David Price calls it quits
May 4, 2009 Leave a comment
Several comments from my side regarding this sale.
First, David Price is not walking away with a fistful of cash from this second sale. Much like what happened to BCN Competicion, these “sales” have many angles and readings – some political, some financial.
The sale of the initial 51% to Herck last year was for a reported €1.8 million, reasonable figure for a GP2 team in early 2008 – at that time valued between €3.5 and €4.0 million. But this time, as owner of 49% of DPR, Price also “owned” 49% of its troubles, translated into losses and debt stemming from the consistent lack of results on the track and its inability to attract well-paying drivers.
Herck, who is also believed to be doubting his future (and his son’s) in GP2, must have told Price he could “sell” his remaining stake for the value of the growing team debt. Summarizing, Price walks away with his initial cash and basically values the team at the €1.8 million which he sold for initially, a price tag that DPR would never fetch on the open market today. He renounces on a higher value but also on the risk from its debt obligations. The valuation from Herck’s side is different, as he paid the €1.8 million and is now assuming all the debt, which could easily be in excess of €500k. At a minimum value of €2.3 million, Herck must seriously trust he can either straighten out the team or he can hold out long enough to sell it once prices have gone up again. Another (unlikely) alternative is that he has a buyer for all or part of DPR.
Second, the departure of David Price from DPR sinks the team further in the “image” standings. Already one of the worst teams in terms of results and reputation, the fact that now it remains in the hands of a wealthy Monaco businessman who bought it for his son, does not help the team in the eyes of drivers and their managers. Herck is a smart man, and he will have to quickly fill in this gap with a top-tier technical “brand name” that can elevate his team’s reputation. A good number of ex-F1 race engineers are out there today, and Herck will probably scoop one up soon, both to fill in for Price’s departure as well as technical chief Andy Miller who also left the team.
Surely, a team with an empty seat in today’s racing market and whose only racing pedigree is no longer there, is not looking too good for survival. André Herck must now pull a wealthy rabbit out of his magician’s hat to sustain a reasonably stable 2009 GP2 Main season, especially when considering DPR’s “paying” driver is his son Michael.
One race DPR is surely contesting in the leading pack is of the first GP2 team to run into life-threatening financial difficulties. DPR and Trident are now neck to neck in this sad contest.