Racing point Force India's troubles keep building
There now seems to be a few problems with the deal and the timing of the deal. First, it appears that some teams who are said to have signed the "waivers" that allowed Racing Point not only to race at Spa but also keep the old Force India's prize money did so during the Hungarian Grand Prix.
This raises a number of issues, it would mean that the administrators and/or FOM had already decided that the Stroll consortium was the preferred buyer and also that the old Force India team was being sold as a going concern, which turned out not to be the case. The Hungarian Grand Prix was way back on the 29th July, but the administrators FRP had set a deadline of midday on 17 August by which time interested parties had to register their bids.
It is now being reported that Lawrence Stroll was seen scuttling about in company with F1 CEO Chase Carey at the Hungarian Grand Prix, soliciting permission for Force India to remain in the championship and also that the new buyers would keep their prize money, also at this time is was believed that the new owners would buy Force India as a going concern. In the end they only brought the assets and not the company that owned the rights to race in F1, as is clear now.
It appears that all teams bar McLaren, Renault and Williams agreed to a waiver as documented during the Hungarian Grand Prix, but that information now turns out to have been incorrect. They didn't buy the company as a going concern, which the waver claimed and are now considered a new entrant, which is also different to the information on the original waver. McLaren, Renault and Williams subsequently clarified that they did not refuse outright, but had instead sought certain clarifications before appending their signatures to the document. The clarifications they sought are believed to relate to the new teams operational relationship with Mercedes, they didn't want Racing Point turning into a Mercedes B team, such as Toro Rosso’s relationship with Red Bull and Ferrari's relationship with both Haas and sauber.
So the information in the waver that the teams signed changed, the crucial issue is that at the time Stroll and Co sought the waivers for the take-over of a going concern, i.e. a company continuing as-is. So only the names of directors and shareholders are changed in registers with all other operational details remaining the same, also all debts settled by the administrator out of sale proceeds. Thus the team would continue to race under the Sahara Force India license, personnel would remain the same, and all contracts would be honored going forward. So the only real change would in fact be that Vijay Mallya would no longer be team principal, with the new owners taking the place of the out-going group. That is the deal the others teams signed up for, or so they thought.
Having singed the deal it turned out that the Stroll consortium couldn't buy the team as a "going concern", its claimed that proved to complex due to delays on the part of the 13 Indian banks who held orders over Force India Formula One Ltd (the holding company that held the rights for the team to race) and Diageo the owners of Jonnie Walker, who also hold a lien over Force India Formula One Ltd.
So Plan B was hatched (which bore no relation to the waver some teams had signed back at the Hungarian Grand Prix) in this plan Stroll and Co would acquire the assets to the team in the name of a shelf company, but not title to the holding company. The new company, Racing Point, would then need to apply to the FIA for an entrant license, crucially as a new team. A good analogy would be that the Stroll consortium brought a computer with the Windows 10 operating system but didn't buy the license to run the operating system, they needed to pay Microsoft extra for that, thus Racing Point needed to pay the FIA for a license to race.
So what is the legal status of the waver signed by the 6 teams (excluding McLaren, Renault and Williams) at the Hungarian Grand Prix, they signed believing the new team was a going concern, yet here we are today with Racing Point being a new entrant. This brings us back to the point I made in a post above regarding Haas, would they have signed knowing that Racing Point would be a new entrant, it seems from what Gene Haas is now saying they wouldn't have signed.
Herein lies the grounds for a possible legal challenge, the six signatures obtained in Hungary specifically referenced to the team as a "going concern". To add further spice, a number of sources are adamant that some clauses were retrospectively amended as the revised circumstances arose, yet not all signatories were advised accordingly. So what they thought they’d signed for is possibly not what is now reflected in the waver. Then last Friday (just before the Spa race weekend) Formula One Management’s legal department allegedly circulated yet another document to all teams, requesting that they attest to not having been placed under duress or coerced into signing whatever waivers they signed in the first place. Curious? This may explain Otmar Szafnauer (the new team boss) intriguing choice of words when asked in the Friday FIA press conference whether Racing Point faced any consequences due to the situation, he said “The remaining nine teams have signed,
so to speak, a document that enables us to keep the money that Sahara Force India had earned in years past”. Why use the words "so to speak", did he know at the time that some of the teams had signed different documents to others?
Also the fact that Stroll was seen in company of F1 CEO Chase Carey going around the different teams back in Hungary will also add weight to the claims by Uralkali, linked to unsuccessful bid lead by billionaire bidder Dmitry Mazepin, that FRP Advisory didn't act with-in the letter of the law and have failed to provide satisfactory answers to their questions around the bid. Uralkali have said that unless satisfactory explanations are forthcoming by 10 a.m. British Summer Time on 10 September 2018, court proceedings will be brought against FRP Advisory LLP.
The irony is there wasn't any need for things to be rushed in this deal. as the bilateral agreements between teams and FOM permit teams to “fail to participate in more than three (3) events in the same FIA F1 Championship before they shall be considered to have withdrawn from the championship”. So the stroll consortium could have waited until after the Belgium, Italy and Singapore races to get the agreements from the 13 Indian banks and Diageo to have continued as a going concern, had they done that, they would have had 9 weeks to sort things out and not be in the mess they are now.
Had Stroll, the FIA and FOM not rushed, I'm sure they would have sorted out a better deal without the uncertainty everyone finds themselves in now. Could it be that they rushed because they wanted Stroll and no-one else, I guess we will find out if this ends up in Court. one thing is for sure FOM are going to have to pay in the end as some teams will want cash to settle this debacle, that is the way in the world of F1.
I really wanted to use the phrase jiggery-pokery in the above text, I haven't used it or heard it in over 40 years, but an English friend staying with us at the moment reminded me of it this morning
What a great phrase but doesn't translate well LOL