Rumors And Denials

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Today a story was leaked stating that Audi had bought The McLaren Group of which McLaren have come out stating this is untrue. Where there is smoke there is fire and believe that there is something happening. I read another article that BMW and Audi were interested in buying McLaren and were involved in a bidding war.

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Interesting enough McLaren have said the story is untrue but have not denied that there are negotiations taking place. BMW and Audi are after one thing mainly and that is the Formula One Team. Regarding monetary value this deal does make sense in more ways than one.

Anyone new joining Formula One would have to fork out in the region of $200 million just to get started. McLaren is reported to be worth in the region of $500 Million so value wise could actually be a steal. Porsche were reportedly interested in joining the F1 family 2 years ago and this would be a smart move for the VW Group of which Audi is part of.

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As a business Formula One is generating profits for the teams as the budget cap is currently on $145 million dropping to $135 million by 2023. One point in the constructors equates to around $1 million or a little less for this season as they agreed to a slight drop due to covid restrictions and a lack of fans. Next season that will be back to the 1 point = $1 million value so McLaren this season will rake in roughly 300 points by the time we finish the season in 3 races time. Do the maths on that and can see why it is a brilliant money earner these days. $300 million -$145 million budget will roughly equal a 100% profit on investment. All the advertising and media coverage is basically for free which is why Audi and BMW want back in. The days of spending $300 million plus have long gone and the new business model is creating FOMO.

BMW were an engine supplier with Williams years ago and why they bailed out of a sport that they should be in baffles the brain. Mercedes have benefitted more than most other manufacturers as they have used the data and info crossing over into their road cars. The technology is the win win for all of these manufacturers involved as they are hybrids using an engine and battery for their power. The Electric Formula One has not been as widely supported with teams pulling out due to regulations not allowing for development. The teams are better off without that sport as they don't want to be given the same battery as everyone else which is exactly what was happening.

McLaren can deny the story as much as they like, but I do believe something is cooking behind the scenes and we will only know when the season is finally over. McLaren last year went through the pain of restructuring their company and is still seen as a bargain if you weigh this all up. This is too big to announce right now and will most likely be announced only in January.