McLaren F1 workforce cut by 10 per cent as business slashes 1,200 staff amid coronavirus pandemic
McLaren will be forced to lose at least 70 staff from its Formula One team amid swingeing cutbacks across the company, triggered by the three-and-a-half-month shutdown of the sport and by a plunge in global demand for its supercars. The redundancies, which affect around 10 per cent of its F1 workforce, represent a potentially huge setback for the UK’s most decorated team just as it promised to challenge for glory once more.
On one of the bleakest days in its history, McLaren announced that it would be shedding 1,200 jobs in total, over a quarter of its staff. The decision came in response to the wipe-out of its supercar sales amid the Covid-19 pandemic and the enforced shutdown of its F1 operations since the cancellation of the Australian Grand Prix in March.
While the campaign is scheduled to resume in Austria on July 5, McLaren must also adapt to the cost cap that arrives from next year, limiting each team to a maximum annual spend of £118 million, which will dwindle further over subsequent seasons. Paul Walsh, executive chairman of the McLaren Group, said that the dramatic job cuts were essential to ensuring the company’s future as an “efficient, sustainable business”.
McLaren’s majority shareholder is Mumtalakat, the Bahraini sovereign wealth fund, and it has recently taken drastic measures to free up liquidity during the coronavirus pandemic. It has borrowed against the value of both its Woking headquarters and its classic car portfolio, including Ayrton Senna’s championship-winning cars, to raise around £275 million. The company has spent £257 million in the year to April 20, with all production at its Surrey plant suspended for over two months.
It was the first team to put staff on furlough when the pandemic struck, but ultimately, the move was not sufficient to prevent permanent job losses. The racing side of the company has been hurt by unprecedented disruption to the calendar, with 10 F1 races postponed or cancelled and the start of the IndyCar season delayed. As such, the decline in sponsorship money has been precipitous.
Reducing spending has become an imperative at McLaren, whose application for a £150 million loan was rejected by the Government. But its F1 team has continued to make ambitious statements throughout the pandemic, not least by signing Daniel Ricciardo, one of the most marketable drivers on the grid, as next year’s team-mate for Lando Norris. The Australian is estimated to earn over £20 million at Renault. That salary is likely to fall significantly at McLaren, even if driver remuneration is excluded from the budget cap.
F1 accounts for around 12 per cent of McLaren’s combined revenues through prize money and advertising deals. While the team has recently revived to a semblance of its halcyon days, achieving a first podium finish in five years in Brazil last November, it has not been spared from the financial fallout of scrapped races. “We deeply regret the impact that this restructure will have on all our people,” Walsh said. “It is a course of action we have worked hard to avoid.”
As revealed on Monday, Formula One’s hopes of staging events in the UK this summer have been boosted by government indications that they are open to discussions about exempting elite sports from rules quarantining new arrivals in the country for 14 days.
It would depend on sports that could be affected, which also include European football and cricket, showing how they will ‘bubble’ those taking part and ensure no risk of infection.
