RACE DEBRIEF

    McLaren chief Zak Brown says he is confident his Formula 1 team have the “resources and people” in place to bring the iconic British racing team back to the front, amid news the McLaren Group plans to sell their factory and lease it back.

    McLaren are in the midst of a restructure, and earlier this year agreed a £150m loan arrangement with the National Bank of Bahrain to shore up their finances. It was part of a wider plan to solidify their long-term future, following the challenges the coronavirus pandemic has placed on the company.

    Earlier this week, Sky News reported McLaren wanted to boost its cashflow by selling the Norman Foster designed McLaren Technology Centre , built in 2003, and then lease it back.

    On Friday, Team Principal Andreas Seidl said the move “doesn’t affect out daily business on the F1 side” with Brown explaining the reasoning behind the move in a video call on Saturday.

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    Zak Brown says he is confident the team have the resources in place to return the team to the front

    “We’re going to issue a traditional sales lease back,” he said. “The majority of companies in this world don’t actually own the real estate they are tenants of. We have a lot of cash tied up in that building and that is not a very productive use of funds when you’re looking to invest in your business.

    “We’ll ultimately sell the facility to someone. We’ll then do an extremely long-term lease and then we’ll use that money to help us grow our business. It’s a pretty simple financial restructuring exercise.”

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    He added: “We have a good chunk of debt, now Paul [Walsh, McLaren Group Executive Chairman who joined in March] is starting to set a direction to give us a stronger balance sheet, invest in the right areas, ultimately grow our companies and be financially a much stronger company. We’re very excited.”

    It is understood the company is hoping to raise around £200m from the sale. Brown said the intention is to use those funds to accelerate growth.

    I think the sale leaseback is a good decision

    Zak Brown, McLaren Racing CEO

    “We’re fine financially from a cashflow standpoint,” he added. “When Covid hit and it turned off our F1 business, our automotive business and to a certain extent our technology business, that consumed an immediate amount of cash. We’ve now done that.

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    “We have now plenty of runway to make sound business decisions. I think the sale leaseback is a good decision. As while we will rent it, it’ll be a lease so we’re paying for it every year, the growth we’ll be able to generate for our business by taking those resources and putting them into the business, we should be able to multiple the money we’re giving because we’ll be able to drive the business to the next level. I do think it’s the right decision.

    “That’s why you see many corporations are just tenants of their buildings. They don’t own their buildings.”

    He added: “We have a good five-year business plan [which ties in with the new Concorde Agreement that runs from 2021 to 2025] for this next era for Formula1, I’m confident we have resources and people in place to give us what we want to get back to the front.”