Prost GP Press Conference, 22.11.2001
Transcription of the press conference with Alain Prost
Also available in French and German
Alain Prost: Thank you everybody and welcome inside the walls of Prost Grand Prix. I will start with a small correction. Beginning yesterday, I have been seeing announcements claiming that Alain Prost had "thrown in the towel", and that "everything is over". I would like right here and now to re-instate the truth, which is that Prost Grand Prix under no circumstances will stop its activity. Today I am here to affirm that my whole team and myself will fight in order to keep the adventure going.
This morning, the trade court of Versailles' verdict was pronounced: the company is today in CH 11 and a legal administrator has been appointed. He will assist me in all my endeavours, so as to find a solution that allows the team to come through the embarrassment in the shortest of time and maintain its best interests.
To begin with, I would like to make a quick assessment of the team and its last four years. It is important to replace the birth of Prost Grand Prix in its context. As a National Project, it was launched at the start with the formidable goal to form a competitive French team. I have been a unifying element of this challenge, to which I have truly involved myself as I considered it to be, and my feelings remain unchanged, a magnificent experience. It is an extremely difficult task, as to this day, no French team has ever become F1 world champion.
Nevertheless, in 1997 this picture looked to me to be perfectly realistic, but for conditions I have not been able to obtain from the beginning. Together with my partners at the time (Bernard Dudot and Hugues de Chaunac amongst others), we had anticipated a plan over 5 years with a perennial budget of between FF300mm and FF500mm aimed at guaranteeing continuity. It was a case of avoiding problems, notably of personnel, since we do not have the same turn-over as they do in England. This guarantee, we never got, be it as far as engines or sponsors were concerned, since the project could only be spread over 3 years.
Then in 2000, we experienced an extremely difficult situation. We cannot say that the French sponsors were not present during those 3 years, to the contrary, but due to a variety of reasons, the agreements have not been renewed. With reference to Peugeot, the project could have been continued, had the company not undergone a change of president and essentially changed to Rally, a choice that no doubt reflected the company's culture much better. Of course, these breaches of contract are also a result of the sponsor's disillusionment with the achieved results.
But if Prost Grand Prix did not fulfil their expectations, it is important to point out that the wish was somewhat less than realistic, especially when it is known that it took Ferrari 20 years to become World Champions and with vastly larger funding than us. Furthermore, this third year, during which our sponsors wanted to see us progress, has been the most difficult one for us, which of course didn't play in our favour. The difficulties of that year 2000 are not at all surprising: during the months of September/October, we were left without an engine or signed sponsors, which presented an obstacle as far as obtaining any form of financing.
Under these conditions, it has thus been difficult to put a car back on the track and to form a technical team, which, against all odds, trusted in Prost Grand Prix. So we lost some sponsors and found ourselves in 2001 with rather important liabilities, without an encouraging outlook for 2002. I therefore applied for protection under Chapter 11 in order to freeze the liabilities and allow us to concentrate on the funding for the year 2002. We have one possibility of funding for the coming year consisting of the TV rights and of sponsors who opted to continue or rejoin us, but we are still lacking the cornerstone of the building, namely a big sponsor or the financing of an investor.
At the moment, there exists a certain number of possible partners and the new situation in which we find ourselves will allow us, I hope, to finalize the signing of an agreement very soon. I would like to insist on the idea that in spite of the difficulties encountered, we managed to put together a team, the best in 4 years. It has virtually not had any losses, apart from the turn-over common in any Formula 1 team, and has in any case not suffered the loss of any key element. I am therefore confident and remain convinced that this team is indeed efficient, we just have to get all the parameters, which so far it has been deprived of, together in order to prove it.
Questions and answers
Do you think that you will be on the starting grid in 2002?
That would of course have been a problem in the case of a liquidation, but to the contrary, we are working on a plan to continue with a six month observation period, thus not jeopardizing the Concorde agreement or any commitments for the 2002 season.
The talk is of a very indebted team. How much is the debt, and who are the main creditors?
The team's debt as far as registered liabilities is concerned, amounts to about 200 million French Francs, without the debt of the group, who's main shareholder I am.
Will Alain Prost's name stay for the next season, and who in your opinion would be the ideal one to take over?
The ideal situation would be to have a big sponsor, which we have been lacking for the last two years. It is true that the purchase of the engine involves additional costs. Today we can assume that we potentially have 50 % of the minimum budget that we wished to have for next year. An agreement with a big sponsor or a potential investor would solve all our problems. Ideally, we would combine both possibilities, which by the way is a true possibility. With reference to the Prost name, I think the most important thing is to save the team's interests and employees. The legal administrator and myself will take the best decision assuring the continuity of the team. If we have to disengage the Prost name, we will envisage that together with the administrator. For the time being, none of the offers stipulates it, but should this present itself and the offer appear to be the best, that would then be the one we would choose.
During the season, you had placed the poverty threshold at 350 millions. Has that increased?
The poverty threshold in Formula One amounts to 350 millions if the team does not have to pay for the engine, 500 millions when the latter is at the team's expense.
What are the terms of the agreement with Ferrari?
We have an agreement with Ferrari as far as the use of the 2000 version engine with one upgrade, it is furthermore absolutely possible to use some of the previous year's engines in testing. Concerning Ferrari, we are in constant contact with them and if there is a solution for the team, there will be absolutely no problem in getting their agreement. As far as timing goes, this will be handled in the coming hours.
Are the wanted 200 millions for paying the Ferrari engines?
Ferrari is not a creditor, to the contrary, it is we who have advanced them money. The missing 200 millions will be mainly used to pay suppliers and other social entities.
Could it be envisaged, that an investor take over the enterprise without the debts?
The CH 11 proceedings work to our advantage since the debts are momentarily frozen. It will be the administrator's job to pay them in agreement with the suppliers.
Could it be envisaged, that a new taker decides to make a new, debt-free company out of Prost GP, and thus start from scratch with you in the manager's position?
The situation in which we find ourselves in is ideal for paying the suppliers to whom here I would like to express both my gratitude and my apologies. Furthermore, creating a new company would be the best way of losing the rights of the Concorde agreement and thus no longer benefit from TV rights and of all the other advantages of Prost GP, it is therefore absolutely no option today.
To explain this failure, you talked about the loss of sponsors: do you think you have made mistakes and which ones?
It is impossible to manage such a project without committing the slightest mistake, simply because you are always confronted with the necessity of taking strategic decisions in a very short period of time. Personally, I clearly assume some strategic mistakes and if today there is somebody paying for them, in the real as in the figurative sense, it is definitely me. In any case, this represents a positive experience for the future. As far as Peugeot is concerned, the decisions have always been taken jointly and after our parting company, amongst my board of directors. It is the situation of any company counting on prestigious partners who believe in a project. Furthermore, the economic environment is not only unfavourable since September 11th, which has made things even more difficult. We knew that if this wasn't working very fast and very good it would be difficult… Failure? Maybe, but nevertheless one has to point out that we have achieved something pretty formidable, i.e. the construction of the only team set up in a Country as prestigious as France, and who's average age doesn't exceed 30 years. Today, in spite of all the financial and technical difficulties that we endured, we can compete with the biggest constructor teams. Also, the team is very Media friendly, which is a great advantage when everything goes well, and a big disadvantage when one hits problems. We see it today, if we manage to get out of the embarrassment, this media experience will prove extremely positive and will constitute a teaching tool as far as the errors, which must not be repeated, are concerned.
Are the TV rights part of your revenue for next year? If so, does this represent a solid base to start the next season?
Today, the only way to pull the team out of embarrassment and to re-find stability, is to freeze the liabilities and thus not to use the revenues coming from sponsors or the TV rights. The investors and the potential sponsors have two wishes: that their funds will not be used to clear the old debts and to have the guarantee to see us race next year. So far we have never been able to assure them of this. Today it is up to us in collaboration with the administrator to bring them this security.
What agreements have been made with the suppliers?
It is up to the administrator to take the adequate legal dispositions, which by the way are very complex. I am therefore not the person who can talk to you about that in detail, but I can nevertheless tell you that there will be an agreement signed between the suppliers and the administrator for them to be paid from future revenues in a time span which one obviously hopes will be the shortest possible.
What exactly is Pedro Diniz' status?
Pedro Diniz is a shareholder owning 40% of the shares. He resigned his mandate as administrator in August, but he remains shareholder of Prost Grand Prix. I would like to make it clear that contrary to what I have read in the press, notably yesterday or the day before, I hold directly or indirectly 51.3% of Prost Grand Prix' shares, Pedro Diniz 40%, YAHOO 2.9% and LVC, subsidiary of LVMH 5.4%. I want it to be clear that the figure of 40% announced in the press is very wrong information.
Before, 10% was attributed to UFA, or not?
I have said it and repeated it and as I had told the reporters of financial news, there actually was a possibility, which we did not lay claim to, and that always in agreement with UFA.
What's about the proposals of Diniz and Al-Waleed?
These are two prospects or possibilities that you know of, because there have been plenty of things in the press. I can tell you that there are at least another 6 or 7 possibilities as serious as those, which most certainly nobody knows of and which are not worse because of it. Three or four new offers arrived today following the announcement of the CH 11 for Prost GP. This situation appears to be legally, socially and financially clearer to a partner or investor.
Did you get any offers from a constructor?
Not yet, no.
Does the current project regarding to the upgraded 2000 engine anticipate an AP05, or a restart with the AP04?
In this situation, what would be good for everybody, would be to be realistic and pragmatic, but I think that in terms of timing, it would be unrealistic to try and start the 1st GP with an AP05. The most reasonable approach will be to start the season with the AP04. This year's advantage is that the rules, in particular those regarding the structures of crash tests are identical to those of 2001. Therefore, it is not impossible to run two or three GP's with the AP04, which in turn would allow us to develop the AP05, which in any case is currently being developed in the wind tunnel, on the drawing board and with extremely promising results. Maybe it is a blessing in disguise. I would like to re-iterate that some of the other teams will make the same choice, i.e. start the season off with last year's car.
Is it possible to imagine yourself in the same company in a function other than President?
Other than driver, everything is possible. Honestly, everything that needs to be done to save the company, or to find the best solution to find an investor, I shall do.
It is said that Heinz-Harald Frentzen is in contact with other teams, what can you tell us on the subject?
For the time being I understand Heinz-Harald's situation, a situation that is a little paradoxical. In as far as him wanting to definitely stay, we will definitely keep him. But we have to be able to give him all the necessary guarantees. It is important to insist on the fact, that when you are a driver like Heinz-Harald Frentzen, who is considered to be one of the best drivers in the world, who hasn't stopped praising the team for the last five Grands Prix and who does everything possible not to have to accept another drive and to wait for one at Prost, who has a total trust in the team, in particular in the technical management, after all it is a pity to find himself in this situation. We will do our utmost in order to supply him the necessary guarantees as quick as possible, and we hope that he can wait a little longer.
On what version of the Ferrari engine did you base yourself when conceiving the AP05?
Around the 2000 engine. Again, it is an upgrade, but it is the same block. That allows us to make the power train of the AP05 almost identical to the AP04.
Will you be using the same engine as Sauber?
No, it will not be the same engine.
Will there be a change of engine during the season?
No, there are other technical and indirectly financial considerations, which in any case prevent this from being realistic.
When do you intend to announce your solution regarding the future of the team?I prefer not to give you any date. It would not be either honest or realistic to give you a date. I hope the soonest possible, it is a vague answer but honest.
Are you still owed money (and by who) for the 2001 season?
I will not go into details, but quite a few sponsors owe us money.
How many employees does Prost Grand Prix have?
Almost 200, around 195 and if we consider that B3Technologies works directly for us, it is about 40 more.
Does that signify that B3T always works for you? Does John Barnard collaborate with the team too?
Is the plan to continue to work with them next year?
The plan is to continue, but working differently.
Are you anticipating personnel lay-offs?
For the time being we work on a plan of continuity. Today, a plan for lay-offs is absolutely not on the agenda. We are numerous, but amongst the Formula 1 teams, we are a small team. I cannot foresee a future investor demanding a major social plan since that would be the fastest way to immediately and automatically put the team at a weaker level. I would strongly advise against it. It is absolutely not the goal.
What guarantees can you offer a potential investor to entice him?
Having an ambitious and solid project, goes through investors and partners. We propose a base, which already is solid. The 2001 results may still appear to be meagre but one has to consider against whom we are fighting and generally with only one pilot capable of scoring points during this season. A sponsor comes and sees the maturity of the company. The arrival of Henri Durand in January has been a determining factor. Even though we were forced to stop testing in June, he has been able to develop the car, thus allowing us to realize, for lack of results, solid performances at season's end, sometimes even ahead of the teams of big constructors. We have to prove that we are worth more than what people say and not only what we are showing. The most important thing would be to attract a big constructor. Amongst the teams out there looking for this type of partnership, we are certainly the best placed.
How long has the financial situation been bad?
For the first 3 years we were profitable or close to breaking even. It is really in 2001 that we had our difficulties. The amount a sponsor has to provide in order to unblock the situation can be estimated at 200 million French Francs. Under no circumstances do we have to be alarmists: only very few teams have their budgets already signed and approved in October-November.
Did the Government bring any type of contribution to your project?
In 97, I made a promise not to accept any public help with the idea that a Formula 1 team project has to be managed in private fashion, according to a true industrial logic. In 1997 I really took the step and tried to do it on my own. More recently, I approached the Ministry of Industries and that of Sports with the idea of making it known to everybody what difficulties our sports adventure and the French Automobile Sport in General was experiencing. A team like ours must absolutely live. The support having vanished a bit, we absolutely have to revive it. From that point of view, help would not be completely illogical. In spite of the problems and the media aspect that is not easy to live with, everybody remains confident. The only solution for Prost Grand Prix is to close ranks and have solidarity. If we are coming through this, we will come through together and I have good hopes.
This press conference was shown live on F1-Live.com and prostgp.com
Transcript by F1-Live.com, slightly revised by Oskar Schuler
Translation by Robyn Schmid, CAPSIS International, revised by Oskar Schuler
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