Business

Tuesday September 29, 2009

Malaysia's Lotus F1 team to drive for profits

By B.K. SIDHU


Shareholders keen on monetising the Lotus brand

PETALING JAYA: The establishment of the much-publicised 1Malaysia F1 Team Sdn Bhd (1MF1T) is an attractive business proposition and is expected to turn profitable in the first year of operations.

The main revenue drivers include sponsorship, sale of merchandise and share of profits with FOM (Formula One Management, the F1 commercial rights holders).

“We will make money in the first year as we have always done with our other ventures,” said Datuk Kamarudin Meranun, who together with long-time business partner and team principal Datuk Seri Tony Fernandes, will own 60% in 1MF1T via Tune Group.

The remaining stake will be held by Naza Group chief executive officer SM Nasarudin SM Nasimudin in his personal capacity.

Datuk Kamarudin Meranun (left) and Datuk Seri Tony Fernandes will own 60% in 1Malaysia F1 Team via Tune Group

“It must give good returns even though there are risks ...,” said Nasarudin.

Fernandes pointed out that there was one F1 brand that managed to sell £150mil worth of T-shirts.

“We are monetising the Lotus brand. It is one of the greatest racing brands and nothing invokes the same emotion except Ferrari,” he said, adding that other potential revenue sources included technology spin-offs, entertainment, and research and development.

“We are also looking at possible sponsors. Interestingly, a lot of people and corporations have approached us wanting to be part of this team,” he said.

One of the firms that have been approached is, not surprisingly, Petroliam Nasional Bhd (Petronas). On the likelihood of the national oil company getting involved in 1MF1T, he replied: “Why not?”

On its part, Petronas would have to evaluate the investment rationale in making such a decision. It currently sponsors the F1 via the BMW Sauber team but the sponsorship will expire this season and it has yet to commit itself to a new team.

Other large corporations that would be approached for sponsorship, according to Fernandes, include Malaysia Airlines and Genting Bhd.

He also said that talks were ongoing with a third group, Litespeed UK, to take up a 10% stake in IMF1T.

“We are still talking and have not fully worked out the final shareholding structure ...,” he said.

In the event the British company steps in, then the shareholding structure will be 55:35:10 among Tune Group, Nasarudin and Litespeed respectively.

Is 1MF1T open to new shareholders? “Of course we are, but the investor has to be one that contributes to the brand and relevant expertise. This is the best time to be in the F1 business as the overall cost has come down,” said Nasarudin.

The privately funded 1MF1T will have a start-up capital of RM168mil with an estimated baseline annual budget of RM308mil.

The Government will not hold any equity in the project, either directly or indirectly, through any of the government-linked companies.

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