APRIL 4, 2003
Some wild rumors
There is still no deal for 2005 and beyond between Williams and BMW and according to our sources there was another meeting last week in Germany without the deal being inked.
It is not unexpected therefore that some wild rumors have been circulating in the F1 paddock. These should not be given too much credence as they are more likely to be part of the negotiation process than having any real basis in reality.
We have however heard suggestions that BMW might buy BAR and that this would result in the Honda engines switching to Williams. While this might seem like a neat solution it is very unlikely to happen for two reasons: BAR's parent company British American Tobacco would have to write off a considerable sum of money; and BMW would have to spend something like $100m in the course of the next 12 months to keep the whole operation running.
BAT bought Tyrrell for $35m in 1997. The latest BAR accounts, which date from November 2001, indicate that BAT has since then loaned the team a total of $153m and it also guarantees an overdraft facility of $18m. The actual value of the team, given the current economic situation, is considerably less than that and so a sale would mean that BAT would have to write off the debts. This would have a noticeable effect on the BAT balance sheet and that would not please investors.
BMW would not only have to pay BAT's price for the team (which might be in the region of $50m) but they would also have to fund the operating costs. In 2001 BAR's income was $66m. Of this $30m came from BAT. The team spent $113m. Under the new management, which took over in 2002, the costs will have been reduced but even if a buyer managed to get continued BAT sponsorship, it would still need to find another $60m to run the team in 2004.
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