Thursday, January 20, 2011

Lots Of Trouble Usually Serious

The problem with twitter is that debating in any depth is rather arduous when you are restricted to 140 characters per stab. Imagine sitting in a Dublin snug, pint in hand, and being forced to debate any issue in abrupt, emasculated sentences, stopping each time to hear what your opposite number had to say. Who would do that? The Licensed Vintners Association of Ireland would have a corporate coronary as their members all filed for bankruptcy.

After the recent INDYCAR 'State of the Series' address, I found myself in just such a situation on Twitter as I became embroiled in a vigorous debate over the comically ambitious 'Most important race in history' tag line. My assertion was that the Indianapolis 500 has never been thus and my extremely game opponent contested that while it is certainly not the case now, it most certainly was in the past. The truth of the matter is that, while it has always been a part America's cultural fabric, it has never resonated with the same intensity outside of the USA where the event and its stars are unknown to all but the committed racing buff. This was confirmed by legendary UK track owner and promoter, John Webb, in an interview with Motorsport Magazine this month. He described the disaster that was his 1978 USAC promotion, which saw him bring all of the top US cars and drivers to the UK for races at Brands Hatch and Silverstone.
The IndyCar visit in '78 is top of my list of failures....I overestimated the knowledge of the British public. I thought they'd flock to see the Indy stars, but the name AJ Foyt meant nothing to them. We lost £250,000, wiping out all the profit we made on that year's GP.
Colin Chapman may well have factored this into his thinking, when he chose Mario Andretti as the man to win him the World Drivers Title in 1978. An American winning the F1 title in one of Chapman's creations was an ideal way to promote the sale of Lotus road cars worldwide, but particularly in United States with Grand Prix on the East and West coasts. Returning to Indianapolis would not be necessary to make the required headlines and kick start an exodus of Elites and Espirits from dealerships from Los Angeles to New York.

It's such a shame that this flawless logic should be in such short supply when it comes to the latest attempts to inject life and vitality into the legendary British marque. Apart from the ongoing dispute between Group Lotus and Team Lotus (heading to court in March), there is, rather unfortunately, the makings of a fine sit com unfolding in Norfolk.

The Midweek Motorsport show on recently received a communication from inside the factory and it makes rather grim reading for anyone with even the slightest regard for the provenance of the Lotus brand. It contained the following revelations:

- Lotus Cars have exhausted their supply of Toyota engines for their road cars so only the supercharged Elise, Exige and Evora can be manufactured.
- 100 members of staff have recently taken voluntary redundancy.
- There is every likelihood that 50-100 more staff will lose their jobs.
- The levels of unallocated (un-sold) stock is rising rapidly with approximately 200 cars now in US port stock
- Sales forecasts have been reduced to the point that about a fifth of the forecast is currently unallocated stock waiting to find buyers
- Dealerships have been served with two year notices of termination
- Lotus have borrowed over $100M to cover existing budget shortfalls with more to come early in 2011
- Lotus paid Renault F1 $14.5m in November.
- The current monthly salary commitment is $6.47M and that was before Nigel Mansell and Jean Alesi were announced as Brand Ambassadors.

The belief amongst the general employees and management is that the already top heavy board of directors are on a non-stop marketing jaunt around the world announcing cars they have no capacity to build and making motorsport commitments they can't possibly honour. The latter includes a commitment to build LMP1 cars for Le Mans, entry into the ILMC in the GT2 category with JetAlliance Racing along with sponsorship of the ART Team in GP2 & Gp3. This in addition to thier existing contracts with Renault F1 and KV Racing/Cosworth in IndyCar. Oh yes, I almost forgot, there is the small matter of the $1.6M T125 'track day car' which is essentially an F1 car for people with way more money than sense!

The Renault F1 team were paid up front and if I were Kevin Kalkhoven (KV Racing & Cosworth), Frédéric Vasseur (ART), Lukas Lichtner-Hoyer (JetAlliance) I would be insisting on a cheque immediately and demanding that one of my drivers get me to the bank as quickly as possible! Okay maybe I wouldn't ask EJ Viso that, as I believe it is rather difficult to cash a cheque while upside down and ablaze on the side of the road!

This whole project reminds of the dot com boom and the days of 22 year old graduates starting companies like and having a market capitalisation of 200 billion dollars for about ten minutes. Which was nine minutes longer than they needed to spend all the money that never existed in the first place.

I suppose the one consolation in all this is that if the electricity does get switched off at the factory in Hethel, they could always keep the lights on using the power generated by Colin Chapman spinning violently in his grave.


  1. I've been calling Tony Fernandes F1 team "Fake Lotus" or "Air Asia F1" as he just bought a name & unlike Chapman his engineering team will never build/market road cars.

    Proton bought what wasleft of Lotus Cars after numerous owners in the 90's & IMO deserve the right to market themselves in motorsport. I know Chapman separated Lotus Cars & Team Lotus, but it was done for legal technicalities. Lotus Cars benefitted from Team Lotus in F1.

    Having said all that I think Dany Bahar is spending Proton's $$$ like a drunken sailor... although I like your 22 year old CEO of a dot com reference much better! Its extremely difficult to support his supporting every racing series on planet Earth! However the Lotus fan-boys picking Tony's "Lotus" is equally as comical.

    Thank you for providing more financial detail on the production car & non F1 motorsport deals. Very interesting & confirms much of what I suspected. The other sad detail for me is "marketing genius" Bahar got himself schooled by Tony Fernandes.

    All of Proton's motorsport efforts are sporting the metallic British Racing Green & the Lotus Yellow colors. This color scheme screams LOTUS, yet Dany-boy paints his F1 team Black & Gold. The JPS Lotus schemes are iconic to F1 fanatics. Racing gear heads in the same class as the diehard Brits that you mentioned that followed the USAC Indycar drivers in the 70's. He couldn't even sell sponsor TOTAL on the "JPS"concept.

    Epic FAIL on numerous fronts! I look forward to keeping up with your blog.

  2. As a big Lotus fan those numbers from the Lotus insider are very worrying.

    I don't think it is normal sponsorship practice to pay 'up front' - I hope the $14.5 million is not the first of staged payment!

    Just how long will the current owners pour money it to Lotus?

    If you want a real laugh have a look at the new Lotus online store £88/$141 for this:

    Yes, you did read that right, £88/$141 for a key ring!

  3. Sadly Declan, it gets worse.

    Numbers produced by Proton will require vast public loans and a need for the company to start producing 3-times-as-many cars per year just to break even.
    Bahar played this game at both Red Bull and Ferrari and was found out before it was too late. Ferrari still lost $6 million thanks to Bahar's push in the A1GP Series.

    This is going to get worse. Much worse.

  4. Leigh,

    I didn't include all of the financial figures in an attempt not to bore people. They are looking for $40M more from the UK Government and that's not going to happen.

    I honestly doubt there will be any Lotus involvement in IndyCar in 2012 or in any other form of motorsport.

    Rumours from the Autosport International Trade Show in January suggest that the global Motorsport budget has not even been signed off by Proton.

  5. I have a dreadful feeling this is going to bring down not just Lotus (cars) but also the F1 team, ART, JetAlliance and KV. I really wish a couple or three of those hadn't got involved at all.

    Scary stuff if that contact is right.

  6. Wouldn't it be bizarre if Fernandes ends up buying Lotus Cars (Group Lotus) out of bankruptcy court??? Then I would take back the mean things I've said about him! :) :)