Nicholas Latifi’s father Michael Latifi once committed a blunder after getting misled by Ferrari’s market capitalization and future trajectory. Latifi Sr. invested $260,000,000 in McLaren back in 2018, after believing that the British team’s market cap was around $2.2 billion. He thought that their valuation too, would soon match Ferrari’s.
However, the mistake soon came to light after the Woking-based team went into an entirely opposite trajectory. Admittedly, following the switch from Honda to Renault for engine, the McLaren challengers failed to prove instrumental. Furthermore, there was a constant change in the hierarchy of the team.
With so many factors affecting them off the track, McLaren’s on-track performance took a major hit surprisingly. This, then resulted in a slump in the market shares and overall downfall of one of the most successful racing teams in F1’s history.
Apart from these problems, they were also in dire need of money to help them on the sporting side of things. Hence, it led to a high inflow of cash into the team. Notably, amid the fall of shares, Latifi Sr’s 10% share in McLaren was watered down to a value of 6%. However, none of these had anything to do with his son Nicholas’ career.
Nicholas Latifi’s father understood his mistake at McLaren
As soon as Michael Latifi understood that McLaren was a cash-guzzling organization, he stopped all investments immediately. He did this even after knowing that his stake in the team would get diluted.
The billionaire even spoke to his close friends about his disappointment at how things at Woking worked. As per Business F1, the Canadian businessman was of the opinion that the British team had an “insatiable demand for cash.” This demand was on a scale that he himself had never seen before.
The McLaren Group has confirmed Michael Latifi as a new shareholder in the company – their first since the departure of Ron Dennis.
The Canadian businessman’s company has invested over £200m in shares.https://t.co/8osbItVGRs pic.twitter.com/3MwxQLudP2
— Sky Sports F1 (@SkySportsF1) May 21, 2018
Along with this, the 60-year-old also had complaints regarding the accounting policy of McLaren. He had questioned them repeatedly at board meetings. In the end, he was suffering huge losses at McLaren, whereas in Ferrari, the market cap reached $55 billion.
How did McLaren suffer the wrath of their loss?
Following their tumultuous season back in 2017, things reached an all time low at McLaren. That season they finished at P9 in the Constructors’ championship with just 30 points. Even though things looked a bit better in 2018, they got hit in the market, and struggled to recapture it.
The 2018 F1 season saw them finish P6 in the standings, but internally things were very critical. Due to excessive demands for cash, they had to borrow a $200 million emergency loan from the National Bank of Bahrain. That year also saw the papaya outfit appoint Zak Brown as their CEO, and with that, their fortunes began to turn.
In the end, from a really lowly place, Brown has helped them come a long way. Even though they aren’t back to winning races and championships yet, they are now the team with the most sponsors in F1 and are indeed bringing in lots of money.
