Money eats away at the soul
It’s actually good news for Aston Martin: in the first half of the year, thanks to Valhalla, turnover rose by 38 per cent to £628.6 million. ‘Profit’ also rose sharply, jumping by as much as 68 per cent to £212.5 million, resulting in a healthy margin of 34 per cent. However, one needs to look at these figures a little more closely, as Aston Martin still has a small problem: losses. After interest (excluding amortisation), the reported loss for the first half of the year rose from £140.8 million to £154.2 million compared with the previous year. The British firm’s adjusted net debt-to-equity ratio stands at 9; a healthy company has a maximum of 1.5, whilst Ferrari, for example, has a ratio of 0. The curse of such a high level of debt is that: The interest rates are outrageously high (at Aston, probably well over 10 per cent) – and so the company really has no chance of ever recovering. To make matters worse, the Aston Martin brand is, in other respects too, merely living on borrowed time: It continues to capitalise on the James Bond image (though the partnership ended back in 2021, and there won’t be a revival), it borrows its technology from Mercedes-OMG, and it no longer even has any influence over its racing history (the Formula 1 rights were handed over to Lawrence Stroll* in 2020 for 50 million dollars).
And now the team led by the hapless CEO Adrian Hallmark (who’d done a good job at Bentley) seems to have made yet another mistake: they’ve sold 50.1 per cent “of its non-automotive intellectual property” to an American vulture fund, the Authentic Brands Group, backed by HPS Investment Partners, a subsidiary of BlackRock (that’s Merz’s parent company). These naming rights, for which apparently £550 million is to be paid, have already been transferred to a new company in the Cayman Islands (even though there are still pending lawsuits from Aston Martin’s largest creditors**…), and Aston Martin has received access to £100 million in an initial tranche. As for what that’s worth: see above. As for the problem: see below.
You might well think, ‘Great, 550 million pounds for everything “non-automotive”’ – and wonder how Authentic Brands Group ever intends to recoup that. Well, it will; that’s what it specialises in, having already concluded similar deals with Reebok and Brooks Brothers. You need a bit of imagination to picture what all this might encompass – obviously, merchandise, T-shirts, caps and underpants, but also watches, yachts, curtains, skyscrapers, cheap leather jackets, condoms, protein shakes, spirits, and so on. And that’s precisely the danger for Aston: whilst they do earn almost half the revenue from such deals, the British firm runs the primary risk of the brand being permanently diluted. And that (actually) good name was the only thing*** the brand still had left in its 113-year history. Apart from, of course, the debts.
* Lawrence Sheldon Strulovic is not only the sugar daddy of Formula 1 underachiever Lance Stroll, but also a very keen collector of Ferraris; he also owns a McLaren F1 and a Ford GT40, but apparently no classic Aston Martin. Strulovic, now Stroll, is a very close friend of Les Wexner, the former owner of the lingerie chain Victoria’s Secret; the two men shared a great deal – Ferraris, houses and yachts, for example. Wexner, in turn, was very, very closely linked to Jeffrey Epstein. The presumption of innocence naturally applies
** In 2020, Lawrence Stroll bought a 16.7 per cent stake in Aston Martin for £182 million (including £50 million for the rights to the F1 team). His Yew Tree Investments now holds around 20 per cent of the shares; the Saudi Arabian sovereign wealth fund (PIF) holds around 14 per cent; Geely and its founder, Shu Fu Li, are thought to hold 17 per cent; and Mercedes-Benz holds up to 20 per cent – depending on liabilities arising from the supply of technology (who exactly is the engine supplier in F1?). There are other prominent investors, such as the Swiss Ernesto Bertarelli – a certified heir by profession – who holds just over 3 per cent.
*** The Walküre, better known as Valkyrie, is still causing trouble. The lawsuits and counter-lawsuits continue, whilst there are also a few owners who would love to blast their car to the moon. Simply filling up the tank is more of an adventure that requires an engineering degree – and for the service required every 1,000 kilometres, you have to take the car to the only service centre at the Nürburgring. Every single time…
There are already a few great Aston Martin stories in our archive.