It is no secret that Formula One teams have high-octane running costs. Average annual budgets have hit around $220 million making the racing series a playground for blue chip brands and auto manufacturers like Mercedes and Ferrari. Finding investors who are wealthy enough to stump up the necessary funds is a challenge for most teams but one seems to have cracked it.
For the past few years the future of Switzerland’s Sauber
A four-year partnership with luxury auto maker BMW came to a halt in 2009 and, since then, Sauber has owned 70% of his eponymous team with 30% in the hands of its chief executive Monisha Kaltenborn. They have faced a rocky road recently as F1 team costs accelerated due to the absence of a budget cap in the series.
Last year Sauber finished a lowly eighth in the championship giving it an estimated $55 million in prize money – around a third of the amount made by F1’s biggest-earner Ferrari. It piled the pressure on Sauber and earlier this year cracks began to appear as it came to light that the team was late paying staff several months on the run.
In March Kaltenborn admitted it and added “we will get on top of the current issues and we will get out of this awkward situation. We will fight and we will get out of it.” It has taken some time but that is exactly what the team has done.
On Wednesday Sauber announced that the entire share capital in the team had been sold to Swiss investment firm Longbow Finance. Kaltenborn is remaining as CEO and the team’s name is not changing though Sauber will step down from the board and will be succeeded as chairman by Longbow director Pascal Picci.
“We are very pleased that by reaching an agreement with Longbow Finance S.A., we can secure the future of Sauber at the pinnacle of motorsport,” said Kaltenborn. “We are convinced that Longbow Finance S.A. is the perfect partner to again make the team competitive and successful in Formula 1.” This kind of rhetoric is common when welcoming new partners but it couldn’t be much more accurate on this occasion.
Corporate disclosure regulations are tight in Switzerland so Longbow is not obliged to file publicly-available financial statements or reveal the identity of its shareholders. However, there is no doubt whatsoever that it is connected to some of the world’s wealthiest businessmen and Sauber’s Swedish driver Marcus Ericsson is in the middle of the action.
Ericsson is currently 21st in the F1 standings after a 20th place finish in today’s Hungarian Grand Prix. Since joining F1 in 2014 the 25 year-old driver has not got the podium or taken pole position for race. Having won in the prestigious proving grounds of Japanese Formula Three and Formula BMW UK there is no doubt that Ericsson has potential but he has yet to fulfil it in F1 as Sauber’s car has struggled to compete. Nevertheless he has succeeded in attracting support away from the races.
For years rumours have swirled around F1 about who backs Ericsson and we are finally closer to an answer thanks to a detailed investigation of company documents driven by the Longbow takeover.
Until 2010 Ericsson personally owned 60% of a UK company called M E Promotions limited which he was on the board of along with his father Thomas and fellow Swede Karl-Johan Persson, the CEO of clothing chain
Further evidence connecting Persson to Ericsson comes from the fact that the remaining 40% of M E Promotions was owned by another UK business called Sportpro which describes itself in company documents as having “activities in sports sponsorship”. In turn, Sportpro is partly owned by Swedish firm Ramsbury Invest which is the private real estate vehicle of Persson’s father Stefan who is worth an estimated $20.1 billion thanks to owning a 28% stake in H&M. Karl-Johan is also a shareholder in Ramsbury so the connection couldn’t be much clearer but it doesn’t stop there.
M E Promotions was dissolved in 2010 but a company with the same name is based in the Netherlands and 40% of it is indirectly owned by Sportpro. That’s not all.
Sportpro’s biggest single shareholder is also Sauber’s new owner Longbow which has a 33% stake in it. In summary, the company which owns Sauber is also the biggest shareholder in Sportpro which in turn owns 40% of M E Promotions.
The list of names connected to Sportpro reads like a roll call of Sweden’s most storied industrialists. Another shareholder alongside Longbow and Ramsbury is Olsbergs, a leading supplier of electro-hydraulic control systems. Sauber’s new chairman Pascal Picci sits on Sportpro’s board next to Karl-Johan Persson and Finn Rausing, another Swedish billionaire. He is worth an estimated $5.7 billion from co-owning the Tetra Laval packaging empire.
Tetra Laval made its fortune from a patent on the fold-able cardboard cartons which milk and orange juice commonly come in. The patent was filed in Germany on Jan 16 1963 by Tepar Ag and nine months later sister company Tepar SA was set up in Switzerland. It is now known as none other than Longbow Finance S.A and one of its board members is Larry Pillard who only stepped down as Tetra Laval chairman last month after 14 years in the job.
Together, Finn Rausing, Stefan and Karl-Johan Persson are worth $28.1 billion and, as if this list of heavyweights was not enough, Longbow’s chairman is Raymond Bär former chairman of Swiss private bank Julius Bär. He also knows his way around the auto industry as he is on the board of AMAG Automobil und Motoren a major Swiss car dealer and importer.
Just days into the deal, the new owners are already having an impact as Ericsson’s team-mate Felipe Nasr said on Thursday that the new funding has allowed Sauber to introduce updates that were previously on hold. The restricted disclosure of Swiss company documents means that we may never know how much of a boost the new investors will bring to the team’s bottom line but it is safe to say that Sauber’s money worries appear to be over.
