Funding and IPO

Kiwi3 · 2 Jun 2006, 09:10 (Ref:1625261)

Everyone has been very quiet since the announcement that A1GP has secured backing by an investment management firm, and aims to raise an initial public offering in the coming months.

There were a couple of interesting points to note as part of this news:

1. Tony Teixeira (who seems to be getting more and more visible) admitted that the series was under-funded during the first season, and that things came to a head halfway through. I take this addmission as a positive as if the financial position was still precarious, I don't think this statement would be made. I think that it is a sign that things have moved on and that the confidence now exists to make this kind of statement.

2. It seems A1GP will no longer be the Sheikh's train set, rather it will need a traditional business structure in order for the IPO to be accepted. Whatever role the Sheikh takes, I hope he will still be applauded for having the vision to set up the series in the first place. Perhaps he will still make a packet from the floatation, or at least recover what he has put in.

3. According to the press release, financing has been put in place by the lead investor to provide stability, hopefully this will lead to more sponsor commitment, and enable to series to grow stronger (particularly if the second season is more lean and mean and visits circuits with an obvious fan base). Hopefully long term plans will now also be able to be put in place in terms of television deals, merchandising etc etc.

I think it is very good news, and I for one will be listening out for the IPO details so that I can put my money where my mouth is.

Roll on October 1st and a bright future for A1GP!

Kiwi3
(lead A1 cheerleader)

**Asp** · 2 Jun 2006, 09:22 (Ref:1625274)

Just for reference, this is the press release we're talking about

It really is promising news, ensuring that A1GP is going to be here for a while yet, and will continue to develop. It's interesting that there is now this admission that there were finacial problems in the first year. They shouldn't have been ashamed of it - new series, new risks, needs to grow. But, it also shows that they should be resolved and won't be an issue in the future, and we will be able to concentrate on the racing and the development of the series as an entertainment package, as opposed worrying about if the series may or may not continue.

cos · 6 Jun 2006, 10:03 (Ref:1628331)

Autosport reports that A1 lost over $200m in its first season so I guess the new investment and move to an IPO would be good news for the series.
(It does seem a *lot* of money... but I wonder how much $$ ChampCar and the IRL are haemorrhaging each season?)

luke · 6 Jun 2006, 11:53 (Ref:1628431)

$212m in its first season of operation is silly. I as suprised that the series survived it's first year.

josvandeperre · 6 Jun 2006, 14:40 (Ref:1628555)

Effectively the IPO is to repay all that seed money so that from now on it has to stand on its own feet without a 'sugar daddy' element

Roninho · 6 Jun 2006, 16:30 (Ref:1628618)

Quote:

Originally Posted by cos

Autosport reports that A1 lost over $200m in its first season so I guess the new investment and move to an IPO would be good news for the series.
(It does seem a *lot* of money... but I wonder how much $$ ChampCar and the IRL are haemorrhaging each season?)

CART lost $90 million in it's last year of business. Out of the top of my head that included $45 million on teamsupport and purses, $10 million on self-promoted races and $15 million on tv expenses.

Imo $200 million is an astonishing loss. I have absolutely no idea where they spend this kind of money on.

Jos >>> I don't know how much of the $200 million were one-time costs (the cars, for example) but is it reasonable to expect a serie to be self-sustaining after the ipo when it loses this kind of money?

Kiwi3 · 7 Jun 2006, 04:46 (Ref:1628961)

A1GP constantly travelled around the world while CART only takes a couple of long trips a year.

Also would like to know if this includes set up costs such as purchasing the cars, if so, that does not need to be repeated for a couple of years.

Also a better schedule involved tracks with support like Zaandvoort instead of disasters like Estoril and Lautsitz should help balance the books a lot better.

I don't see why it couldn't be profitable long term considering how much money F1 and other sporting events generate. It was always a three year plan to be profitable, but I presume this loss was much larger than anticipated hence the IPO plans.

Mystery · 7 Jun 2006, 12:59 (Ref:1629220)

Quote:

Originally Posted by Roninho

Imo $200 million is an astonishing loss. I have absolutely no idea where they spend this kind of money on.

Who remembers the helicopter car removal service in Dubai - probably cost more than a couple of quid

georges1 · 12 Jun 2006, 13:48 (Ref:1632485)

All this is not important guys the most important is that A1 put the plans and calendar and prove they will survive for the 2nd season, A1 i feel is in danger

A1 fan · 13 Jun 2006, 10:42 (Ref:1633332)

A1 is not in danger anymore IMO. It now has the money to move forward. They just need to sort the PR and marketing side of things.

**Asp** · 13 Jun 2006, 11:35 (Ref:1633379)

I feel A1 was in danger, that's for sure - but this statement indicating all the finances and saying that they were having problems, with more openess, suggests more that the problems are resolved.
It's a big step for the series, and now, IMHO, guarantees the security for the future more than weakens it.

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