FINANCIAL

Formula 1's franchise system

Formula 1 has become a "franchise" sport. Following Toyota's decision to pay a $48m deposit to become the sport's 12 team in 2002, anyone wanting to become involved has to buy an existing F1 organization.

The reason that people want to buy a team is that successful Formula 1 teams can make a lot of money thanks to the provisions of the Concorde Agreement and the huge amounts of money Bernie Ecclestone has been able to generate from the sale of Fe's TV rights.

Formula One Holdings earned around $330m last year from sale of TV revenues. The teams receive 48% of this. That means that between them they took around $158m last year. The division of that money is not made equally, but it is fair to say that a middle-ranking F1 team in 2000 can be guaranteed to earn around $15m a year from TV income.

In exchange for the money the teams have committed to sending two cars to every Grand Prix in the course of the next 10 years. This means that Ecclestone has a guaranteed package that he can sell to the TV companies. Ecclestone does not own the commercial rights to Formula 1 but he has a 15 year deal with the FIA for which he pays the governing body an annual fee of $10m. This is not much but when he eventually decides to float Formula One Holdings on the Stock Exchange the international automobile federation will get 10% of the company - and that would be worth hundreds of millions of dollars.

Having paid the teams and the FIA, Ecclestone gets the rest of the money and further revenues from the sale of other promotional rights in the sport. He has to pay for the vast digital television facility which goes from race to race but he is still able to make annual profits of around $270m. Such profit margins have attracted interest in the financial world and this enabled him to sell 12.5% of the company to Morgan Grenfell Private Equity Ltd for $325m last autumn. A few weeks ago he sold another 37.5% to San Francisco investment company Hellman & Friedman for just over $1bn.

In addition Bernie had raised a bond issue (which is in effect a loan) for $1.4bn. This has been secured the future revenues generated by the business. In short Ecclestone has collected $2.7bn in the last 12 months and remains in control of his empire. He says he intends to go on running the sport for another 15 years, looking for ways to add value to the company. There are obvious possibilities in merchandising and with the Internet. There is also the strong possibility that Ecclestone will buy Paddy McNally's Allsport Management, the company which looks after the sale of the circuit signage at each Grand Prix and the VIP Paddock Club operations. Allsport has a turnover of around $160m a year and has a high profit margin. Ecclestone would have to pay McNally around $500m for Allsport but such a deal would greatly increase the value of FOH, particularly as McNally is currently working on the development of an official supplier program for the sport, which is potentially another huge money-making scheme.

The economics and the legally-established stability of the Concorde Agreement have suddenly turned Grand Prix racing into a promising investment opportunity. With careful financial management, a moderately-successful F1 team can now be guaranteed to make a sizable profit every year for the duration of the Concorde Agreement and if TV income continues to rise that could mean more than $200m worth of income - just for being there. In addition F1 teams have enormous merchandising potential which has yet to be exploited and at the end of the contract the owners of a team will still have a very valuable asset to sell. The Benetton company long ago realized that it was better value to own a team rather than be a long-term sponsor. Austrian drinks company Red Bull followed suit in 1994 when it bought a majority shareholding in the Sauber team and in 1997 British American Tobacco decided to buy the Tyrrell team - paying $30m for the back-of-the grid operation. Recently the Spanish telecommunications company Telefonica has purchased Minardi for around $50m.

The car companies have also realized that they can reduce their investment in F1 if they become owners or shareholders of F1 teams and so we have seen DaimlerChrysler buy a 40% share of the TAG McLaren Group - the parent company of the West McLaren Mercedes team. Jackie Stewart's Stewart Grand Prix was also snapped up by the Ford Motor Company with the estimates of the sale price being $60m.

Formula 1 is an obvious place for the world's car manufacturers to compete and with the new financial structure of the sport, it is advantageous for the car companies to own the teams - as it means that their investment is being repaid as they go along. They still have to invest a lot of money but at the end of 10 years they will have recouped the money (probably with a profit), they will have had free publicity and they will have a racing team to sell. It is motor racing which makes financial sense. Big companies do not, however, want to actually run operations and so the trend is to take a large minority shareholding and let the teams get on with the running of the business. The amounts of money involved may have changed but the business is much the same as it always has been, except that now it is one millionaire fighting against another rather than two race fans in competition.

Analysis of situation of each team:

McLaren International Ltd - Estimated value $1.2bn

The McLaren Formula 1 team is part of the TAG McLaren Group. This has several different divisions including the F1 team, the car building company McLaren Cars, the Formula 3000 team, a marketing company, the TAG Electronics company and a high-technology car stereo company. It also owns a share of a catering company.

The company is 40% owned by the DaimlerChrysler car company but Ron Dennis retains 30% of the shares and Mansour Ojjeh of the TAG Group owns another 30%. The parties to the agreement have given assurances that they will not reveal how much money is involved but rumors so that Dennis received $80m for the 10% he sold and TAG got $240m. If these figures are current the value of the company is around $800m. However, it is clear that part of the deal was an agreement between DaimlerChrysler and McLaren for the construction of a supercar beginning in the year 2003. The intention is for the Mercedes SLR model to compete directly with Ferrari models in the supercar market. Each one will cost around $200,000 and the intention is for production to be around 500 a year which will bring the company an extra $100m a year in income. This means that the company's true value is probably around $1.2bn. Although DaimlerChrysler is the biggest McLaren shareholder the company remains under the control of Ron Dennis as he had negotiated a deal which allows him to control TAG's votes on the board of directors so, in effect, he controls 60% of the company.

The TAG McLaren group currently employs 750 people but says that this figure will rise to over 1000 when the new Paragon Technology Center is completed. This state-of-the-art facility will house the entire TAG McLaren Group and should be is finished next year. Paragon - which will house the very latest high-technology windtunnels and test equipment - will also increase the overall value of the company and upgrading work taking place at McLaren's Lydden Hill facility should also be taken into account. Lydden Hill is being converted to become the European distribution center for the new Mercedes-Benz SLR models and will be used as a test track for the production cars before they are delivered.

The company also owns a number of industrial sites in and around Woking and, given the property prices in Britain, these will be worth several millions of dollars. They will probably be sold once the McLaren companies have moved to Paragon.

It is quite likely that the TAG McLaren Group will continue to expand by acquisition of high-technology, automobile-related companies in the years ahead.

Dennis says that there is no plan for the company to sell any more shares to DaimlerChrysler at the moment and so it is unlikely that the situation will change until 2003 at the earliest. If the new SLR is a success, Dennis and Ojjeh may decide to release more shares.

Ferrari SpA - Estimated value $1bn

Enzo Ferrari established Scuderia Ferrari in 1929 and although the team changed names on several occasions it remained much the same for the next 40 years, during which time the company became the most successful racing team in history. After World War II Ferrari began building expensive road cars for the rich and famous. Racing and Ferrari's unusual personality added the company's mystique and created a glamorous image which would eventually make the Ferrari Prancing Horse one of the most recognized brand images in the world. This alone has enormous value.

In the late 1960s Ferrari wanted to expand production of his road cars and needed investment from a bigger company and so he sold 50% of the company to the Turin-based industrial giant Fiat. The Ferrari F1 team was left to run independently until Ferrari died when it too became under Fiat control. Fiat now controls 87% of the company. Ten percent of the company is held by Enzo Ferrari's son Piero Lardi Ferrari. The remaining 3% belongs to a consortium of banks. The sale was completed in 1996 and raised $14.7m. This value the company at around $470m but that has increased significantly since then with successful new models being produced and Ferrari now also being in control of the Maserati car company. Work is going on to revive the Maserati brand and there has been continued speculation that the company will eventually enter a Maserati team in single-seater racing in the United States, but not until the current CART-IRL problems are solved. The company is planning to enter the US market in 2001 with a range of luxury sporting cars for those who cannot quite afford a Ferrari. This is likely to be very successful because of the strength of the Maserati brand.

Of all the Formula 1 teams Ferrari is the most successful in merchandising but this is still to be properly exploited. There are estimates that a more effective merchandising operation could bring Ferrari around $100m a year in revenue as the firm's popularity around the world is remarkably strong. Team boss Luca di Montezemolo is also believed to be considering building a Ferrari theme park which would also generate significant new revenue. This would include a museum of the all the company's cars.

Fiat is a public company but the Agnelli Family still controls around 32% of the shares. In recent months there has been much speculation about whether Fiat Auto, Ferrari's sister car company (which owns the Fiat, Alfa Romeo, Lancia, Innocenti and Autobianchi marques), will be bought by one of the major automotive companies. The Agnelli Family has said that even if this were to happen they would not include Ferrari in the sale. If Ferrari was to become an independent car company it would need to be strengthened with a wider product range and this would probably mean that Ferrari would become a public company although the Agnelli Family would undoubtedly retain a significant shareholding.

Williams Grand Prix Engineering Ltd - Estimated value $500m

Frank Williams and Patrick Head have been in business together since 1977 when they set up the team in an old carpet warehouse in Didcot, Oxfordshire. They have built a very successful company thanks to their extraordinary successes in Formula which began with the team's first F1 victory in 1979. Since then the team has collected a total of nine Formula 1 Constructors' titles (a total which was equaled last year when Ferrari won the 1999 title) and seven Drivers' World Championships. In addition to the Formula 1 program, Williams has had a very successful British Touring Car Championship team with Renault and more recently has won the Le Mans 24 Hours and other major sportscar races with Williams-built BMW sportscars. In recent years Williams has raised more money by running test teams for BMW and will this year he running a testing operation for the Michelin tire company, which plans to enter F1 in 2001.

The Williams organization also runs a low-key engineering consultancy business which helps other non-F1 racing teams with their technology. Current work is being carried out for Opel in the British Touring Car Championship and for the Petrobras Junior Team Formula 3000 operation. This team is not owned by Williams but enjoys the semi-official status of being its junior team. The engineering consultancy business remains an area which is still not fully commercially-exploited.

Williams has not become involved in building production cars mainly because Williams and Head are interested in racing rather than making money. Success has made them both very wealthy men - with the company estimated to be worth around half a billion dollars - and neither is showing an interest in selling their shares at the moment. Even without the sale of the shares the two men are wealthy so there is no rush for them to do anything. The current arrangement with BMW allows the Munich company to style the cars in exchange for cash payment so BMW can make the cars appear as they want them to be and Williams can retain the shares.

The Williams assets include one of the most advanced windtunnel facilities in the world and one of the largest factories although the team also has a separate facility at its site in Grove, Oxfordshire, which used to house the BMW Motorsport sportscar team. The team also has a private museum and conference center which is run as a separate commercial operation in its own right and eventually there is likely to be a Williams Museum which will be open to the public.

Williams is also in the process of developing a more effective merchandising operation as there are millions of Williams fans around the world. The team does not attract the same following as Ferrari but there is no doubt that there is considerable expansion possible in its merchandising operations.

Jordan Grand Prix Ltd - Estimated value $180m

Eddie Jordan established Jordan Grand Prix at the end of 1989 and he and his family retained complete control of the team until the end of 1998 when he agreed to sell 40% of the team to the venture capitalist company Warburg, Pincus & Co for an estimated $60m. This valued the team at $150m but success in 1999 has had been a big help in increasing the team's value, notably with the big new sponsorship deal from Deutsche Post.

In addition there is a major effort going on to develop the Jordan brand around the world. This is being undertaken by former Reebok marketing man Bill Sweeney who believes that the Jordan name can be built into a very successful "lifestyle" brand which will eventually produce multi-million dollar income for the team. The team's strength is its image of being relaxed ad free-spirited in a sport where too often teams have a very corporate image. Sweeney's first deal was an agreement for Jordan to market the Indianapolis Motor Speedway and its associated brands around the world - in exchange for Indianapolis marketing Jordan Grand Prix in the Americas.

Jordan's actual operations are a lot less valuable than those of other teams. The factory is too small for the team and the team's windtunnel at Brackley is 12 years old and too small when compared to the facilities being used by the bigger teams these days. In order to increase the value of the team Jordan needs to invest in a new factory. That will probably not be possible until Jordan gets backing from a major automobile manufacturer and at the moment there is no sign of that happening although it is the obvious step for the team. The problem for Jordan is that most of the manufacturers which are looking at Formula 1 today are planning to enter the sport by buying a large percentage of an existing team. This is logical because the current Concorde Agreement guarantees that the top 10 teams all receive a share of the TV income and of the fees paid by promoters in order to secure a race. This income amounts to about $12m a year at the moment and this is likely to increase in the years ahead. This means that a manufacturer can buy into Formula 1, exert a considerable amount of control, and then recoup the money by selling the shares later. Jordan's problem is that having parted with 40% of the team he is now not in a position to sell a share of the company to a big car company without losing control.

Jordan's other weakness is that it relies heavily on sub-contracting firms, although we understand that Jordan actually owns several of these. The team produces much less of the F1 car in-house than do its rivals.

Benetton Formula Ltd - Estimated value $120m

The Benetton clothing company bought control of the Toleman Formula 1 team in 1985. The Italians had been involved in F1 in 1983 with Tyrrell and in 1984 with the Euroracing Alfa Romeo team but neither had been a success and Luciano Benetton decided that it would be better, as a long-term investment, to buy a team and find sponsorship for it than it would be to continue purely as a sponsor.

The Benettons have invested heavily in the team over the last years but the value of the team to the Benetton company in terms of advertising alone has been enormous and this probably explains the family's unwillingness to sell a share in the company to the Ford Motor Company in 1998. That resulted in the departure of the team's chief executive David Richards and left the team in the hands of Luciano's son Rocco Benetton.

The team has not been a great success since Michael Schumacher departed in 1996 with the only race victory coming in Germany in 1997 when Gerhard Berger won at Hockenheim. The team has been losing sponsorship and there is a danger that at the end of the coming season Japan Tobacco, which supplies the majority of the team's sponsorship from the Mild Seven brand, may decide not to continue. Fortunately for the team there are a lot of companies interested in entering F1 at the moment and so a replacement should be found. The team's biggest asset at the moment is that it has a remarkably good facility at Enstone, including the vast $20m windtunnel which took three years to complete and can be used for full-sized models.

Benetton is currently hoping that its relationship with Renault, which dates back to 1995 will result in a deal to use the new Renault V10 Formula 1 engine if the French car company decides to return to Grand Prix racing in 2001. This is by no means certain to happen. Renault chief Louis Schweitzer has hinted that if th company does come back to Grand Prix racing it will probably be as a team owner rather than as an engine manufacturer. In all likelihood, however, this would mean that the company would buy a share of an existing team in order to get to the vital chassis technology which F1 teams have available to them. If the Benetton Family are not happy to part with at least 40% of the team it is unlikely that Renault will be willing to do a deal. In addition there are strong commercial links between Renault and Tom Walkinshaw which mean that an Arrows-Renault deal is more likely to happen.

Benetton is currently being identified by potential buyers as one of the most likely teams to be sold although it should be remembered that the operation remains a strong marketing tool for the Benetton empire.

PP Sauber AG - Estimated value $ 80m

Peter Sauber's success with Mercedes-Benz in sportscar racing in the late 1980s helped him to build an impressive factory in Hinwil in Switzerland and to enter F1 in 1992. Mercedes-Benz supported him quietly and when things went well decided to support him officially in 1994. That program was a great disappointment and Mercedes-Benz decided to do a deal with McLaren instead. After a brief period with Ford (which was already committed to joining forces with Stewart in 1997) Sauber struggled to survive and concluded a deal with the Red Bull drinks company - owned by Austria's Dietrich Mateschitz - and with Lichtenstein businessman Fritz Kaiser. Mateschitz bought 51% of the Sauber team while Peter Sauber and Fritz Kaiser (who organized the deal) each took a shareholding.

Kaiser proved to be the commercial force behind the team and found massive financial support for Sauber from the Malaysian oil company Petronas in 1995. In addition Sauber and Petronas formed a joint-venture to build an F1 engine. While this was being prepared Petronas agreed to pay for old Ferrari engines and these were rebadged as Sauber Petronas V10s.

In 1998 Sauber sold more shares to Kaiser and so the pair each had 24.5% of the company. In 1998 the financial crisis is Asia meant that the Sauber Petronas V10 engine design program was cancelled.

Last year Kaiser decided that he either wanted to run the team how he felt it should be run or he wanted to sell his shares. Mateschitz sided with Sauber and Kaiser departed, selling his shares back to Sauber and Mateschitz. The team now faces the renegotiation of the Petronas deal (after five unsuccessful years) without Kaiser. There are rumours that Petronas may have decided to commission Lotus Cars, a subsidiary of the Malaysian company Proton, to design a F1 engine for the future. Petronas may want to have more control over the F1 programmed and could ask Sauber for shares in the company but the problem is that it is unlikely to feel that basing an F1 team in Switzerland is a good idea. British chassis designers do not want to work there. Thus it would be more logical for Petronas to try to buy a shareholding in a British team and supply its rumoured new Lotus engine to them.

If this is the case Sauber will probably become a target for takeover.

The team has added problems because it does not have its own windtunnel and has trouble getting as much time as it wants in the Swiss aerospace tunnel at Emmen. The team is planning to build a windtunnel at Hinwil but is struggling to get planning permission.

Sauber is safe as long as Mateschitz sticks with him but if the team cannot find sponsors, engines and good staff it is unlikely that the Red Bull boss will be happy to watch his investment become devalued.

Arrows Grand Prix International - Estimated value $ 80m

Tom Walkinshaw has been running the Arrows team since the middle of 1996. The team was moved to new premises at the Tom Walkinshaw Racing headquarters at Leafield in Oxfordshire and a new staff recruited. But all Walkinshaw's efforts have failed although he came close to winning a race in 1997 when Damon was on his way to victory in Hungary in 1997 when his car hit trouble. In 1998 the team had serious financial trouble and at the end of the year Walkinshaw restructured the team, selling 45% of the team to the venture capital company Morgan Grenfell Private Equity Ltd and 10% to the British-based Nigerian Prince Malik ado Ibrahim. Malik failed to pay for his shares and was ousted in the autumn and since then his shares have been left unsold. The team again struggled for money in 1999 and at the end of the year Morgan Grenfell said it was looking to reduce its involvement in Arrows. Those shares have not been sold because the only people interested in buying want to run their own operations and not be in a partnership with Walkinshaw.

Walkinshaw has now found money for the 2000 season from the Orange telephone company (a deal which is rumoured to be worth around $18m a year), from Repsol YPF ($7.5m) and from the cable TV company UPC ($7.5m). This means that Tom now has a good budget to run the team this year. Tom's aim is to do a deal with the Renault car company for engines in 2001. This is quite likely to happen as Walkinshaw and Renault are working together on the production of the Renault Sport version of the Clio at Tom's factory in Uddevalla in Sweden. Walkinshaw would also be happy to sell Morgan Grenfell's share of the team to Renault. The French company has hinted that it would like to have a share in an F1 team when it does return to F1. Arrows would be a cheap option and would give Renault the chance to have a higher profile on the car for less money than it would cost to buy a big share of Benetton. Arrows has a very talented engineering team and if a Renault deal does happen it is virtually certain that Walkinshaw would get Michelin tyres in an effort to find a performance advantage.

The problem for Walkinshaw is that Arrows has debts which need to be settled and that means that even if Renault decides to buy a share of the team more money will be needed to pay the debts left over from 1998 and 1999. The good news for Tom is that Morgan Grenfell wants to get out of F1 and will sell its shares relatively cheaply if Renault were to come along and that would mean that there was more money available to settle all the debts.

Jaguar Racing - Estimated value $ 100m

Jaguar Racing is very definitely not for sale. Formerly known as Stewart Grand Prix , the team was bought from the Stewart Family last year by the Ford Motor Company for a rumoured $60m. Ford has very specific plans for the team and it is fairly clear that the team is going to be part of a long-term strategy by Ford to build up a strong presence in Formula 1, using the sporty Jaguar brand. Although Jaguar has never raced in Formula 1 the name did create a lot of excitement with its highly-successful sportscar programmes of the late 1980s and Ford's Jac Nasser hopes to translate that passion to race fans around the world with the Formula 1 cars.

The team is believed to have cost Ford a rumoured $60m, although the team was worth considerably more than that. The low price was because Ford had already invested heavily in Stewart and so was in a position to pay less than the market value for the team. The team became Jaguar Racing in January and Jackie Stewart recently stood down as chairman and chief executive although Ford did not name a replacement for him. Ford's Neil Ressler will act as chairman leaving the running of the team to the existing management (minus Stewart).

This is an interim year as the team management is not greatly changed and Stewart and the Ford-owned Cosworth - which is supplying the engines - need to be relocated to new facilities. A site has been found near Northampton but Ford has yet to get planning permission for its planned "motorsport campus" which will feature new factories for the various teams and a new windtunnel. Once this is completed the team will become a lot more valuable.

Jaguar's immediate target is to sell a lot of the new cars it is building. The current S-Type is due to double Jaguar sales in the next 18 months and in 2001 it will be joined by the smaller T-Type which is expected to double the company's sales again. In addition the F-Type roadster is aimed to attract those who want a real roadgoing sports car.

It is expected to be a couple of years before Jaguar Racing is strong enough to take on McLaren and Ferrari and by then it is likely that Jaguar will have developed a lucrative merchandising operation to go alongside the F1 programme. Ferrari reckons that it can raise annual merchandising income to $100m and Jaguar should be able to do almost as well if the team does become a winning force. This will greatly help the financing of the team. At the moment Stewart's old sponsors HSBC are still involved although the red color scheme detracts somewhat from the Jaguar green which has been chosen. In the long term the team is expected to concentrate on finding sponsorship from companies which will fit in with the green color scheme, in much the same way as Williams sponsors now need to fit into BMW's desire for blue and white cars.

Gauloises Prost Peugeot - Estimated value $ 120m

Alain Prost bought the old Ligier team from Flavio Briatore in February 1997 and he had complete control of the team until October 1999 when he sold 10% of the shares to the luxury company Louis Vuitton Moet Hennessy's investment capital subsidiary LV Capital for an estimated $12m. As part of the deal it was agreed that Louis Vuitton and Prost would establish a joint venture to produce and sell Prost-branded merchandise around the world. The strategy is aimed at the top end of the market with products likely to be expensive clothing, watches and high quality design items. This is intended to produce considerable income for both companies. Prost's intention appears to be to try to secure a second supply of Mercedes-Benz engines in 2001. This deal makes a great deal of sense for Mercedes-Benz as it will mean that there will be four Mercedes-engined cars to be beaten rather the current two. It makes sense for Prost as it fits neatly in with his luxury merchandising plans. The recently announced sponsorship deal from Yahoo! will provide the teams with a distribution network for goods on the Internet.

Mercedes-Benz is unlikely to want to acquire any equity in the Prost team but Alain seems to be committed to making his team successful rather than selling it to make a quick profit. He is already a very wealthy man thanks to his long and successful driving career so his motivation in building a team is not financial. The team has built an impressive factory at Guyancourt near Versailles and there will soon be a windtunnel as well. In addition Prost has officially confirmed that a lot more of production is going to be done in Britain in the future at the new B3 Technologies factory which is currently under construction in Godalming, Surrey. This will enable the company to have its finger on the pulse of technological development in Britain while remaining based in France. There are also very considerable financial benefits as the cost of employing staff in France is considerably more expensive than it is in Britain and so switching production to Britain will help the team save money without breaking the link with France.

Prost's value is increased by the fact that it still owns the old Ligier factory in Magny-Cours. This is now the base of the Gauloises Junior Team, Prost's Formula 3000 operation which will run Andre Couto and Sebastien Bourdais this season. The company also has the old Ligier windtunnel at Magny-Cours. This may be developed as a commercial testing facility for non-F1 teams as it has proved itself to be rather unreliable for modern F1 work.

Minardi Team - Estimated value $50m

The sale of Minardi to Spanish telecommunications company Telefonica has yet to be completed but it is expected that the deal will be done within the newt few months. In that is the case the team is expected to be moved to Spain in the course of 2001. Former Benetton Operations Director Joan Villadelprat is expected to take over the running of the operation at a new factory. Initially this was expected to be located in Barcelona but it may be that the team will be offered incentives to be located at the new Circuit Ricardo Torma in Valencia.

The exact ownership situation of the team remains uncertain at the moment but it is possible that Telefonica will be only part of a Spanish consortium which may include former F1 driver Adrian Campos. There is no doubt that Campos has been influential in shaping the team this year. He currently runs Adrian Campos Motorsport in the Open Fortuna by Nissan series in Spain and won the inaugural title in 1998 with driver Marc Gene (now with Minardi) and last year with Fernando Alonso (now Minardi's test driver). In addition the team has backing from Lois (which supported Minardi when Campos drove for the team in the mid 1980s) and he is based in Valencia. Campos may be part of the consortium as he comes from the wealthy Suner Family which used to control a huge ice cream and frozen chicken empire called Avidesa. That business has since been sold to Nestle SA. It would not the first time that a Spanish consortium has tried to establish an F1 team. In 1993 Jean Mosnier came close to establishing a Formula 1 team called Bravo. The project failed because Mosnier died unexpectedly while preparations were being completed.

A switch to Spain and Villadelprat in charge would probably enable the team to recruit some top level designers from Britain, although the team's value is going to remain low until a deal can be struck with a major motor manufacturer. It is possible that the team may be offering part of its shares to Renault in the hope of an engine deal in the future. It may be a coincidence but the team's new yellow color scheme is not dissimilar to the old Renault Sport one from the early 1980s. This would be a very cheap deal for Renault and would be a way for the team to raise money to build a state-of-the-art factory in Spain. This is largely speculation at the moment but Renault has strong connections in Spain where there are a number of Renault and Nissan factories and Telefonica's electronic impact in South America - a major Renault target market - could make it an attractive deal for the French company.

British American Racing - Estimated value $80m

British American Tobacco subsidiaries controls 50% of the shares in British American Racing. Thirty-five percent of the team belongs to an American company called Mount Eagle Inc, which involves CART team owner Jerry Forsythe, Craig Pollock and Jacques Villeneuve, while the remaining 15% of the team belongs to Reynard Motorsport. The team is not very successful at the moment in part because of the rivalry between the various partners. Pollock has the support of BAT while Adrian Reynard was the pivotal figure in the negotiations which convinced Honda to supply the team with engines in exchange for BAT money. The Reynard-Honda combination has been extraordinarily successful in CART in recent years but it remains to be seen whether that success can be repeated. The current car has not shown well in testing, despite the fact that Honda is claiming to have more than 800 horsepower from the engine. Honda may be content to use BAT money for a year or two to develop the V10 engine into a winner and will then switch to another team - Jordan being the obvious choice. However, if the team is not successful this year BAT chiefs are going to become more and more impatient as it seems that they were promised rather faster results than have actually happened. In addition there is a very distinct danger that if the new car does not work well the team will lose Villeneuve at the end of the year. There are. therefore, many question marks and this is keeping the value of team much lower than it would be if these was a little more harmony. The team does have a very impressive facility at Brackley and a brand new windtunnel but Pollock is still out of favour with the F1 bosses after his arrogant stance last year about the FIA's decision to ban twin liveries in F1.

There have long been rumours that part of Honda's deal with BAT is an option to buy control of the team at some point in the future if BAT decides to leave F1. Increasingly tough anti-cigarette legislation in Europe will mean that BAT's investment in Grand Prix racing will have less value after 2002. That will be about the same time as the new Honda V10 engine becomes fully competitive and, if the team can sort out its internal problems, it will become a much more seasoned operation, capable of good results. And that will greatly increase the value of the team.

A few points this year would certainly help as BAR currently does not have any right to the TV money from Bernie Ecclestone as this is given only to the top 10 teams. Pollock has been campaigning for the money to go to all the teams but so far his pleas have been ignored. Things might be different if there was a new team boss.

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