Losses, Lawsuits and a Nigerian Prince – The Demise of Arrows Grand Prix & TWR

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Sourced from unracedf1.com

In the fourth edition of his What Went Wrong series, Aaron Collins analyses the trials and tribulations experienced by the Arrows team in its latter years.

Having made their Grand Prix debut in 1978, the Arrows F1 Team would go on to become one of the few constants within the world of Formula One.

Success was few and far in between, and when things looked bright, cruel fate would intervene. A prime example of this was when Riccardo Patrese lead the 1981 US Grand Prix West at Long Beach from Pole Position and the Italian was on course for victory, only for the fuel flow system to fail on Lap 33.

The team slowly climbed up the order as they received backing from BMW, Barclay cigarettes and American insurance company USF&G and were established midfield contenders by the end of the 1980’s.

So when the likes of McLaren, Williams, Lotus and Ferrari faltered at the front with reliability issues, the likes of Thierry Boutsen, Derek Warwick and Eddie Cheever were there to pick up the pieces and score some valuable points.

In 1990, Japanese businessman Wataru Ohashi bought the team and renamed it Footwork to promote his logistics company of the same name. An initial engine deal with Porsche proved to be troublesome and prevented them from moving forward.

The next three seasons saw Footwork secure a supply of Mugen-Honda engines and went on to score ten world championship points, with Warwick’s fourth place in the 1993 Hungarian Grand Prix being their best result.

Ohashi ended the sponsorship deal at the conclusion of 1993, which meant Footwork subsequently lost its Mugen-Honda engines, but the businessman opted to maintain his shares in the team.

Gianni Morbidelli aboard the Footwork FA16 en route to third place in the 1995 Australian Grand Prix at Adelaide. Image sourced from @itsmarchisio_racing via Instagram.

The next two years didn’t see much change in terms of race-to-race competitiveness, though Gianni Morbidelli managed to finish third in the high-attrition 1995 Australian Grand Prix at Adelaide.

At the end of that year, former F1 drivers Jackie Oliver and Alan Rees bought Ohashi’s shares with help from the Stuttgart based Schwabische bank.

By March 1996, ownership had changed once again as Tom Walkinshaw entered the fold after his success in several motorsport categories as a driver and team manager with his own team, Tom Walkinshaw Racing (TWR).

In addition, Tom Walkinshaw was Technical Director at Benetton when Michael Schumacher won his first Formula One Drivers’ Title in 1994 and was scrutinized when the Enstone outfit were accused of using banned driver aids on the Benetton B194.

He then purchased part of the Ligier team from Flavio Briatore in the hope of taking full ownership, but the two were unable to reach an agreement and Walkinshaw walked away and invested in Footwork instead.

Jos Verstappen’s sixth place in Argentina would prove to be the only point scored by Footwork in what was a difficult first year for the TWR partnership. In contrast, Ligier would go on to win the 1996 Monaco Grand Prix with Olivier Panis before they were re-christened Prost Grand Prix.

For 1997, the team was renamed Arrows Grand Prix International and Walkinshaw decided to start with a clean slate on the driver front, as drafted in 1996 F1 World Champion Damon Hill, who had been ousted from the dominant Williams-Renault team.

Brazilian pay driver Pedro Diniz was hired and bought in much needed money to help fund the Briton’s services, whilst Germany Jorg Muller acted as the team’s Test driver and Danka were installed as title sponsors.

Frank Dernie was responsible for the development of the Arrows A18 and reports at the time reckoned that Arrows could use Volvo engines, as TWR oversaw the Swedish manufacturer’s programme in the British Touring Car Championship.

These reports proved to be false as they went on to use a 3 Litre, Yamaha V10 that had been previously used by Tyrrell and produced around 690bhp.

The Japanese power proved to be unreliable with the team having the worse possible start in Melbourne, Australia, when Damon Hill’s Arrows broke down on the way to the grid and unfortunately was a sign of things to come.

Neither driver could produce the goods in such a fragile car and it wasn’t until the British Grand Prix in July that Arrows managed to register a point, courtesy of Hill’s sixth place finish.

Damon Hill celebrates his second place finish in the 1997 Hungarian Grand Prix with Arrows Team Principal Tom Walkinshaw. However, things weren’t easy as the smiles suggested. Image Sourced from Pinterest.

Regardless of the breakthrough, Walkinshaw criticized Damon for his underwhelming performances:

“Any professional sportsman is only as good as his last race,” Walkinshaw said that weekend.

“If money does not motivate you, then the fear of failure certainly should. It’s an application problem and we need to sort it out.”

The Hungarian Grand Prix followed shortly after and Arrows surprised many when Damon Hill qualified fourth on the grid. The hot weather that weekend saw the Goodyear runners suffer severe tyre blisters, whereas the Bridgestone tyres used by Arrows were more suitable to the conditions.

On the race start, Hill moved up into second before he took the lead from the Ferrari of his nemesis Michael Schumacher on Lap 11.

From that point forward, the Brit drove superbly and demonstrated why he won the World Championship the previously year. But with three laps left, disaster struck as the hydraulic pump broke on the No.1 Arrows and left Hill with a significant loss of power.

This left him vulnerable as he crawled around the circuit and hoped he could keep his former Williams team-mate Jacques Villeneuve at bay; but it wasn’t to be as the Canadian squeezed his way past on the final lap and snatched a well-deserved victory.

Speaking to ITV later that year, Damon reflected on the race in Hungary and the importance of looking towards the future:

“Formula One doesn’t stop for anything, it carries on and you have to keep proving yourself every single race; It’s pressing on from start to finish and never letting up until the chequered flag.”

Despite Damon’s heroics, Arrows had to settle for eighth place in the Constructors’ Standings with nine points. By the time the 1997 season had concluded, the relationship between himself and Tom Walkinshaw had completely soured.

The former World Champion had already signed a contract to drive for Jordan in 1998 and was replaced by Tyrrell’s Mika Salo.

With the introduction of grooved tyres in mind for 1998, respected car designer John Barnard was hired to develop the Arrows A19. Alongside this, TWR purchased Brian Hart’s V10 engines and badged them under the Arrows name, making them and Ferrari the only two teams to produce their own engines.

“We decided that instead of wasting money just renting engines from someone, we would invest it and build our own and hopefully get industry support for it,” Walkinshaw explained after Arrows officially unveiled the A19 car.

Mika Salo at the Loews hairpin during the 1998 Monaco Grand Prix. The Finnish driver would go on to finish fourth in the race. Image Sourced from Pinterest.

Once again, the engine proved to be the team’s achilles heel due to a lack of development and was consequently unreliable; something that was accentuated by nine double retirements across that year’s 16 Grand Prix.

A double-points finish at Monaco showcased the worth of the A19’s chassis and along with Pedro Diniz’s fifth place in the famous 1998 Belgian Grand Prix – a race coincidently won by former Arrows driver Damon Hill – the team improved slightly to seventh in the Constructors’ Championship with just six points.

During the winter break, Pedro Diniz decided that his sponsorship money was being wasted (not for the first time) and left to join Sauber. This angered Arrows, who believed that the Brazilian had incorrectly terminated his contract and launched legal action against him.

The transition to produce their own engines hit them hard as they announced operating losses of around £5.8million for 1998; in contrast, Arrows lost just £246,218 in 1997.

Pedro de la Rosa driving the Arrows A20 on his Grand Prix debut at the 1999 Australian Grand Prix, in which the Spaniard would finish sixth. Image Sourced from gpextreme.com

Mika Salo looked set to stay with the team in 1999, but Tom Walkinshaw opted to replace him with the 1997 Formula Nippon and All-Japan GT champion Pedro de la Rosa.

The young Spaniard was backed by oil company Repsol, who would become Arrows’ title sponsor that year and had spent the previous year as a Test driver for Jordan. de la Rosa was partnered by Toranosuke ‘Tora’ Takagi who, like Salo before him, had joined from Tyrrell.

In mid-January, both Jackie Oliver and Alan Rees resigned whilst on the technical front, John Barnard also handed in his noticed. Consequently, his replacement Eghbal Hamidy was left in charge of the Arrows A20 – essentially an updated version of the preceding Arrows A19 – and was assisted in its development by Technical Director Mike Coughlan.

On top of this, Arrows had a new sponsor in the form of the mysterious T-Minus brand owned by the Nigerian Prince Malik Ado Ibrahim, who became one of the team’s new shareholders alongside the Morgan Grenfell Private Equity Bank (MGPE).

Prince Malik Ado Ibrahim pictured outside of the Arrows garage during the 1999 Formula One Season. Image Sourced from badgergp.com

At the time, it was understood that Tom Walkinshaw had reduced his shares in the team down from 40% to 25%. Prince Ibrahim also gained shares of 25%, whilst Morgan Grenfell took up 45% in the belief that Arrows could go on to become one of the leading teams in Formula One.

Scott Lanphere, one of the directors at MGPE at the time, was quoted saying that both Walkinshaw and Ibrahim “promised that Arrows would be the best in the business.” Yet, the results that followed were far from this target.

Although Pedro de la Rosa scored a point on his F1 debut at the 1999 Australian Grand Prix, with Tora Takagi close behind in seventh, once again Arrows had produced a slow and unreliable car which saw them struggle to beat the traditional backmarkers Minardi.

Their only saving grace was that the unreliability experienced by the new BAR team was much worse and prevented them from finishing bottom of the Constructors’ Standings.

Their lack of competiveness wasn’t helped by Prince Ibrahim not being able to deliver on the money he’d promised for 1999 and was unsurprisingly ejected by the time the Formula One paddock had arrived in Hungary.

Because of this, Walkinshaw had no choice but to setup a long-term loan with MGPE to keep the team afloat. To help understand the team’s climate at that time, Arrows published operating losses of £22.7million that year and required urgent investment.

Pedro de la Rosa (right) stands alongside the Arrows A21, with his team-mate Jos Verstappen sat in the cockpit at the launch of the Orange Arrows team in 2000. Image Sourced from fedef1.com

However, as Arrows entered the new millennium, it seemed that their fortunes were going to turn for the better. As Tora Takagi had failed to settle at Arrows, a fact not helped by his inability to speak English to his colleagues, he departed and returned to Formula Nippon his native Japan and went on to win the Drivers’ Title in 2000 with Nakajima Racing.

Jos Verstappen took up the vacant seat alongside Pedro de la Rosa, as the Coughlan/Hamidy combination came up with the designs for the Arrows A21 armed with the 780bhp V10 Supertec FB02 Engine.

Australian airline magnate Paul Stoddart used the team to promote his European Aviation brand, as he previously done at Tyrrell and Jordan in the late 90’s. Additionally, Stoddart’s team in the FIA International Formula 3000 Championship – the main feeder series to F1 at the time – was rebranded as the European Arrows Junior Team for 2000 and gave Mark Webber and Christijan Albers their respective debuts in the series.

Moreover, the French telecommunications company Orange became the new title sponsor of the Arrows team, with further sponsorship support from Red Bull, broadband providers Chello, Dutch video game developers Lost Boys and Eurobet, the latter of which was owned by shareholders MGPE.

“There is no pressure on us, we can only do better than we’re forecast to do,” said Tom Walkinshaw before the start of the new season.

“I think we’ve assembled one of the best engineering teams in Formula One, here, we’ve got a good engine. I’m sure we’ve got a good car once we get it developed and we’ve got two good drivers.”

As it turned out, Arrows had indeed developed a fast car as the A21 was the fastest through the speed traps over the course of the season, but unreliability yet again held them back.

Despite this, Jos Verstappen recorded the team’s best finish of fourth during the 2000 Italian Grand Prix. The Arrows A21 also proved to be quite handy in the rain, demonstrated by both Verstappen and de la Rosa en route to points finishes during the Canadian and German Grand Prix respectively.

The upturn of pace helped Arrows to finish seventh in the Constructors’ Championship with seven points. However, the positivity didn’t last long as Paul Stoddart went on become the new owner of Minardi and consequently pulled his backing from Arrows and renamed his junior team European Minardi F3000 as a result.

Eurobet also suffered losses of $70million in 2000 and had to significantly reduce their contributions to the team with immediate effect, whilst Arrows recorded another financial loss, albeit a smaller one of £1.6million in comparison the previous two years.

Red Bull stepped up to increase their investment in the team and fill the void left by Eurobet, and as a compromise for doing so, the energy drink manufacturers inserted a clause in their contract to ensure that their junior driver Enrique Bernoldi would drive for Arrows in 2001 alongside Jos Verstappen. The Brazilian had scored just seven points across two full seasons in Formula 3000 and forced Pedro de la Rosa to seek refugee at Jaguar.

Numerous changes took place at the Leafield Technical Centre as well, with Eghbal Hamidy being replaced by Sauber’s Sergio Rinland to become the new Chief Designer and pencilled the Arrows A22. The 2001 challenger used the Asiatech-branded 800bhp Peugeot V10 engines that had been abandoned by the Prost team which failed to score a single point the previous season.

The 3rd wing which appeared on the Arrows A22 of Jos Verstappen during the 2001 Monaco Grand Prix. The extra wing was designed to add more downforce around the tight street circuit, but was only used in Practice before the FIA banned it. Image Sourced from racehut.com

The decision to use a small fuel tank helped the team create plenty of high-profile strategies during the races. The most famous example took place at the 2001 Malaysian Grand Prix in monsoon conditions, where Jos Verstappen ran as high as second place before a drying track saw the Dutchman drop outside the points and settle for seventh.

This method produced just one solitary point for Arrows that year, courtesy of Verstappen’s sixth place at the A1 Ring in Austria, with a limited budget preventing them from testing and saw them fall down the order.

Enrique Bernoldi was the fastest of the two drivers in qualifying but was unable to utilize this promise on race day, even if he did famously hold up the McLaren-Mercedes of David Coulthard for the majority of the 2001 Monaco Grand Prix.

The climate Arrows found themselves in ahead of the 2002 season was tough and unforgiving. The purchase of Cosworth CR3 V10 engines for the Arrows A23 – which were originally going to be exclusive to the Jaguar team – made the team financially vulnerable.

Their scenario worsened by the verdict of the court case with Pedro Diniz went against them and were ordered to pay $700,000 in compensation and cover the legal fees, which cost them valuable assets.

On top of this, Arrows lost even more money when Jos Verstappen sued them for breach of contract after being dropped for 2002 in favour of Heinz-Harald Frentzen, a driver who had won three Grand Prix in the late 90’s with Williams and Jordan respectively.

Heinz-Harald Frentzen testing the Arrows A23 ahead of the 2002 Formula One campaign. Image Sourced from conceptcarz.com

The start to the 2002 season was an absolute travesty for Arrows, as both drivers were disqualified from the Australian Grand Prix. Enrique Bernoldi added to the misery when he failed to finish any of the six races due to more teething problems with engine reliability.

And though Heinz-Harald Frentzen managed to score two points thanks to a pair of sixth places in Spain and Monaco respectively, they would be the only bright spots for the team.

Their situation went downhill fast and in the build-up to the British Grand Prix in July, the extent of how cash-strapped Arrows were started to come to light.

During a hearing at the High Court against shareholders MGPE, it was revealed that Arrows owed Cosworth $4.7million in unpaid engine bills, with Mr Justice Lightman adding that the team were in a “dire financial position.”

Giancarlo Minardi, the founder of Italian minnows Minardi, expressed his fear for the fate of the Arrows and the other privateers in the sport:

“For me, it is a problem for Formula One, not just the small teams,” Giancarlo said.

“First Prost goes down, then Minardi is struggling, now Arrows – slowly it goes up the grid. All the teams have problems.”

“Money is a serious problem for Minardi, but also for the big teams. F1 is not on a good road.”

In contrast, Tom Walkinshaw’s former Benetton boss Flavio Briatore, who had gone on to become the Team Principal of Renault, showed no signs of sympathy:

“Like any business, some do well, and some do badly.”

“I sold Ligier to [Alain] Prost when it was fifth or sixth in the championship with 30-odd points. Soon it had nothing. Management is very important,”  Briatore added.

“This is a very difficult competitive business. I don’t think F1 is in crisis. When times are difficult, you need to be efficient.”

During the weekend of the French Grand Prix later that month, the uncertainty over the future of Arrows in F1 meant that Frentzen and Bernoldi were ordered to not qualify for the race on purpose.

As there were no signs of forthcoming investment, the team could not afford to run their cars, but as per the regulations stated in the Concorde Agreement, an attempt to qualify would allow them to avoid a fine of up to $500,000.

Former BAR Team Principal Craig Pollock was part of one of the parties that were interested in rescuing the Arrows team in 2002. Image Sourced from motor1.com

Reports at the time suggested that Arrows had turned up to the 2002 German Grand Prix with a deal in place with Red Bull and its owner, Dietrich Mateschitz, but nothing materialized. Former BAR boss Craig Pollock was also in the frame to buy into the team on behalf of a consortium and wanted to between 20-40% of its shares.

However, many believed that Walkinshaw asked for too much money during negotiations, which led to both parties walking away from a potential takeover deal.

The race at the Hockenheimring would prove to be the last outing for Arrows, with both cars unable to finish the race and after a three-week break on the calendar, the team failed to show up for the Hungarian Grand Prix in August.

However, Arrows managed to reappear in the paddock during the Belgian Grand Prix at Spa-Francorchamps despite the inability to compete in the race.

Enrique Bernoldi driving the Arrows A23 during the 2002 Malaysian Grand Prix. Image Sourced from f1-fansite.com

The FIA rules stated that if a team misses a race due to insolvency, they will lose their rights in F1, which included prize money and their entry in the championship.

However, Arrows announced earlier in the week that they’d signed a pre-contractual agreement with the American billionaire Cal Smith, an 80-year-old who amassed his fortune through mining.

By this point, Heinz-Harald Frentzen had left over unpaid salary and asked for his release to re-joined Sauber for his swansong season in 2003, following interest from Jordan and Toyota.

Like Verstappen before him, Frentzen also bought legal proceedings against the team which crushed the slim chances Arrows had of surviving.

The scene of the Orange Arrows garage during the Friday Practice Session of the 2002 Belgian Grand Prix at Spa-Francorchamps. Copyright – LAT Photographic

Although Renault’s test drivers Fernando Alonso and Sebastien Bourdais were allegedly lined up to replace the German, a takeover deal failed to come into fruition and Arrows were disqualified from the 2002 Formula One World Championship for going into administration.

Last ditch attempts were made by the team to re-enter the F1 championship in 2003, but these were rejected.

The Leafield Technical Centre and the remaining assets of the team were then sold off. The Arrows A23 chassis and its intellectual property were bought by Minardi owner Paul Stoddart, which included the designs constructed by Sergio Rinland and Mike Coughlan for the unbuilt Arrows A24 intended for 2003.

This information was then used to help develop the Minardi PS04B for the 2004 campaign to help save money for the Italian team. Speculation around this time suggested that the PS04B basically an updated copy of the Arrows A24 that featured parts from Minardi’s preceding PS03 and PS04 chassis’ which helped them overcome the regulation which stated that all Constructors must build their own cars.

After selling Minardi to Dietrich Mateschitz in 2005, Stoddart then sold on the remaining Arrows chassis to newcomers Super Aguri Team, ahead of their F1 debut in 2006. In a ironic twist, the Japanese team were based at Leafield and was used to produce the Super Aguri SA05 for the first half of the 2006 Formula One season.

Arrows Grand Prix International was eventually wound up on 15 September 2006, before being officially liquidated on 8 December 2012.

Sergio Rinland went on to focus on his consultancy company, Astauto Ltd., while Mike Coughlan spent the next five years with McLaren before being sacked for his involvement in the infamous Spygate scandal.

As for Tom Walkinshaw, his TWR racing group went into liquidation alongside the demise of Arrows, only for the Australian arm of the company to be bought out and saved by Holden.

2005 saw Walkinshaw return to team management in the Australian V8 Supercars Championship and helped Holden to win consecutive championships with Rick Kelly and Garth Tander in 2006 and 2007 respectively.

Tom Walkinshaw then remained active within V8 Supercars before he sadly passed away on 12 December 2010, aged 64, after suffering complications from cancer.

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