising, they face a significant and immediate funding shortfall as their fixed cost base is high.

All of the points above are interesting, but they don't currently contribute a great deal to turnover. Its possible that they might in the future and maybe this will make up some of the 'upside' that will form the basis of the IPO.

If there alternative ways of raising finance available, then an IPO of an organization like Williams, in the current climate, would not be my first choice.

[chillibowl]

it would be cool if ownership shares are to be sold to the fans making a truly publicly owned team.
such a system is in place for the Green Bay Packers of the NFL however the league is not a fan of the arrangement. it effectively allows for the fans to put someone on the Board of Owners who has the interests of the fans at heart...clearly something most other owners are afraid of.

a few details on the arrangement here on wiki.

[Casper]

Ask yourself why this move is being considered. if the company had a healthy P&L result and this was likely to continue then why would they be seeking to put it on the market? I'll pass thanks, being a race fan does not equal throwing money down the drain.

You may think it is diversified but the it sounds to me like a lot of airy fairy stuff that might produce something in the future.

[Oldtony]

As an IPO Williams suffers from exactly the thing that the fans love about them.
The senior management are passionate, through and through racers. The are in the game to win races and they have demonstrated that they put winning races and champoinships above profitability.
I, cynicaly, mentioned earlier their decision to veto customer chasis. That was an area where they had demonstrated strengths to grab a significant part of a market opportunity and make money. The decision to veto was apparently made because SFW and PH decided it would make it harder for them to win champioships. Profit opportunity dumped for championship maybe!
A number of the driver and engine manufacturer decisions That SFW and PH have made over the years have reflected the same sort of gut feeling approach that by making the decisions they did, that they might achieve a championship advantage.
Great racers no doubt, but I'm sure in terms of an IPO there are Indian software firms or South American rare earth miners that have management more attuned to achieving the potential financial upside of their proposals that the dedicated racers at Williams.
Long may they race, but as an investment you would need to change the attitude of the current principals.

[Greem]

Funny you should mention South African rare earth miners, given that Adam Parr was a employee of Barclays de Zoete Wedd, followed by Rio Tinto. OK, so only one is a mining company, but the other is South African!

I'd say that the IPO is being driven by Parr rather than SFW or PH. He's got a pretty serious head for business and high finance, so I don't think this issue is as shaky as you might think.

[Paradise City]

Joe Saward seems to have thought it out and thinks its a bad idea. Basically he says that F1 teams are not great profit-making enterprises, that the profits that are made are eaten up in the quest to stay at the front and therefore there is little incentive for potential investors to invest in the organisation. He makes his case by putting forward the example of soccer teams that have followed this path. CART did this as well extraordinarily.

http://joesaward.wordpress.com/2011/...-racing-teams/

[davyboy]

Originally Posted by Greem

I'd say that the IPO is being driven by Parr rather than SFW or PH. He's got a pretty serious head for business and high finance, so I don't think this issue is as shaky as you might think.

I disagree. I've been personally involved in a number of flotations and as IPOs go, this one is seriously shakey !

[wnut]

Williams pretty well summed up my feelings of Williams as an Engineering Company when he said, "money is the basis of success" and "the Financial Times is my bible" and followed it up with Mr. Ecclestone was the first to understand the commercial potential of F1 and give team owners the ability to make money out of the sport.

Also attributed the success of F1 to its vast free to air TV coverage. Which I reckon is the only reason for its success, heaven knows its not the racing.

All looks like take the money and run.

Last win 2007 last podium 2008 apparently.
Source: Autosport.com

[Teretonga]

Well for a start Williams is not for sale... In effect Mr Head's shares are for sale, the control will remain firmly with SFW and his partner Mr Wolf has a handy share. Sir frank would need a very successful season and even that will not guarantee a dividend unl;ess it translates into big sponsorship opportunities and a considerable excess of income over expenditure....

Thats the way F1 works. What you would be

buying is a speculative share in a business that may, if extremely successful and well managed, may be able to spin off a number of successful associated engineering busnesses that will enalrge the financial base of the group to the point where it results in a considerable increase in the share price....

Plus the ego trip of being able to say you are part owner of a F1 team...

[E.B]

Originally Posted by Teretonga

Well for a start Williams is not for sale... In effect Mr Head's shares are for sale, the control will remain firmly with SFW and his partner Mr Wolf has a handy share.

Actually not quite right as the reports I have read, including an interview with Patrick Head, which suggest SFW has also sold some of his shares. The reason for most of the shares to be sold being Patrick's is their (PH & SFW) need for one of the founder partners to remain mathematically the major shareholder in the overall business. Originally when established many moons ago, I think SFW held 67%, with PH the balance. Then more recently Toto Wolff came in and took a percentage from each of them. Im not sure how they managed that split, and I do vaguely recall SFW making a redress to PH of some of his own major share of the business to represent more fairly the fact that without PH's technical skills none of the teams successes would have happened.

Whatever the recent months have done for the PH / SFW split of shares prior to the float (ie at this moment) they are at 56.7% for SFW and 23.5% for Patrick. That is just over 80% combined shareholding for SFW and PH...... This suggests (unless there is any shareholding by other entities or family trusts) a 20% share is owned by Toto Wolf.

However after the float, which will offer something just over a further 25% of the companies shares on the market, SFW will retain 50. something %(50.3% rings a bell) of the business and Patrick will hold 5.8%. So in approximate terms, Patrick is providing about 75% of the issue and Frank 25%.

I think the funds generated from the sale are going personally to PH and SFW as they (particularly Patrick) move closer to retirement or less involvement day to day with the F1 side of the business.

[Matador]

Originally Posted by E.B

Actually not quite right as the reports I have read, including an interview with Patrick Head, which suggest SFW has also sold some of his shares. The reason for most of the shares to be sold being Patrick's is their (PH & SFW) need for one of the founder partners to remain mathematically the major shareholder in the overall business. Originally when established many moons ago, I think SFW held 67%, with PH the balance. Then more recently Toto Wolff came in and took a percentage from each of them. Im not sure how they managed that split, and I do vaguely recall SFW making a redress to PH of some of his own major share of the business to represent more fairly the fact that without PH's technical skills none of the teams successes would have happened.

Whatever the recent months have done for the PH / SFW split of shares prior to the float (ie at this moment) they are at 56.7% for SFW and 23.5% for Patrick. That is just over 80% combined shareholding for SFW and PH...... This suggests (unless there is any shareholding by other entities or family trusts) a 20% share is owned by Toto Wolf.

However after the float, which will offer something just over a further 25% of the companies shares on the market, SFW will retain 50. something %(50.3% rings a bell) of the business and Patrick will hold 5.8%. So in approximate terms, Patrick is providing about 75% of the issue and Frank 25%.

I think the funds generated from the sale are going personally to PH and SFW as they (particularly Patrick) move closer to retirement or less involvement day to day with the F1 side of the business.

Cheers for that info mate.

[Teretonga]

Originally Posted by E.B

Actually not quite right as the reports I have read, including an interview with Patrick Head, which suggest SFW has also sold some of his shares. The reason for most of the shares to be sold being Patrick's is their (PH & SFW) need for one of the founder partners to remain mathematically the major shareholder in the overall business. Originally when established many moons ago, I think SFW held 67%, with PH the balance. Then more recently Toto Wolff came in and took a percentage from each of them. Im not sure how they managed that split, and I do vaguely recall SFW making a redress to PH of some of his own major share of the business to represent more fairly the fact that without PH's technical skills none of the teams successes would have happened.

Whatever the recent months have done for the PH / SFW split of shares prior to the float (ie at this moment) they are at 56.7% for SFW and 23.5% for Patrick. That is just over 80% combined shareholding for SFW and PH...... This suggests (unless there is any shareholding by other entities or family trusts) a 20% share is owned by Toto Wolf.

However after the float, which will offer something just over a further 25% of the companies shares on the market, SFW will retain 50. something %(50.3% rings a bell) of the business and Patrick will hold 5.8%. So in approximate terms, Patrick is providing about 75% of the issue and Frank 25%.

I think the funds generated from the sale are going personally to PH and SFW as they (particularly Patrick) move closer to retirement or less involvement day to day with the F1 side of the business.

After the float Sir Frank will still retain 50.3% of the shares meaning he is still firmly in control of the organisation. I never said he was not selling any, I simply said he would remain in control with a majority shareholding. see Joe Sawards blog for the actual details.

[strider]

Here's the latest on the subject from Joe Saward. The punchline is at the end where he says Patrick Head will retire at some time in the course of 2011. I don't see that as good news.

[wnut]

Originally Posted by strider

Here's the latest on the subject from Joe Saward. The punchline is at the end where he says Patrick Head will retire at some time in the course of 2011. I don't see that as good news.

Not to worry, they said the loss of Adrian Newey wouldn't affect them and it didn't!

[nobster]

Well at least they are showing great pace today in quali runs at Jerez testing, the first car to dip under the 1.20's this week. Maybe they have a good car after all this year, that would not be bad for the shares.