MARCH 29, 2002
The collapse of Reynard
ALTHOUGH there will be more wringing of hands and gnashing of teeth in the Formula 1 paddock about the collapse of Reynard - and talk that motor racing is in danger from the recession, the collapse of Reynard Motorsport should not be blamed on the recession - but rather on more effective competition from rival Lola and the fact that the company might have been run in a different way.
Reynard has had a long history of boom and bust cycles but on several previous occasions was saved by the ingenuity and salesmanship of Rock Gorne, who joined the company in 1981. At the time Reynard was struggling financially but Gorne kept the business afloat by selling 12 racing cars to the United Arab Emirates, having convinced the government that they would keep the company's fighter pilots happy when they were not flying. Reynard was bought enough time to build an impressive Formula Ford car, which made an astonishing debut at the Formula Ford Festival in 1981 and as a result 50 orders arrived the following year. The boom lasted throughout the 1980s with the sale in the course of the 1990s of 661 Formula Ford chassis. In 1985 Reynard entered F3 and by 1993 had sold 360 F3 cars. There were more than 200 Formula Vauxhall sales and success also in Formula Atlantic. The company moved to Formula 3000 in 1988 and by the end of 1995 Reynard had sold 220 Formula 3000 cars.
An attempt at F1 in 1991 failed and almost bankrupted the company but Gorne saved the day again by selling 40 Formula 3 cars to Mexico for the creation of a local F3 series. As the company came back from the brink Reynard looked at CART and in 1994 arrived in style with a victory for Michael Andretti at Surfers Paradise. It was boom time again and by the end of 1998 Reynard had sold 148 CART cars and won four consecutive CART titles. With profit margins running at around 50% of turnover, Reynard was pulling in profits of $25m a year. Reynard decided to go to Wall Street. In order to make the company a little more stable and to offer a better range of services Reynard bought Gemini Transmissions for $12m. The company also invested heavily in technology so as to become a world leader in computational fluid dynamics and building windtunnels. The company also flirted with the automotive industry via its Reynard Special Vehicle Projects which designed such weird and wonderful devices as the Chrysler Patriot gar turbine sports car, the Ford Indigo concept car, the Strathcarron sportscar for road use and racing GTs for Don Panoz.
Adrian Reynard reaped the benefits of all this success and took home salaries of $4.7m in 1996, $10m in 1997 and $8m in 1998. After that he agreed to restrict his wages to $1.5m a year.
The company buying spree added Riley & Scott to its books but that deal never really worked and eventually the original owners took the company back.
The flotation for some reason went wrong and from then on it was downhill all the way. Lola's ascendancy and Dallara's domination of several key markets led Reynard to scramble around for business. CART was the saving grace but even there Lola gradually cut into the Reynard market. Gorne left, returned but realized in the end that it was a lost cause of so jumped to Lola instead.
The company has gone to the wall. The assets will be sold off and there will be some bargains about although we hear that a lot of the machinery was not owned by the company itself but leased from other Reynard-owned businesses. Roger Penske is believed to have options to take up a lot of the Reynard assets, including the Automobile Research Center (ARC) in Indianapolis.
The other major asset should be the 14% share in British American Racing although it is not clear whether this is owned by Reynard himself or by the company.
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