FORUMula1.com - F1 Forum

[davevettel66]

Hi all,

I have been a keen F1 fan since the late 80's, but of late i have found myself wanting for more information with regard to finances, especially re: Brawn GP. I am in my early 40's and have worked with finance most of my life in the building industry but Brawn GP's finances has me all confused and asking many questions ...

Q1. Before the season had even begun, Ross Brawn purchased the team from Honda, presumably including all facilities and intellectual rights in connection with R+D. Question = Did he self finance this purchase? Or was there some sort of 'buy now, pay later' agreement made?

Q2. Without a 'major' sponsor, (can't call Virgin major just yet) how is Brawn financing the running of the team on a current day to day basis? I assume no-one is working for nothing, well not many anyway.

Q3. How does the F1 supremo (cough) Bernie Ecclestone distribute money between teams? (TV rights, etc.)

Q4. Did Brawn GP have to pay an entrance fee? If so, where did that money come from? Or was it waived?

Q5. I assume Ross Brawn has put some of his own personal wealth into the team, and also assume the team has loans up to its eyeballs, and if the team had flopped, then assume he would have had to sell the team in an attempt to re-pay the loans... Or am i wide of the mark?

Q6. How the * does the financing work? Especially for Brawn GP?

I know that having won 3 races and looking fairly good, he can demand a much higher price for the biggest parts of the car, rear wing, side-pods, sides if engine cover, etc, etc. So he can really bag a 'big-player' with a high price-tag. But if they had done a BMW, oh dear, what would have happened then?

And more questions like that.

Puzzled?

Dave.

[Jensonb]

Q1. Before the season had even begun, Ross Brawn purchased the team from Honda, presumably including all facilities and intellectual rights in connection with R+D. Question = Did he self finance this purchase? Or was there some sort of 'buy now, pay later' agreement made?

The team was sold for the nominal value of £1.

Q2. Without a 'major' sponsor, (can't call Virgin major just yet) how is Brawn financing the running of the team on a current day to day basis? I assume no-one is working for nothing, well not many anyway.

Honda provided Brawn with a "bursary" to the same amount of money it would have cost them to wind the team down, and also took on and forgave some of the team's debt.

Q3. How does the F1 supremo (cough) Bernie Ecclestone distribute money between teams? (TV rights, etc.)

It is based partially on a base rate and partially on performance I believe.

Q4. Did Brawn GP have to pay an entrance fee? If so, where did that money come from? Or was it waived?

It was waived.

Q5. I assume Ross Brawn has put some of his own personal wealth into the team, and also assume the team has loans up to its eyeballs, and if the team had flopped, then assume he would have had to sell the team in an attempt to re-pay the loans... Or am i wide of the mark?

No, the team is not in substantial debt, Honda having paid off or assumed most of the significant debts incurred under their ownership. Ross did not need to invest heavily in the team as Honda donated the funds they had set aside to wrap the team up.

Q6. How the * does the financing work? Especially for Brawn GP?

I know that having won 3 races and looking fairly good, he can demand a much higher price for the biggest parts of the car, rear wing, side-pods, sides if engine cover, etc, etc. So he can really bag a 'big-player' with a high price-tag. But if they had done a BMW, oh dear, what would have happened then?

The funds from Honda would have kept the team afloat, if uncompetitive, until a buyer or partner could be found.

[Gaz]

Hi all,

I have been a keen F1 fan since the late 80's, but of late i have found myself wanting for more information with regard to finances, especially re: Brawn GP. I am in my early 40's and have worked with finance most of my life in the building industry but Brawn GP's finances has me all confused and asking many questions ...

Q1. Before the season had even begun, Ross Brawn purchased the team from Honda, presumably including all facilities and intellectual rights in connection with R+D. Question = Did he self finance this purchase? Or was there some sort of 'buy now, pay later' agreement made?

The Team was pretty much Free as i understand it.

Q2. Without a 'major' sponsor, (can't call Virgin major just yet) how is Brawn financing the running of the team on a current day to day basis? I assume no-one is working for nothing, well not many anyway.

The team recived 150mil + from Honda also i belive they are to recive FOM tv Money in the region of 80mil they also are getting 250k/Race from Virgin and they have a small winglet sponsor not sure how much they are paying prob 25-50k/race perhaps?

Q3. How does the F1 supremo (cough) Bernie Ecclestone distribute money between teams? (TV rights, etc.)

80mil for competing + bonus if you win WDC or WCC. On top of that Ferrari get a special bonous which i belive is 80mil regardless for because there supposed "heratige" bullpoo.

Q4. Did Brawn GP have to pay an entrance fee? If so, where did that money come from? Or was it waived?

There is a NEW team entry fee of $48 million + drivers have to pay superlicences.

I belive Brawn got away with that due to the fact its a continuation of Honda F1 Racing.

Q5. I assume Ross Brawn has put some of his own personal wealth into the team, and also assume the team has loans up to its eyeballs, and if the team had flopped, then assume he would have had to sell the team in an attempt to re-pay the loans... Or am i wide of the mark?

Doubt Brawn has had to fork out much since Honda left them so much...and they have a big deal with Virgin comming up.

Q6. How the * does the financing work? Especially for Brawn GP?

I know that having won 3 races and looking fairly good, he can demand a much higher price for the biggest parts of the car, rear wing, side-pods, sides if engine cover, etc, etc. So he can really bag a 'big-player' with a high price-tag. But if they had done a BMW, oh dear, what would have happened then?

Teams get money from sponsors + tv rights money from FOM (formula one managment) which is run by Ecclestone.

If brawn were not sucsfull i imagine they'd still be around next year with with the 30mil budget cap coming up since the FOM money would cover that with some minor sponsors.

In addition F1 teams are going to become valuble as the grid slots fill.

Before the 05 Season Jordan F1 was sold for 60mil to Become Midland F1 super agrui came in at the start of 06 and then for 2007 Midland was sold again to Spyker for nearly double (106mil) i expect simply because the grid slots filled and there was a rumor of Pro Drive comming in.

And more questions like that.

Puzzled?

Dave.

Hope that helps might not be 100% acurate but i think i'm right with these facts and figures

[Frosty]

Q1. Before the season had even begun, Ross Brawn purchased the team from Honda, presumably including all facilities and intellectual rights in connection with R+D. Question = Did he self finance this purchase? Or was there some sort of 'buy now, pay later' agreement made?

Ross Brawn did self finance the buy out but it cost him £1 in return for that he got the money that it would of cost Honda to pay off all the staff plus the rights to Honda's commercial rights money from 2008, this plus the money they will get at the end of the season is pretty much enough for Brawn to run 2 seasons without any sponsorship...

Q2. Without a 'major' sponsor, (can't call Virgin major just yet) how is Brawn financing the running of the team on a current day to day basis? I assume no-one is working for nothing, well not many anyway.

In short the team at the moment has no debts because Honda paid them all off and the team is loaded!(but not as much as McLaren, Ferrari, Toyota, BMW and Renault)

Q3. How does the F1 supremo (cough) Bernie Ecclestone distribute money between teams? (TV rights, etc.)

The distribution isn't very fair with some teams getting better deals than others money is given out after the end of the previous season.

Q4. Did Brawn GP have to pay an entrance fee? If so, where did that money come from? Or was it waived?

It was waived.

Q5. I assume Ross Brawn has put some of his own personal wealth into the team, and also assume the team has loans up to its eyeballs, and if the team had flopped, then assume he would have had to sell the team in an attempt to re-pay the loans... Or am i wide of the mark?

Honda paid all their debts off and i don't think Ross Brawn put any of his own money into the team but it is also 100% his liability.

Q6. How the * does the financing work? Especially for Brawn GP?

Well they have very small amount of sponsorship money, plus money from Honda, also money from commercial rights.

In short the team should currently have enough money to run the team for 2 seasons without any major sponsorship that's why Brawn hasn't rushed into any deals he wants to wait and find the right committed partner who will help the team for many years not just a few months.

[Jensonb]

To clarify, Ross is absolutely not in any financial danger. Brawn GP F1 Team is a Private Limited Company. Limited means Limited Liability, so owners can only lose what they invest - thus only £1 in Ross's case.

[Gaz]

To clarify, Ross is absolutely not in any financial danger. Brawn GP F1 Team is a Private Limited Company. Limited means Limited Liability, so owners can only lose what they invest - thus only £1 in Ross's case.

Yeh and i doubt they are in any danger anyway since the team is doing so well.

[Frosty]

To clarify, Ross is absolutely not in any financial danger. Brawn GP F1 Team is a Private Limited Company. Limited means Limited Liability, so owners can only lose what they invest - thus only £1 in Ross's case.

Yeh and i doubt they are in any danger anyway since the team is doing so well.

He is going to do even better than Eddie did out of Jordan I think!

[davevettel66]

Thanks so much guys for all the info.

It sounds like Honda gave the team away in the end. Hey-ho, Ross is king, long live the king. Have followed his achievements since his Benetton days with Flav' and MS.

Davo

[Jensonb]

Thanks so much guys for all the info.

It sounds like Honda gave the team away in the end. Hey-ho, Ross is king, long live the king. Have followed his achievements since his Benetton days with Flav' and MS.

Davo

More or less. It would have been as or more expensive to shut the team down, and that would have been a PR nightmare to boot. So they basically set Ross up to save it.

[Gert]

I reckon Ross has pulled a fast 1 here.

1. He is very responsible for the wretched performance Honda had last year as a result of deciding to spend last year's cash on this year's car which lead to some dismal performances & almost certainly helped Honda come to the conclusion that they wanted out.

2. Then he managaged to out manoevere every other suitor for the team & take over himself with a very fully developed car for this year at somebody else's expense.

3. He then pleaded poverty to ensure that he was allowed in without paying the 48 million when it's a new team, with new race numbers etc to everybody else.

4. Now he's got a major deal with Branson lined up & may well have done since the end of last year but is keeping that quiet in case people start to smell a rat & realise just how much of a lie the whole "we are too poor to pay for the team or the entry" actually is.

5. & all the above is without considering Ross' hand in the the double diffusor controvercy.

I can see how Ferrari's lawyer & Bernie would call him names & no wonder Flav thinks he can take a running jump at himself if he thinks he's getting Honda's TV cash.

[darwin dali]

I reckon Ross has pulled a fast 1 here.

1. He is very responsible for the wretched performance Honda had last year as a result of deciding to spend last year's cash on this year's car which lead to some dismal performances & almost certainly helped Honda come to the conclusion that they wanted out.

2. Then he managaged to out manoevere every other suitor for the team & take over himself with a very fully developed car for this year at somebody else's expense.

3. He then pleaded poverty to ensure that he was allowed in without paying the 48 million when it's a new team, with new race numbers etc to everybody else.

4. Now he's got a major deal with Branson lined up & may well have done since the end of last year but is keeping that quiet in case people start to smell a rat & realise just how much of a lie the whole "we are too poor to pay for the team or the entry" actually is.

5. & all the above is without considering Ross' hand in the the double diffusor controvercy.

I can see how Ferrari's lawyer & Bernie would call him names & no wonder Flav thinks he can take a running jump at himself if he thinks he's getting Honda's TV cash.

Geez, tell me how you REALLY feel about Ross

[Frosty]

Firstly when Ross got to Honda at the end of 2007 he instantly knew that the 2008 car was a load of crap so he did the best thing for the team put the effort into the 09 car and sorted out the team. The Richard Branson sponsorship deal was definitely not around until a couple of weeks before Brawn took over ownership. Yes he may of you used his influence to be at the top of the list for taking over the team but how can you blame him for that he is doing a sound job and that's business for you. What do you mean by Brawn had a hand in the double diffuser controversy it was Ross who tried to get the loopholes closed last year if you don't remember!

[Denthúl]

I reckon Ross has pulled a fast 1 here.

1. He is very responsible for the wretched performance Honda had last year as a result of deciding to spend last year's cash on this year's car which lead to some dismal performances & almost certainly helped Honda come to the conclusion that they wanted out.

2. Then he managaged to out manoevere every other suitor for the team & take over himself with a very fully developed car for this year at somebody else's expense.

3. He then pleaded poverty to ensure that he was allowed in without paying the 48 million when it's a new team, with new race numbers etc to everybody else.

4. Now he's got a major deal with Branson lined up & may well have done since the end of last year but is keeping that quiet in case people start to smell a rat & realise just how much of a lie the whole "we are too poor to pay for the team or the entry" actually is.

5. & all the above is without considering Ross' hand in the the double diffusor controvercy.

I can see how Ferrari's lawyer & Bernie would call him names & no wonder Flav thinks he can take a running jump at himself if he thinks he's getting Honda's TV cash.

1. Honda's RA108 was flawed right from the start, suffering from the same basic problem as the RA107. Ross Brawn had no influence over the RA108's design and knew that there would be no chance of that car winning a race in 2008 regardless of how much they attempted to develop it. Therefore, the only logical choice would be to focus on the next season's car. It was a move that paid off in spectacular fashion. Furthermore, Honda's decision to pull out of the sport was a knee-jerk reaction to the slump in their car sales.

2. Had there been a better, more serious bidder, I'm quite sure they'd have bought the team. Brawn's job was secure in the event of any takeover, really, because nobody would want to drop him. Just look at all the people who tried to buy the team and you'll realise that none of them were ver going to do it.

3. If he so wanted to make out that the team were so, so poor, would he not have accepted Ecclestone's financial offer to make it look as if he couldn't fund the team with his own resources on top of those that Honda were offering? That would certainly give off the impression that it would be the only way they could afford it.

4. See above. We all knew Branson was interested in getting in to Formula One but he made it clear that he wouldn't buy Honda without the sport meeting specific criteria. It was too late to change any of the regulations to cover these, so the earliest that he would consider actually purchasing the team was 2010. Sponsorship, however, is the first logical step towards taking over a team.

5. Ross Brawn pointed out the loophole in the regulations over a year in advance and put forward a proposal to close it and generally tidy up the regulations to avoid the situation that we had with the diffuser. The guys from Renault and BMW Sauber said 'no' to that. Ross did not make them refuse, so I don't see how you can possibly lay any of the blame on him. He tried to fix the situation before it was broken.

All-in-all, you've got an issue with Brawn but no real reason for it. I imagine jealousy is a major factor in it, but I don't know you well enough to make such a claim.

Out of curiosity, are you a Ferrari or Renault fan?

[Frosty]

I reckon Ross has pulled a fast 1 here.

1. He is very responsible for the wretched performance Honda had last year as a result of deciding to spend last year's cash on this year's car which lead to some dismal performances & almost certainly helped Honda come to the conclusion that they wanted out.

2. Then he managaged to out manoevere every other suitor for the team & take over himself with a very fully developed car for this year at somebody else's expense.

3. He then pleaded poverty to ensure that he was allowed in without paying the 48 million when it's a new team, with new race numbers etc to everybody else.

4. Now he's got a major deal with Branson lined up & may well have done since the end of last year but is keeping that quiet in case people start to smell a rat & realise just how much of a lie the whole "we are too poor to pay for the team or the entry" actually is.

5. & all the above is without considering Ross' hand in the the double diffusor controvercy.

I can see how Ferrari's lawyer & Bernie would call him names & no wonder Flav thinks he can take a running jump at himself if he thinks he's getting Honda's TV cash.

1. Honda's RA108 was flawed right from the start, suffering from the same basic problem as the RA107. Ross Brawn had no influence over the RA108's design and knew that there would be no chance of that car winning a race in 2008 regardless of how much they attempted to develop it. Therefore, the only logical choice would be to focus on the next season's car. It was a move that paid off in spectacular fashion. Furthermore, Honda's decision to pull out of the sport was a knee-jerk reaction to the slump in their car sales.

2. Had there been a better, more serious bidder, I'm quite sure they'd have bought the team. Brawn's job was secure in the event of any takeover, really, because nobody would want to drop him. Just look at all the people who tried to buy the team and you'll realise that none of them were ver going to do it.

3. If he so wanted to make out that the team were so, so poor, would he not have accepted Ecclestone's financial offer to make it look as if he couldn't fund the team with his own resources on top of those that Honda were offering? That would certainly give off the impression that it would be the only way they could afford it.

4. See above. We all knew Branson was interested in getting in to Formula One but he made it clear that he wouldn't buy Honda without the sport meeting specific criteria. It was too late to change any of the regulations to cover these, so the earliest that he would consider actually purchasing the team was 2010. Sponsorship, however, is the first logical step towards taking over a team.

5. Ross Brawn pointed out the loophole in the regulations over a year in advance and put forward a proposal to close it and generally tidy up the regulations to avoid the situation that we had with the diffuser. The guys from Renault and BMW Sauber said 'no' to that. Ross did not make them refuse, so I don't see how you can possibly lay any of the blame on him. He tried to fix the situation before it was broken.

All-in-all, you've got an issue with Brawn but no real reason for it. I imagine jealousy is a major factor in it, but I don't know you well enough to make such a claim.

Out of curiosity, are you a Ferrari or Renault fan?

[davevettel66]

WOW!

If ever there was a conspiracy theory ......

Not sure i agree with you Gert. U seem to have failed to mention that Honda gave Ross a job in the first place.

Once they (Ross and his team) had taken a look at what they had to work with, they took a very wise decision to not waste any effort improving a pile of poo to battle for mid-field places at the expense of their 2009 chances. So, set-about developing 09's car that would stand a good chance especially as they knew that the regulation changes were some of the biggest for years. Yes, the diffuser was a contentious issue, but they weren't the only people who took advantage of a loophole or interpretation of the rules, or whatever you want to call it, were they? Some teams (Ferrari) cried foul and said it wasn't in the 'spirit' of the regulations. LMAO! Ferrari and morals..? What a laugh! Since when did they play so fair?? HAHAHA

Also a year ago he would have required a crystal ball to foresee the world's economic problems. Which was the major contributing factor behind Honda pulling out, not 08's results.

I can see why you think some of the things you say, but there's no denying Ross's abilities. And as for Flav and Bernie, well they're just jealous, plain and simple. Bernie is also a &n0b, and Flav' is the only guy in the pitlane that has NO technical engineering knowledge, none, zilch. He has a sales & marketing background. So what does he know anyway?

For what it;s worth i don't think they should get Honda's TV cash either.