Marussia to exit administration on February 19th..

Zuma said:
The shameful thing in the way f1 is set up is that when a team fails, it's all their suppliers who take the hit. The f1 team just stops existing and all you are left with is a load of suppliers and former employees owed money for work they did properly. Money that should be paid to them from 'prize' money. Although as said earlier it's not really prize money, it's more of an appearance bonus paid to teams who were successful the previous year.
But the way this is set up and the way teams fail means that it will always be the suppliers who take the hit when a team goes under
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Why is it shameful the way F1 is set up? In simple terms a business goes insolvent because it can't pay its debts so any business that goes insolvent owes someone money. It is unfortunate but the someone usually does include suppliers and employees, F1 is no different in this. The only shameful thing is that teams joined F1 based on a promise of reduced costs and budgets that was simply never going to be implemented.

It is impressive what Marussia (and Caterham) managed on what was, for the big F1 teams, a shoe string budget. It is a shame that it looks like neither will be on the grid this year but ultimately it is probably a good thing. Performance gains were made over their years in F1 but with no winter development or testing they would be woefully uncompetitive this year.
 
Greboth said:
Why is it shameful the way F1 is set up? In simple terms a business goes insolvent because it can't pay its debts so any business that goes insolvent owes someone money. It is unfortunate but the someone usually does include suppliers and employees, F1 is no different in this. The only shameful thing is that teams joined F1 based on a promise of reduced costs and budgets that was simply never going to be implemented.

It is impressive what Marussia (and Caterham) managed on what was, for the big F1 teams, a shoe string budget. It is a shame that it looks like neither will be on the grid this year but ultimately it is probably a good thing. Performance gains were made over their years in F1 but with no winter development or testing they would be woefully uncompetitive this year.
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it's shameful because everyone knows that the mode of failure for a team is for the suppliers to lose out, not the actual team. when the other teams were getting together to make decisions that would affect the future of teams like marussia and caterham, what they were really doing was deciding the future prospects of the employees of those teams and the suppliers who were owed money. money that could easily have been paid off with the prize money that was earned that year by the hard work of the suppliers and workers.

It's not the team that gets punished for the financial failures, it's people. the F1 team is just a name on a bit of paper.
 
The_Abyss said:
But not necessarily to the teams that finished below Marussia.
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You mean the $10m "thanks for turning up" handout? Bernie does keep that, that's true. But Bernie had no say in this blocking of Marussia using a 2014 car.

Side note, I remember when using an old car was pretty standard. Less so in the 00s, but Super Aguri based a whole team on it quite recently. Maybe part of the problem with why F1 is so expensive is because the FIA keep changing the rules every year?

But stable rules would require them to be able to write half decent ones in the first place, so were outa luck there then!
 
Zuma said:
it's shameful because everyone knows that the mode of failure for a team is for the suppliers to lose out, not the actual team. when the other teams were getting together to make decisions that would affect the future of teams like marussia and caterham, what they were really doing was deciding the future prospects of the employees of those teams and the suppliers who were owed money. money that could easily have been paid off with the prize money that was earned that year by the hard work of the suppliers and workers.

It's not the team that gets punished for the financial failures, it's people. the F1 team is just a name on a bit of paper.
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Hi. Welcome to capitalism.
 
Zuma said:
If you think F1 is based on capitalism, you are wrong.
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I'm saying businesses going bust and the staff and suppliers feeling the pain is part and parcel of capitalism.

F1 is a rather odd industry to choose to have this rant at. Companies go bust and leave behind massive debts and flocks of unemployed staff all the time. Why is F1 the chosen target for your wrath? Did you used to work for a Marussia supplier?
 
Zuma said:
If you think F1 is based on capitalism, you are wrong.
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It's not directly, but F1 has absolutely nothing at all to do with a supplier CHOOSING to supply something but accepting the payment later. They could demand payment upfront, that is a risk they chose. There is absolutely no regulation in F1 that says, run in debt and we give you money at the end of the year to pay off debt. Teams that get into F1 should put together enough to run for a year(at least) before starting and could pay for everything upfront, thus no supplier would lose out if Marussia ran out of money, well actually they still could be in a different way.

If someone has a company where their main revenue input is a company that goes under, a supplier can still go under.

That is the capitalism part, if you choose to base a business around supplying parts for a F1 team and that F1 team goes under, so does the supplier, bit whoop. Who said those guys had to get into that business, that is part and parcel of the risk of the business they choose and that goes the same for a majority of businesses.

That supplier has it's own suppliers. It can go under when an F1 team hasn't gone under, in fact you'll find a situation where a supplier takes money, puts in an order for supplies, like metals/stuff to make a carbon shell, whatever, then run out of cash, both failing to pay off their supplier and failing to provide a product paid for(in this case) already by the F1 team. Thus the suppliers supplier gets hit and the F1 team.

That is business, it has nothing at all to do with F1, name a industry and people getting hurt when a part of their business chain goes down is standard.
 
the main point i make is the mechanism where these teams failed is not like how a normal business could fail.
tell me another capitalist market where all the other players in that market can get round a table and decide to kill off one of the other players cos it's slightly in their short term interests to do so.
the main difference for marussia this year was the very high costs of engine compared to the previous years. Thats not to say that there weren't plenty of self inflicted troubles they had to deal with also.
but if you take into account the 'prize' money they earned this year, then they would be barely insolvent in the first place. but as i said early, the way F1 is setup, that final prize money never gets paid to the team, but by the time a team has failed, it's not really the 'team' that should be getting it.

And yes i was a supplier to marussia. We didn't go under though cos we have other work and also we limited the debt they could run up. but some suppliers are in a far worse position. And because of the nature of the work, some suppliers get into a position where they could potentially withhold work or parts and precipitate the demise of the team, when we really only knew they were in trouble late in the season.
And it's common in pretty much every business to give a months credit on invoices anyway, so the payment up front concept is just not based in reality
 
The teams didn't decide to kill off Marussia. They failed on their own (having been set down the path of failure by the FIA). The other teams have just blocked changing the rules to keep them, which is very different.

And the engines didn't kill Marussia at all. They may have even been free to them for running Bianchi.
 
Anyone who only 'really' knew Marussia were in trouble late in the season weren't paying an awful lot of attention to the industry they were involved in. Again F1 has nothing to do with the decisions for suppliers to provide products on credit expecting to be paid later, all businesses can run into trouble when they rely on another company for income and that business goes down and all companies should be monitoring the financial health of any significant source of revenue or anyone with a significant amount of money owed to them and act accordingly.

As for the teams killing off Marussia, they didn't. Not always but often what happens in a situation like this is a team(be it football, F1) or a business gets into trouble, other people see it as a potential takeover target but when they have significant debt it's usually financially beneficial to let it go into administration. Let some of the waste be shed, employees fired, let the administration team come up with deals for the debt. Maybe for instance Marussia had 30mil of debt, they had 10mil of cash and the administrators raised 5mil via selling off some assets, the creditors agree to take 50p on the pound and the administrators pay off 15mil of debt and then take the company out of adminstration.... it's at this point the circling vultures want to buy. They save 15mil in debt and hopefully key personnel they would want to fire have already gone, saving a load in redundancy payments.

So I can see a situation in which effectively the debt Marussia had could have been paid off/wiped out, and being allowed into F1 for 2015 is effectively an entirely separate matter. So the decision to not let them could have literally no effect at all on those suppliers who were owed money. As woeful a business practice as it is, if they've made an agreement to take say in one case 500k instead of 1mil owed THEN the company is bought and turned into a new company, new owners, then they don't owe the remaining 500k even if they have it now.

As for other industries situations a group of companies can kill off another one, happens all the time, not usually legally. But you get guys like Amazon colluding on e-book pricing for whatever reason it was(kill off smaller e-book suppliers or prop up pricing and keep normal book pricing higher?). You get memory makers colluding, sometimes they'll reduce manufacturing to raise prices, sometimes they tank prices to force another company to close their doors and leave better profits for the others(both of these HAVE happened). intel paying dell and others to not sell AMD based computers, costing AMD in the region of billions in sales at a time AMD were making stronger chips.

Football teams have voted to not let a team stay in a league, or voted to punish a team. This kind of stuff in different ways and in different situation actually happens pretty often. Collusion in the business world to try and cut out other people and share the profits between who is left is pretty common.
 
I would like to know why FI blocked the change.
On the wording of the BBC article that suggests all the other teams OK'd it - which is quite unusual!
Can't see Marussia being a 'threat' to FI, but would have been nice to have an extra team.
 
ajf said:
I would like to know why FI blocked the change.
On the wording of the BBC article that suggests all the other teams OK'd it - which is quite unusual!
Can't see Marussia being a 'threat' to FI, but would have been nice to have an extra team.
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The prize money is split between less teams if Marussia aren't included. For the teams at the bottom (Force India and Sauber) it means a not insignificant bump in their share of the money. So in blocking Marussia competing in 2015 FI will have made themselves a few million quid.
 
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