23/02/2008
NEWS STORY
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Once upon a time McLaren was one of the bastions of F1 integrity with indisputable dominance both on track and in the financial department. Then came last year. The spying scandal rocked its roots and the management's hearts missed beats when Hamilton lost the championship by just one point. The £50 million fine it received from the FIA for having Ferrari's data was the icing on the cake. Now it turns out that behind the scenes McLaren was already on a rocky road before any of this even began.
A report in today's Daily Mail by Pitpass contributors Christian Sylt and Caroline Reid reveals that, according to its latest accounts, the McLaren Group made a £2.3 million operating loss in 2006 - a huge crash from the previous year's £14.3 million profit. Lack of a title sponsor after tobacco brand West left the F1 team sent its revenues into reverse gear and the group's turnover dropped to £206.6 million.
But the biggest driving force behind the loss was sales of McLaren's £300,000 flagship model, the SLR, which slumped from 649 in 2005 to 261 the following year. It had an uphill struggle from there since the £50 million fine was due in December last year and McLaren's accounts show that the group had £88 million of creditors to pay by the end of 2007.
Making gains by cutting costs will be tough as the company is already very lean. In 2006 McLaren's overheads decreased by 10% to £209 million with one of the biggest chunks of this being the £65 million paid to its 1,290 staff. Tight cash management during the year enabled McLaren to eliminate £70 million that it owed and its cash reserves increased by £9 million to £11.6 million. It's a healthy war chest but nowhere near enough to pay its due to the FIA.
McLaren's most valuable tangible assets are its land and buildings which have a book value of £203 million and include its lavish Norman Foster-designed factory with an underground windtunnel. And if the FIA has its way with limiting car design and budget capping even this may have to be mothballed for a good deal of time.