Hungry like a Wolff? Williams new investor opens up 10 Dec 2009
When Frank Williams recently revealed hed sold a stake in his beloved team, everybody was surprised. The second bolt from the blue came when the identity of the new shareholder was revealed. Toto Wolff? Even in the Formula One paddock many were left shrugging their shoulders. But now the Austrian entrepreneur and amateur racer is ready to come out of the shadows in an exclusive interview with Formula1.com. With a tangible passion for motorsport and a well-developed business sense, its clear why Williams decided Wolff was the right man for the role
Q: Toto, you have long been involved in the sport as a racer and now you have switched sides to become a minority shareholder in the Williams team. Can you explain your reasons for that move?
Toto Wolff: Well, first of all, my racing career has always been on an amateur level - for the fun of it. You could say that I saw myself as a competitive amateur. The involvement in the Williams team is the opposite. It was a purely commercial decision - an economic deal. I believe that the environment around Formula One has changed very recently, with the exit of some manufacturers and with the financial restrictions looming. I believe that the business model functions again now. The business of Formula One teams has returned again to the normal principles of companies, meaning that they will at least be cost neutral or even profitable. That was not the case in recent years.
Q: Were you surprised that Frank Williams accepted your offer? Over the years there have been several attempts to buy into his team and he always rejected them. Why did your offer change that policy?
TW: Frank always had a long-term view for Formula One and his company. We have been discussing the deal for months. It definitely didnt come about from one day to the other. We met by pure accident but discovered that we get along very well. Frank is very aware of the fact that he has to lead the company into the future and supervise its transition to the next generation. He started that process some time ago by putting a young management team in place with Adam Parr and Sam Michael. My guess is that he also wanted to make a step towards a younger generation on the shareholder side. And on top of that, selling a stake seemed suitable for him for purely economic reasons.
Q: And for you, why Williams? Did you have a look at other teams before making your decision?
TW: Yes. Ive been looking at the environment quite closely for a couple of years now, since I had discussions with a Formula One team three years ago. Without name dropping, that business case didnt seem intelligent to me or commercially viable. If you look at the heritage of Formula One and the great brands, then there are only three or four teams who have that kind of heritage. The second reason was that I wanted to buy into a team with a lot of knowhow, with a good infrastructure and the capability of coping with the new resource restrictions agreement. Williams has been operating with a significantly smaller budget to the manufacturers for some years.
Q: How long have you been wooing Frank?
WT: Well, I think Frank and I have been serious about the idea from the very start, because both sides were very clear about their visions for the deal. The basic outline for the transaction was clear in the late springtime, but a deal of this size is quite complicated. Its definitely not a two page contract! All in all, I would say that we negotiated for about six months.
Q: You said that your stake in the team is somewhere between 10 and 49 percent. That is a pretty wide range. Can you be a little bit more precise?
WT: The problem is that I cant be more precise because the deal is not as simple as it sounds. It is not that I bought a certain percentage of the company, period. Its a very cleverly structured deal with options and therefore we decided not to disclose the percentage of ownership to avoid any new percentage disclosures over the future months or years. All I can say is that its a serious ownership, not just something to show off with and say hey Im in Formula One!. I can only repeat that I did it for purely commercial reasons. My background is in private equity and not in a fairytale book. Ive been involved in motorsport, with DTM, for many years so I know the trade. But it was not just me that made the decision but also my company. We all decided that the commercial model and the business case is viable. Therefore the way the deal is structured is from a long-term perspective, with shareholding in the company, which is a clear commitment to the company in the future.
Q: Frank said that you will attend all board meetings but wont have any impact on the teams direction. So whats in it for you? How does the silent partner get his satisfaction?
TW: As I just said before, the deal is not as simple as a just a percentage. On the other hand, being part of a board with only six people on it is itself a privilege and shows the commitment and the long-term perspective of both sides. Being on the board means you are involved in all major decisions in and around the company. I think that one of Frank and Patricks (Head) motivations to sell a stake now was to get somebody involved with some knowledge of motorsport - and I am lucky to have that. Im involved in the management of various motorsport categories, including DTM and rallying, so I also might have some new and interesting input into the company, even though Ive not been in Formula One before.
Q: Could your minority share open the door to a takeover in the future? Frank has said that he and Patrick are no longer spring chickens
TW: The fact that Frank and Patrick have not sold a stake before now indicates that when they decided to do it that it was a very well thought-out move. Yes, it is a door opener, but for both sides. And I think it is important for all for us to think that, yes, Toto can play a role in the future development of the team. The same goes for me. Yes I want to play a part in the team, and yes I want to increase my stake, but lets talk about it when we get there. I am the new kid on the block and I hope that slowly I will get a better insight into the business of Formula One and start to play a part in the team.
Q: Are you going to put in some years of service at Williams in preparation for bigger things?
TW: Yep, you could say that. I think at the start its important to be humble about your own knowhow and skills, because I definitely have very little knowhow in the Formula One environment. But Ive been in the private equity business for ten years and I think that is a sort of added value that I can bring to Williams and the management of the team. All the shareholders have the same vision of what road the team should take in the years to come. I have my foot in the door, and we have made sure that the door can be pushed more open in the future.
Q: Despite the worldwide economic downturn, Formula One racing seems to be more attractive than ever, with four private teams pushing their way on to the 2010 grid. After a decade of manufacturers, is it once again the time for entrepreneurs?
TW: The manufacturers have played an important role in shaping Formula One over the past decade, but yes, I think that the entrepreneurs - and manufacturers with the right racing spirit - are on the advance. The future will show if all those new entrants make it to the grid in 2010. Williams is the opposite of a new entrant, and that was one of the major reasons why I decided to get involved with them. I would have never invested in a new entrant and neither would I have invested in the complete buyout of another company because I think that it is too difficult a task. You have to build up a deep understanding of Formula One to be able to run a team, and that is something that does not come overnight. Being an entrepreneur and buying the majority of an F1 team, you have to be very careful about your own skills and hiring the right people to run the team. You can so easily get it wrong. That was the reason why Ive invested in Williams because it is a perfectly running outfit which has experienced very little fluctuation in the past years.
Q: Where do you want to end up in Formula One racing? You must have a bigger ambition than being a silent partner?
TW: On the commercial side, I want to make money with my shareholding in Williams and increase the value of the company - very simple. On a personal level, I have a well developed racing spirit - and in Formula One, if you race well, the revenues increase. So I have found a business that perfectly combines both sides of my interests.
Q: So will we see you at every race next season as you learn the business?
TW: No, not at all. I am involved in HWA which runs the Mercedes DTM programme so I will be at the DTM races. But I will definitely go to some Formula One races where we all believe that it makes sense for me to go. But I will definitely not visit all the races as a tourist and plant myself in the Williams pit to enjoy 15 minutes of fame.