McLaren has no plans for flotation following Williams - Formula 1 update
Andy Myers, the chief financial officer for McLaren has announced, "The McLaren group has no plans to float in the future." The statement was made to end the speculations that the Formula One team would be following its British adversary Williams to the
stock market.
Bahrain's Mumtalakat sovereign wealth fund owns half the stock shares in McLaren with the rest being held by Ron Dennis, its chairman and Mansour Ojjeh, a Saudi tycoon. In 2009 they acquired out former 40% shareholder Mercedes with no incentive of listing
the business.
Williams, the Oxfordshire based group plans to list 27% of its shares on the Frankfurt Stock exchange on March 2nd, 2011. The majority of the shares offered belong to Patrick Head, who is anticipated to be retiring this year.
Williams have reduced the flotation share price from the previous range of €24-€29 to between €25 and €27 (£23) a share, ahead of pricing on March 1st. The price is reduced due to the cancellation of the season opening race as turmoil continues
in Bahrain.
McLaren enjoys the freedom of private ownership without having to worry about answering any shareholders. The company considers it as crucial in the fast changing world.
Talking to the media, Myers explained that their strategy "is to remain as a private company in the ownership of a small number of focused shareholders, since we believe that best suits our business model". The strategy has maneuvered more championships
for McLaren's drivers than any other team except Ferrari.
McLaren has charmed the interest of a string of blue chip sponsors to the team which are believed to be paying about £47m ($75m) annually. The sponsors include Hilton, Hugo Boss, Exxon Mobil and the title partner Vodafone. Comparing it to Williams, McLaren
earns double the amount through sponsors.
McLaren’s revenue is not only fuelled by sponsorship income but also the prize money left it with an after-tax profit 10 times higher than Williams' net result in 2009. McLaren was in the third place with Williams four places behind, the key difference being
caused by the costs involved.
McLaren had a 30% higher expenditure on its F1 campaign. This may decipher into improved results on track but that is no warranty that investors will profit.
Sir Frank Williams, the team principal for Williams seems to be ambitious after the launch of the new FW33 livery that it would help to take them closer to the upper ranks.
A senior consultant of Sports Business Group, Martyn Hawkins commented, "Attracting appropriately skilled performers to allow teams to hit on-track performance targets can be a costly business. It was the cost pressure on player wages and transfer fees –
combined with ineffectual cost control – that was one of the main factors that prevented the majority of football club stock market flotation from being successful".
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