No rants or discussions this time. While responding to a comment in the daily thread, I ended up going down the rabbit hole of looking into how Lawrence Stroll secured the Aston Martin investment, and connected some of the dots. Thought I’d put my bcomm to good use and share some of findings in a standalone post, in case anyone is curious about the financial/business side of F1 drama. Most of this stuff is fairly obvious, but I think it’s cool nonetheless.
If it wasn’t obvious yet, Stroll is a massive car and racing enthusiast. As a billionaire with nothing left to prove, the idea of owning an F1 team was probably too sweet to pass up. Added bonus is giving his son a better seat. He leads a group of investors which create Racing Point UK, which takes over ownership of FI.
So now he owns RP, which owns the F1 team. Much like Kimi, he decides to make running an F1 team his hobby. And step 1 is securing a great title sponsor.
He talks to Aston back in January, tries to get them to be a title sponsor but they don’t want to play ball. Aston as a company is in a bit of a pickle. They’re leveraged out the ass, have declining sales and even posted a ~$100mil loss last year.
This is where the gears in Strolls head start turning, and he comes up with a very clever plan. He proposes to make a ~$500mil investment into Aston, buying up 16.7% of the company in exchange for their commitment to be a title sponsor. Terms of this aren’t disclosed, but I suspect it was a sizable sum and a long term deal.
Through this investment, He provides AM with a much needed shot of liquidity to help them survive, while simultaneously investing in that company, which is just about to get huge marketing exposure from being back in F1 as a mere title sponsor. From the article-
In a statement, Aston Martin said that this [deal] will “strengthen its balance sheet to necessarily and immediately improve liquidity and reduce leverage.”
Then Corona happens, which hits the already struggling Aston even more, perhaps even threatening Strolls initial investment of going bust. Aston might have even tried to pull out of the title sponsorship depending on what clauses they had in the agreement, but this is pure speculation.
What does big wallet, big balls papa Stroll do? He doubles down, increases his [group of investors’] Aston ownership stake from 16.7% to ~25% in exchange for a future commitment on Aston’s part to invest ~$200 mil into the team over the next 4 years. And he did this without losing ownership control of his F1 team.
This is fucking genius by Stroll. On one side of the equation, Aston gets yet another massive injection of badly needed liquidity due to them having almost a billion of debt which needs to be serviced. Aston gets to enter F1 as a full fledged team without paying much, if at anything at all upfront (remember how the $200 mil is due to RP sometime over the next 4 years). All of this helps AM tremendously as a company.
The other side of the equation is the fact that everything that benefits Aston, benefits Stroll. His investment, paired with his appointment as a chairman at Aston, paired with AM’s better financial position, paired with the marketing exposure from returning to F1, paired with the fact that RP’s cars look to be challenging for podiums, if not wins, all of this points to Stroll’s investment having a great chance to have a massive payoff. Not only his Aston investment mind you, at this rate RP itself might have made Stroll money, (or will very very soon). Stroll might be the first person in the history of F1 to end up making a profit as a team owner.
TL;DR-Stroll saved an F1 team from folding, possibly saved Aston from folding, secured a massive investment from Aston, broke ground on a new factory, positioned the team perfectly for future success, got his son a top seat, all while setting himself up to make heaps of money in the near future.
Oh and they’re looking like they’re going to sign Vettel.
If that isn’t absolutely baller, I don’t know what is.
Well done Lawrence.