OCTOBER 26, 2000

Is Reynard really a player for BAR?

JUST days after it looked like a deal was done being for Prodrive to buy the entire Reynard Motorsport company, the talks have been called off.

JUST days after it looked like a deal was done being for Prodrive to buy the entire Reynard Motorsport company, the talks have been called off. No-one involved is saying why but our spies are hinting that the Reynard Motorsport empire is not the jewel it appeared to be and that the company is suffering from serious financial problems. There is no doubt that in recent months Reynard has lost a lot of its business in the CART series to Lola and a variety of sportscar deals have not been successful. Reynard has laid off a lot of staff as a result.

We have even heard some rather alarmist stories suggesting that the Reynard company could be placed in receivership within the next few days by banks involved in the business. Our sources say that Reynard has sizeable debts and problems with the tax authorities and that not much can be done because various parts of the company are already under option to be sold to other companies. One name we have heard mentioned is that of Roger Penske who is understood to have preemptive rights to buy some of Reynard's businesses. Such a deal makes sense to Penske who has been looking for new premises in Britain for some time and who is ideally positioned to build production versions of his CART cars. It is worth noting rumors in recent days that Penske may be planning to enter cars in the Indy Racing League. This would be easy if Penske had acquired the Reynard-owned IRL chassis-building company Riley & Scott. The Penske team last week went tire-testing at The Speedway.

If the stories about Reynard's problems prove to be true - and we have heard then from several different sources - there is little chance that Adrian Reynard will be able to pull off his deal to buy British American Tobacco's share of the BAR Formula 1 team. Reynard was hoping to use the money from the sale of his company to fund the takeover of BAR but if he is unable to secure the financing it is unlikely that the deal will go ahead. The question is whether Reynard can afford to buy out BAT without the money from the sale of Reynard Motorsport? Certainly it is not going to be easy but there are probably venture capital companies interested in backing such a takeover. At the same time Reynard's close connections with Honda could save the day.

Honda could use Reynard as a front man for the purchase of BAT's shares in BAR. The Japanese company is not yet ready to run the team with its own people but that remains the ultimate aim and so it is possible that Honda could be part of a Reynard-led consortium with the long-term aim of taking over the entire operation.

All this assumes that Pollock will do nothing to defend his position and that is unlikely. In the last 18 months he has proved himself to be a fighter and has survived despite the internal politics within the team and within BAR. His credibility within F1 has been rising steadily this year while Adrian Reynard's lack of direct involvement and politicking has done nothing for his reputation in the sport. The weak point in the BAR package this year has, in fact, been the chassis and Reynard and his engineers (who are on loan to BAR) must shoulder some of the blame for that.

It is by no means certain that BAT will sell its shares in the team if the deal is not right. The tobacco company might prefer to retain ownership - perhaps even buying out other shareholders - in expectation that the whole team will be sold to Honda at the end of 2001. The team's results this year have been promising and if that progress continues the value of the team will be a lot higher by the end of next year. Pollock's relationship with Jacques Villeneuve is important in all this as his departure from BAR would be a very serious blow. Renault is keen to get Jacques to drive for the Benetton team and so BAT must consider any threat of departure to be a serious one. This would seem to suggest that Pollock will probably the battle with Reynard. Having said that his situation is by no means secure as most of his supporters within BAT have long-since disappeared and BAT may decide to clean out both Reynard and Pollock and put in a new team management, led by Barry Green. This would be a risky business as Green has no F1 experience and sticking with Pollock would probably be a wiser move.

At the moment, however, nothing is clear but things should begin to fall into place when the BAR Holdings board meets on November 1. One way or the other, the teams to clear the air and decide once and for all who is in charge. The split in the management has been the team's Achilles Heel from the very start and the team will only be able to challenge the big F1 combines if it is working as a single unit.