FEBRUARY 28, 2002
TWR rising from the ashes of Prost?
THE decision of a French court to sell TWR the major assets of Prost Grand Prix for a tiny sum of money is an extraordinary one and the reaction in France is going to be interesting because the deal leaves Prost's creditors with little hope of getting any money back. The team went into liquidation owing $30m and the major assets have now been handed on for less than 10% of that.
There is also likely to be an explosion in F1 circles as the revival of Prost means that the $12m of TV money (perhaps more) will not be going to Minardi, which stood to gain a share of the TV revenues if Prost closed down. The question now is whether the entry is still valid as the team missed the deadline for entries in Australia, which was signed off by the three FIA stewards yesterday afternoon. According to our understanding of the Concorde Agreement if a team misses a race while insolvent the entry is immediately forfeited and so there is now an argument as to whether the entry is still valid or not and with so much money at stake it is hard to imagine that Minardi will sit down and take the news without some reaction.
The deal could have serious effects on a number of other teams as well: The Arrows organization, which is 40% owned by Tom Walkinshaw (and controlled by him) has debts in the region of $100m (the last accounts were published at the end of 2000) and its current deal with Orange is coming to an end this season. The future is looking decidedly grim. Walkinshaw and his partners in Arrows (Deutsche Bank) are not on good terms and there is at least one legal action going between them. That means there is little incentive to keep the team going.
The big question is what parts of Arrows are owned by Arrows itself and what is owned by TWR. It is quite possible for example that Heinz-Harald Frentzen has a contract with TWR rather than with Arrows.
This is not the first time that there has been a question like this involving TWR. Back in April 1996 when Walkinshaw was running Ligier but acquired Arrows a number of the staff were found to have TWR contracts rather than deals with Ligier. Arrows also took Ligier sponsors Parmalat and Power Horse. It will be interesting to see for example what happens to the windtunnel in Bedford and the team's headquarters in Leafield as these are probably owned by TWR not by Arrows.
This could mean that the heavily indebted Arrows team will end up in terminal trouble. This would have serious repercussions for the creditors of that organization as there may not be many assets left to be sold if Arrows were to go out of business. This must be causing worries, for example, at suppliers such as Cosworth and that could even impact on Jaguar Racing, Cosworth's sister company, as the money from Arrows was due to be used to help pay Jaguar's F1 bills.
While one can see the merits of such an idea from TWR's point of view, it is hardly the kind of business that will reflect well on F1 and it will be interesting to see whether there is any reaction to the deal from the motor racing authorities.
If all goes to plan, TWR will appear in the Malaysian GP with the old Prost chassis powered by Arrows V10 engines. One must presume that one of the cars will be offered to Jos Verstappen. The other could go to anyone with some cash. It is highly unlikely that they will be competitive and there may be questions of legality because it is hard to see how the new team can design and build the rear end of a new car in the space of two weeks!
When all is said and done, however, one must stand in awe of Walkinshaw's ability to cut deals.
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