Formula 1 – like the rest of the world – currently finds itself on lockdown as a result of the COVID-19 global pandemic, and it’s proving to be a perilous time for the sport and those involved.
F1, unsurprisingly, relies on races being held to generate TV, gate and advertising/sponsorship revenue. No races, no income (or very little at least). It’s a simple as that.
Sadly, though, there are still costs involved. Suppliers and creditors still need to be paid, as do staff, and where these aren’t covered by government grants or insurance, organisations find themselves having to dig deep in order to cover these costs.
Big teams like Mercedes, Red Bull and Ferrari (FIAT) have deep pockets and their funding streams are less reliant on races taking place.
But for constructors like Williams and McLaren it’s a different story. These guys have already furloughed staff to help see them through the inactivity to a place where they’re fit to resume racing when it happens.
But clearly that’s not enough, and both Williams and McLaren have leant on their rich heritage in order to secure extra funding.
In April it was announced that Williams Racing had secured a $50m loan from Latrus, a company owned by Michael Latifi – father of current Williams driver Nicholas – secured using the team’s collection of heritage racing cars.
And today it has been announced that McLaren are doing likewise, mortgaging their Woking HQ and their collection of historic cars in order to raise the cash they need to see them through the lockdown.
McLaren had a request for a £150m loan from the UK government’s Department for Business, Energy and Industrial Strategy in April denied.
Unlike Williams, McLaren also have a road car division that is also being hit by the inactivity in the sales market, and so the amount they’re likely to have to borrow could dwarf that needed by Williams.
It’s not the first time that McLaren have leveraged cars against a loan agreement – as recently as 2017 they were used to secure the funding to buy out Ron Dennis after he and the team parted company.
That loan was paid back successfully and the ownership of the cars was returned to the team. It would be tragic if the outcome were different for either Williams or McLaren this time round.