NOVEMBER 13, 2002
Moves to get Arrows in
We hear from a variety of team sources that Bernie Ecclestone has recently circulated a letter asking teams to consider whether they wish to accept the idea that the Arrows team has an automatic entry for the 2003 Formula 1 season. Our spies say that at least five of the teams have said that they do not believe that the team has any rights under the Concorde Agreement and that if the team wishes to take part in the World Championship it must therefore do so as a new entrant, depositing $48m with the FIA and accepting that there will be no benefits paid for the next three years. This makes any deal being planned much more difficult to bring to fruition, particularly at a time when money is so hard to find in F1 circles.
The question of who the buyer of Arrows might be remains a mystery with the usual silly stories circulating about Middle Eastern oil barons. It is our belief that the saviour of the team is probably Tom Walkinshaw himself who may finally have found a solution to the problems he had with Morgan Grenfell Private Equity. Getting rid of the German financial firm would make a big difference to the Arrows balance sheets as a large chunk of the team's debt can now be written off. MGPE, a sunsidiary of Deutsche Bank, has probably decided that it has had enough of the whole business and that it will simply swallow the huge losses. The bank really has no-one to blame but itself. It overpaid for the shares and then failed to keep a close eye on what was going on.
With the bank out of the way, the team still has to square away a lot of trade creditors - estimates range from $10m to $30m - but if these debts can be settled the team is basically back to zero. This will not pay for engines in 2003 nor for the running costs needed nor for the money which will be required to rebuild the team as many of the staff have moved elsewhere. Having said that there are people on the market and so Arrows can probably be reconstituted to some extent in the immediate short-term. the question of engines is a difficult one because it is going to be very hard for Walkinshaw to convince Cosworth to do anything without turning up in Northampton with a Securicor truck full of cash. Previous guarantees were not respected and so Cosworth boss Niki Lauda is, at best, leery of doing business with the team again.
The team can use the old 2002 chassis and could in theory find some old engines from somewhere but this would hardly make a package which would do anything more than survive and without TV revenues even that would be tough.
The biggest problem, however, remains the entry because without that the problem is twice as difficult...
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