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Possible Indycar fallout from McLaren Financial Peril?

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  • Possible Indycar fallout from McLaren Financial Peril?

    Something we might want to keep an eye on: https://www.motorsport.com/f1/news/m...-team/4810618/


    "Whilst the Group has sufficient liquidity to meet its obligations as and when they fall due in the very short term, further liquidity is required to be made available by no later than 17 July 2020," and that "additional liquidity of approximately £280 million would be sufficient for the Group to be able to support its operations into 2021."
    The term "liquidity" in this case roughly translates to "Cash". As in, if they aren't able to get loans by July 17, they will not be able to pay their bills.

    The article describes in some detail what is going on, but this is my quick summation
    1. McLaren will run out of money July 17. And if they don't obtain loans by then, McLaren will be insolvent.
    2. The most valuable assets they could use as collateral are McLaren Group Property and the Heritage Car collection.
    3. They have already borrowed money using those as collateral (Security in English).
    4. The present Lenders do not want McLaren to borrow more against the same assets, likely because they are worried about McLaren paying back the existing loans.
    5. McLaren has proposed a new plan to use those assets to get fresh cash. But the existing Lenders have not agreed to the plan.
    6. McLaren is asking a court to order the lenders to go along with the new plan.
    The questions with implications for Indycar are:
    1. Does McLaren owe SPAM any money? Or did they pay upfront?
    2. What happens to SPAM if McLaren goes into Administration (English term for Bankruptcy)?
    3. How committed is Arrow to McLaren and SPAM?
    If things don't work themselves out, it is possible both teams could fold suddenly.

  • #2
    I don't think there was much "cash" that changed hands between the two. McLaren does not own any percentage of the SPM team. I'd imagine worse comes to worse, Arrow SPM will simply return.
    "If your car was a dog, then you had to figure it out and test your own limits. And we didn't go to a wind tunnel – we did it in the first turn at Indianapolis."

    Comment


    • #3
      Originally posted by Bullwinkle View Post
      [*]What happens to SPAM if McLaren goes into Administration (English term for Bankruptcy)?
      It has been said multiple times that Sam and Ric are the only owners of the IndyCar team.
      McLaren is a technical partner, no idea on if that includes money or just brains.

      Comment


      • #4
        Originally posted by Grizzlor View Post
        I don't think there was much "cash" that changed hands between the two. McLaren does not own any percentage of the SPM team. I'd imagine worse comes to worse, Arrow SPM will simply return.
        Yep, it seemed more like a sponsorship deal than an ownership stake. That being said, it shows how perilous the finances of Mclaren are that this isn't the first go around where they attempt to secure capital to save the company.

        Comment


        • #5
          Originally posted by Bullwinkle View Post
          Something we might want to keep an eye on: https://www.motorsport.com/f1/news/m...-team/4810618/




          The term "liquidity" in this case roughly translates to "Cash". As in, if they aren't able to get loans by July 17, they will not be able to pay their bills.

          The article describes in some detail what is going on, but this is my quick summation
          1. McLaren will run out of money July 17. And if they don't obtain loans by then, McLaren will be insolvent.
          2. The most valuable assets they could use as collateral are McLaren Group Property and the Heritage Car collection.
          3. They have already borrowed money using those as collateral (Security in English).
          4. The present Lenders do not want McLaren to borrow more against the same assets, likely because they are worried about McLaren paying back the existing loans.
          5. McLaren has proposed a new plan to use those assets to get fresh cash. But the existing Lenders have not agreed to the plan.
          6. McLaren is asking a court to order the lenders to go along with the new plan.
          The questions with implications for Indycar are:
          1. Does McLaren owe SPAM any money? Or did they pay upfront?
          2. What happens to SPAM if McLaren goes into Administration (English term for Bankruptcy)?
          3. How committed is Arrow to McLaren and SPAM?
          If things don't work themselves out, it is possible both teams could fold suddenly.
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          Comment


          • #6
            Originally posted by LAindycarfan80 View Post

            Yep, it seemed more like a sponsorship deal than an ownership stake. That being said, it shows how perilous the finances of Mclaren are that this isn't the first go around where they attempt to secure capital to save the company.
            To my knowledge Arrow remains the primary payer of bills, though there are other associates on the cars which came via McLaren. As has been said before, the IndyCar expenditure is literally peanuts compared to what they spend in F1. The bigger question is why hasn't FIA or Formula One lifted a finger? I'm sure McLaren are not the only team of theirs in peril.
            "If your car was a dog, then you had to figure it out and test your own limits. And we didn't go to a wind tunnel – we did it in the first turn at Indianapolis."

            Comment


            • #7
              Originally posted by dwaldrep51 View Post

              It has been said multiple times that Sam and Ric are the only owners of the IndyCar team.
              McLaren is a technical partner, no idea on if that includes money or just brains.
              Ownership is different from having the ability financially to run the team. In return for they name and branding on the team, McLaren was kicking in something significant in the way of money. if they can't pay come July 17, one would think there would be consequences, even if that is only "re-painting" the cars. No one wants to lose a backer, and by all accounts, McLaren was that for SPAM.

              It could be losing an entry.

              Comment


              • #8
                Originally posted by Grizzlor View Post

                To my knowledge Arrow remains the primary payer of bills, though there are other associates on the cars which came via McLaren. As has been said before, the IndyCar expenditure is literally peanuts compared to what they spend in F1. The bigger question is why hasn't FIA or Formula One lifted a finger? I'm sure McLaren are not the only team of theirs in peril.
                1. The FIA is not in the business of subsidizing anything.
                2. Formula 1 might be, but is Discovery Communications in good enough shape to pick up two, and possibly three teams? They are already running some races for free. Keeping F1 teams afloat is a big ask.
                As long as you mention Arrow: They are a diversified electronics manufacturer, and I am sure they are managing their cash tightly to get through the next year or so.

                Comment


                • #9
                  Do Indycar engines still use McLaren ECM units?

                  https://www.mclaren.com/group/case-s...control-units/
                  "You can't arrest those guys, they're folk heroes"
                  "They're criminals"
                  "Well most folk heroes started out as criminals"

                  Comment


                  • #10
                    Originally posted by Z28 View Post
                    Do Indycar engines still use McLaren ECM units?

                    https://www.mclaren.com/group/case-s...control-units/
                    Yes. "McLaren Applied Limited" or whatever it's called today is a separate subsidiary from the race team and the automotive subsidiaries.
                    NASCAR uses the same ECU

                    Comment


                    • #11
                      Originally posted by dwaldrep51 View Post

                      Yes. "McLaren Applied Limited" or whatever it's called today is a separate subsidiary from the race team and the automotive subsidiaries.
                      NASCAR uses the same ECU
                      These units helped put Rossi, Rahal and Hunter-Reay out of contention at Texas,

                      Comment


                      • #12
                        Originally posted by Bullwinkle View Post
                        1. The FIA is not in the business of subsidizing anything.
                        2. Formula 1 might be, but is Discovery Communications in good enough shape to pick up two, and possibly three teams? They are already running some races for free. Keeping F1 teams afloat is a big ask.
                        As long as you mention Arrow: They are a diversified electronics manufacturer, and I am sure they are managing their cash tightly to get through the next year or so.
                        Not to mention FIA doesn't run the commercial side of things. In order to change the business model of how much a slice of the pie the teams get, they would have to come to an agreement for the next Concorde agreement. The teams would have to take up their negotiations with the FOM, which is currently majority held by Liberty Media.

                        Comment


                        • #13
                          Originally posted by Bullwinkle View Post

                          These units helped put Rossi, Rahal and Hunter-Reay out of contention at Texas,
                          The ECUs were reset in time to make the start. I'd opine it was the IndyCar rules that put them out of contention.
                          And I think IndyCar will change/adapt the rule for the next race.
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                          Comment


                          • #14
                            Originally posted by Bullwinkle View Post

                            Ownership is different from having the ability financially to run the team. In return for they name and branding on the team, McLaren was kicking in something significant in the way of money. if they can't pay come July 17, one would think there would be consequences, even if that is only "re-painting" the cars. No one wants to lose a backer, and by all accounts, McLaren was that for SPAM.

                            It could be losing an entry.
                            Concur. And, ownership, sponsorship or 'technical partner' doesn't matter....McLaren brought $$ to SPM. McLaren's financial problems become SPM's financial problems.
                            BAN SHREDDED CHEESE! MAKE AMERICA GRATE AGAIN!

                            Comment


                            • #15
                              Originally posted by Grizzlor View Post

                              the IndyCar expenditure is literally peanuts compared to what they spend in F1. .
                              Figuratively peanuts.

                              Comment

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