McLaren used Michael Latifi's £200million investment to cover the costs of the split from Honda last season. Honda had been paying an incredibly high amount of money towards the team's budget, including the contract of Fernando Alonso.
McLaren Group’s chief financial officer Paul Buddin said in an investors call that the costs of the split were soaked up using the fresh investment from the Nidala group, owned by F2 driver Nicolas Latifi's father.
“The reason we went for that equity was that we recognised our decision, for performance reasons, to take the Honda engine out of the Formula 1 car, would have a significant impact on our cash flows within Formula 1,” said Buddin.
“We have a plan to recover that over the next three, three-and-a-half, four years as we improve performance that will come with improved cashflow from Formula 1 and also knock-on improvements within sponsorship. But for that period we have to fund it and that’s what the equity came in to do.
“We anticipate an improving cashflow position over the next two to three years and we will move back towards cash positive in that timeframe. But it is unlikely to be next year, apart from the investment of course.”
Buddin also added that the group had considered lowering the budget it pumped into the Formula One team.
“If things do not go to plan then we can take costs out of the Formula 1 business. There is choice there. We could have chosen last year when we took the Honda engine out to have taken an equivalent amount of costs out and still compete in Formula 1. But that’s not McLaren.
“We want to get ourselves back to the front of the grid and therefore we chose to take the equity instead and continue to spend at the same rates we have been spending at in the past.”
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