According to many reports from last year Lotus has been for sale for over a year, they want $400 million for it. This latest report says that lotus (the owners of) are in the hole for $185 million as of the end of 2012. The trend is greater debt each year, so, end of 2013 more then $185 million and end of 2014 most likely more then 2013 debt.
So they want to sell and $400 million was the price in 2013, that number is a crazy insane high price especially with the exit of so many top team members and the performance that has followed, its damaged goods. So why $400 million, its simple, these owners want their money back, all that debt is from them, they want it back AND they want some profit. I guess getting your own F1 team is the equivalent of telling everyone your still a kid, but rich. Watch this Mom, no hands, and I get to lose a massive amount of my money!
Right now those Lotus owners are living in the nightmare scenario of nightmare scenarios, how does it go, “how do you make a small fortune in F1, start with a large one”. These owners are living this, their debts are now higher then the price they will ever get for a sale of the team, I would guess under $200 million, the Lotus owners will lose money on their “investment” and they don’t seem to have realized it just yet, and the debt keep on growing.
I think Lotus is the most desirable team for someone to buy, if they want into F1, but the price will be much lower then the total debt. When the folks a Geni finally concede that its over, because of the financial pain, no one will be around to buy it from them. If I were in the market for a team and Lotus looked like the right choice, I would wait for it to die and pick up the pieces at the auction of their stuff. I am sure the layers of advisors and consultants that make up the intelligentsia of F1 have been saying this for some time, Geni wants too much, wait for them to go bankrupt then buy at the auction. Geni is living the nightmare, they should get out today not tomorrow, if they want to lose less money.
Don't worry that much about Genii. The numbers you reading from Lotus Balance Sheet do not have to translate to Genii pain in same amount.
First, Lotus debt is primary loans from Genii. So what is current liabilities on Lotus B/S is current assets on Genii B/S.
Second, we don't know what was interest rates on those loans. Maybe they were quite higher over market rates, and what contributed to Lotus losses turned into profits on Genii books. Sure they are only profits not cash flow, as Lotus does not pay it back. But I wonder how much of this debt is principal amount borrowed from Genii and how much are capitalized interests.
Third, we don't know what the transfer pricing tricks were used by Genii. I can imagine a lot of management fees beeing charged by Genii to Lotus, or commissions on sponsors brought by Genii.
Sure, all that Genii revenues and profits are just paper they are printed on untill Lotus generates enough cash to pay them. And this is were Lotus main problems generate. They played with the big boys and they never get paid close to what big boys are paid by Bernie. Unfair distrubution of money in Tab B payments (to Ferrari, Lotus, McLaren and Williams) means for example that in situation that Lotus wins WCC and Ferrari comes last in WCC, Ferrari still gets more money from FOM that Lotus does.
So IMO the only sound reason to hang into this investment is to wait for that FOM payment model to change, or getting manufacturer in, or getting some rich Gulf Prince looking for ways to impress his fiance by buing into F1 team ;-)
I am not saying that Genii will get out from this business with dry feet. But they actual losses may end up way lower that Lotus financial statements filings suggests.