FEBRUARY 27, 2002
TWR bidding for Prost?
As the Arrows team was launching its Formula 1 program for 2002 in Melbourne, a curious rumor surfaced in Paris with word that the Tribunal de Commerce of Versailles is studying a last-minute attempt to keep a 12th Formula 1 team going.
While such a deal seems strange given that Arrows is not the wealthiest of teams, there is logic in the move. Prost is entered in the 2002 Formula 1 World Championship and if the team appears it will get something like $12m in TV money (which is available because of the results achieved last year by Prost). Prost has several 2001 cars which are ready to race and there is believed to be one new chassis which was built for the FIA crash tests. The problem is that in order to run the cars and claim the $12m, it is necessary to pay for Ferrari engines - which cost about $25m a year. There is no doubt a value in the 12th F1 "franchise" but it is a big investment for anyone. Walkinshaw has one advantage over others who wanted to buy Prost in that he already has a stock of old Arrows V10 engines from 1998 which are of no real value to him. If these were fitted into the Prost chassis the cars could run and the team could be revived. It would give Walkinshaw a team without the massive debt load that Arrows has built up. Walkinshaw may control Arrows but he owns only 40% of the equity.
In order to claim the $12m available TWR must retain the same company number as Prost had but if that happens it is likely that Walkinshaw would be liable to the Prost debts - which would make the deal a worthless one. If the court in France decided to sell the company number as an asset but leave the debts and responsibilities behind there would be uproar in France - not least amongst the 200 or so Prost staff who are currently unemployed.
The court in Versailles turned down some serious offers for Prost (the largest was believed to be worth $60m) and so selling off the assets for a fraction of that price would be a difficult thing to justify.
There is the additional problem that the team will not be ready to race for a while and that would mean fines having to be paid. These are not however massive in comparison to the F1 budgets of today.
The final problem is whether or not an F1 entry survives if a team has been placed in liquidation. That is not a decision that the court can make and one must assume that it is something covered by the Concorde Agreement, although such details are shrouded in secrecy and so it is hard to speculate.