McLaren May Need To Sell Stake In F1 Team To Survive

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The UK automaker has been hit hard financially.

McLaren has been hit pretty hard by the Covid-19 pandemic and the associated market downturn. The UK automaker was forced to terminate 1,200 job contracts from both its F1 team and production car businesses arms and borrow funds to stay afloat. McLaren recently received a $184 million loan from the National Bank of Bahrain that helped keep the company secure in the short term but Autocar now reports that more funding will be required for the medium term.

The plans that are currently being discussed involve selling off pieces or all of the Automotive and Applied Technologies divisions but the most likely piece to be sold could be the Racing division. This includes the McLaren F1 team, which just scored a podium finish at the Austrian Grand Prix.

McLaren Racing
McLaren Racing

It is unclear how much McLaren's racing team could draw as an investment target. Two years ago, Iranian-Canadian businessman Michael Latifi purchased a 10 percent stake of McLaren's three divisions for $270 million, meaning that the company was likely valued at over $2.7 billion at the time. Recent changes to F1 including a new cost cap for teams could make McLaren racing more profitable than it was two years ago, possibly increasing today's valuation.

A McLaren spokesperson confirmed these rumors by saying, "We are considering the option of additional investors in the Racing business." As for the partial or complete sale of Mclaren Automotive, which produces the road-going models like the 2021 McLaren 765LT, those discussions have not been confirmed.

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McLaren Racing
McLaren Racing

McLaren's sales have certainly been hurt because of the pandemic but the company was profitable before the virus outbreak. As for the McLaren Applied business, which leverages the company's racing technology for everyday uses such as health and public transport, those discussions are a bit more complicated. Because McLaren Applied relies so heavily on the Mclaren Racing division, it could be difficult to sell on its own.

McLaren
McLaren
McLaren
Source Credits: Autocar

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