The MT Interview: David Richards

Winner of the World Rally Championship as Ari Vatanen's co-driver in 1981, he has since made his fortune in motorsports engineering and plans to field an F1 team next year - and turn a profit. His latest coup? Outracing the PE boys to acquire the Aston Martin marque from Ford.

by Andrew Saunders
Last Updated: 31 Aug 2010

For someone who has just spent half a billion pounds on a car company - at a time when the smart money generally wants out of the automotive sector - David Richards smiles a lot. The smile broadens into an ear-to-ear grin as, sitting behind a desk fashioned from the polished aluminium wing-tip of a DC-3 aircraft, he tells how he and a US banker friend took on the might of global finance and won.

For this is the man who masterminded the acquisition of Aston Martin from Ford's Premier Automotive Group earlier this year, beating any number of bigger, better-known and much more heavily fancied rivals in the process - including private-equity house Doughty Hanson and Aussie James 'son of Kerry' Packer. It was quite a coup, and he knows it. He quotes eagerly from an e-mail - sent after the dust had settled - from a senior legal adviser on the deal. 'This was the most fun I've had on an M&A deal in a long while,' he reads. 'One day it will make a fantastic business school case study, or even a book, on how a small group managed to buy one of the best brands going while the world of private equity looked on.'

'Ha! He didn't say it was fun at the time. It was a real muck-and-bullets situation,' he adds, failing to hide his pleasure at the compliment. Aston's new chairman is clearly delighted, and perhaps a teeny bit surprised, at the way things have panned out. For all that he's no stranger to business - Prodrive, his Banbury-based motorsport and engineering group, is the leader in its field and the Sunday Times Rich List values him personally at £77m - the Aston deal was a far chewier mouthful than anything else he's bitten off. 'I've done other deals but nothing like this. I had to immerse myself in it for months, really do my homework.' He also has a considerable - undisclosed - personal stake in the transaction.

Softly spoken and with a measured, solicitous manner, most of the time he does a good impression of a sober-suited strategist with his eyes pinned on the bottom line. Not bad for a man who must have more than a touch of the adrenalin junkie in him. After all, he once made a living from map-reading in the passenger seat of a Mark Two Ford Escort while it was being piloted sideways down a forest track in the pitch dark at 70 mph by 'Flying Finn' Ari Vatanen.

Talk to him about Prodrive, for example - a business that he founded after co-driving his way with Vatanen to the World Rally Championship in 1981 and one that relies on the passion and enthusiasm of rally and race fans across the globe to keep its commercial engine running. What's most striking is that he doesn't let emotion or the urge to win cloud his judgment. 'Prodrive is my shop window, a loss leader that builds the brand. But everything we do in motorsport with Prodrive has to have mainstream spin-offs, either in technology for the automotive consultancy side or in marketing terms.'

It is on the consultancy side - the hush-hush but lucrative business of selling race-bred hi-tech systems and knowhow to big manufacturers for use on their road cars - that the real money is to be made, and Richards knows that.

He even does a pretty good job of making Formula One - which must rank alongside football, horse racing and dubious internet ventures as a great way for the wealthy to lose their cash - sound like a good business proposition. For he is also planning to field his own F1 team next year, although there are no plans to call the car an Aston Martin just yet, he says.

Actually, it will be a re-entry. He has been an F1 manager twice already: once briefly for Benetton in 1998 and again with BAR from 2001 to '04. When Honda bought BAR, Richards was out, just as he was hitting his stride - a forced withdrawal from combat that clearly still rankles. 'People's emotions and egos take over from rational thinking in F1. For me, it has to be a paying proposition. After BAR, I said I'd only ever go back if I thought I could be competitive and profitable within a reasonable period of time.'

F1 has an unrivalled history as a graveyard for ambition, but Richards says he has it all worked out. 'The circumstances in F1 have changed fundamentally. In 2008, for the first time in 20 years, teams will be allowed to use another team's chassis. Previously, everybody had to own the intellectual property in their car's chassis, but next year I can go out and not only buy an engine and transmission from someone else, but also the chassis. That changes the whole landscape.'

It does? 'Sponsors will only sign up to your team if you have a competitive car. Going the old route, no-one would believe we'd have a competitive car in the foreseeable future. But if I can buy a car that's already on the front of the grid with another team, then we can be competitive quickly, and that means we can raise money.'

But get him back onto the subject of Aston and this sangfroid starts to lose the battle with his car-mad inner child. On the day of MT's interview, he's still busy dotting i's and crossing t's on the deal, pausing occasionally to scan e-mail and once - proffering profuse apologies - ducking out for 10 minutes to take a call. 'I better take this, it's David Smith.' Who? The FD of PAG, Aston's former beancounter-in-chief. He grins a delighted, conspiratorial grin, as if he can't quite believe what's happening.

It's a pretty safe bet that it would have been hard for Richards to resist having a crack at the deal. For a lifelong enthusiast such as he, there is no more potent brand in motoring. He's a genuine fan, and has just taken part in the classic Mille Miglia event, where he and JCB digger magnate Sir Anthony Bamford spent a happy few days driving three of Bamford's classic Aston Martins over 1,000 miles of Italian highway. The chance to keep Aston in the UK must have been a powerful incentive, too.

His old driver from rallying days, Vatanen (now a Euro MP), agrees: 'Aston Martin is very fitting for DR. He's passionate about British engineering; he would not have been able to resist having a go. Getting the finance was not all plain sailing, but I was not surprised that he succeeded. He has always been able to pull all kinds of rabbits out of hats.'

Finding backers for the £479m deal was tricky, because Richards and his partner, Texan banker and fellow Aston nut John Sinders, deliberately eschewed the white-hot money of the moment, private-equity funds. 'It would have been easy to leverage the deal,' says Richards, 'but the car business is capital-intensive and long-term; you have to be very cautious about the amount of debt you take on. We were looking for people who wanted a high level of equity investment and who weren't looking for a two or three-year get-out.' Not for them a PE-style LBO.

It wasn't easy, and it looked as though the wheels might fall off before the car had finished its first lap. But they found Investment Dar and Adeem Investment, both based in Kuwait, and were back on the racing line once again. 'We've been very fortunate with the Kuwaitis, they are professional and entirely clear thinking about what they are doing.'

It's a strange time, though, to want to get into the automobile business. Globally, the industry is in a parlous state, making too many cars that too few people want to buy, and failing conspicuously to address the perils of climate change. Indeed, the 'for sale' sign went up over Aston because of the financial woes of parent Ford - which has since put two more luxury brands (Jaguar and Land Rover) on the market. Of all volume manufacturers, only a handful - the likes of Toyota, Porsche and BMW - make money.

Would he like to buy Jaguar too? Maybe - he gives a long, dissimulating answer without actually saying 'no'.

Of course, Aston is a very niche product, and Richards reckons that it's a better bet today than it has ever been - all largely thanks to Ford, he adds. Despite its many troubles - including footing the prescriptions bill for Viagra-munching retired workers - he thinks the US giant has done a good job at Aston. It retains a £40m stake, which should help to guarantee access to Ford components and facilities for a while. 'There's no question that we paid a significant premium for the brand name - we'd have been looking at a very different multiple if it weren't for that. Ford has done an exceptional job, giving free rein to management and the required investment, access to technology and facilities to give Aston a step up the ladder.'

To get where he is today, Richards has done a fair bit of ladder-climbing himself. If you know the M40, you'll have seen the Prodrive HQ - it's a long, low-rise, metal-and-glass building nestling by the northbound carriageway just past Junction 11, the Banbury turn-off. There's a big car park, naturally, but fewer flash motors in evidence than you'd expect. A couple of M-series BMWs, the odd Porsche and Richards' own black Range Rover Sport, registration DR2000. He also has an Aston - of course - and more modest wheels: a Morris Minor Traveller and a 'Frog-eye' Austin-Healey Sprite.

Prodrive's first outing was with the Porsche Rothman's rally team in 1984. Given that the cars - Porsche 911s - were getting on a bit, it didn't do badly. His big break followed in 1989, when Subaru asked him to assemble its brand-new World Rally Team. Prodrive Subarus have won six World Rally titles since, turning a little-known Japanese maker into a global brand. There have also been numerous titles in touring-car and sports-car racing, and Richards has nurtured many talented young drivers, including World Rally Champions Colin McRae and Richard Burns. Prodrive and its subsidiaries now operate in six countries, with revenues of more than $250m annually and over 1,000 staff.

In reception at Banbury HQ, it's not unlike a Saab or Audi car dealership - roomy but functional. Technicians bustle in from out the back, trailing a whiff of petrol and hot metal in their wake. That's where the action is, the workshops where Prodrive's multi-championship winning cars are turned out.

If you like rallying and you've got deep enough pockets, you can walk in off the street and buy anything from an entry-level Group N Subaru Impreza for £100k to a hand-built WRC car for a cool £400k. Or if circuit racing is more your thing, how about a full-race Aston Martin GT car? Just £550k to you, squire. This is not a game for the faint of wallet.

A lot of hugely skilled design and fabrication work goes on here, and there are 450 staff on site, about half of them technicians. But very few women. 'We've got a couple of female technicians, and a couple of engineers too - that's more than most in this business,' Richards points out.

The engine shop is spotlessly clean, bearing about as much resemblance to your local garage as a roman candle does to the Starship Enterprise. At £90k a go for a full-house 'boxer' four-cylinder Subaru engine, £100k for a V12 Aston job, a quick calculation suggests there's more than a million quid's worth of not-very-oily oily bits being worked on when we visit.

Tucked away in their own shed right at the back are the current stars of the show, the official Aston racing team. Prodrive has been in charge of the factory competition programme since 2003. Three squat and purposeful looking mid-green DB9Rs are being prepped for the highlight of the sports-car season, the Le Mans 24-hour race. These cars can't be bought at any price - they are strictly for works drivers only.

If the outlook for Aston Martin - founded in 1914 by Lionel Martin and Robert Bamford - is fairly sunny now, it hasn't always been. Even the briefest account of its history leaves one amazed that the firm made it to the 21st century. It failed to turn a profit for its first 91 years; not until 2005 and the Ford era did it creep into the black. The first cars were hand-built competition machines, raced with great success by Martin at the Aston Clinton hillclimb near Aylesbury in Buckinghamshire - hence the firm's name.

Trouble was brewing as early as 1920 and only an injection of fresh capital by racing enthusiast Count Louis Zborowski kept the show on the road. Bankruptcy in 1924 followed, and again in 1925, with yet another near-collapse in 1932. Rescue bids by wealthy well-wishers became a regular part of the Aston Martin story.

In 1947, it was acquired by tractor tycoon David Brown, who put the firm on a sound footing for the first time, crucially bankrolling the iconic DB series of cars - including the immortal DB5 (complete with ejector seat and machine guns) given its first outing by James Bond in the 1964 movie Goldfinger. The Bond deal was a marketing masterstroke that overnight created the modern Aston brand - suave and capable but oh-so-English, without the braggadocio of Italian rivals like Ferrari or Lamborghini.

In the early '80s, sales were down to three a week globally and production hit an all-time low of a mere 30 cars in '82. Ford took control in '93, installed new management, rolled its sleeves up and got to work. New capital, more affordable models like the DB7 and proper marketing soon had production booming, to hit a record 700 cars in '95. By 2002, more than 6,000 DB7s had been sold - exceeding the combined sales of every previous DB model. Annual sales roared ahead to hit 7,000 by '06 and the Aston Martin brand was firing on all 12 cylinders once again.

Ah yes, the brand. Richards has been given a hero's welcome by fans so far, but he has plans that could have Aston purists shaking their string-back gloved fists at him. 'We've got to look at what brand extensions can do for us, and by this time next year we'll have a full strategy for brand extensions,' he says, citing successful examples like Harley Davidson, Porsche and Ferrari. Images of bobble hats, key-fobs, designer luggage, even Aston Martin kettles and toasters, spring unhappily to mind. Is that what he means? 'I'm not going to speculate at this point. It will all need very careful handling.'

It's the one bit of his patter that isn't entirely convincing, suggesting that he thinks Ford may have wrung as much value out of selling the cars as can readily be got, without the sort of capital expenditure that the new owners can't afford.

The son of a company director, Richards was born in Kent but brought up in Ruthin, North Wales, not far from Chester. He married Karen in 1976 and they have three children - a daughter, 28 and two sons, 25 and 13. They have a house in Oxfordshire and one in the west country, too. He's still president of the local Clywd Vale Motor Club, which he joined as a teenager.

A merely 'competent' scholar, he went to the local comp and hated every minute of it. 'It was very frustrating, but I was always good at maths.' He didn't discover the source of his academic sidelining until much later; when his son was diagnosed with mild dyslexia, it transpired that Richards was dyslexic, too. He's in good company - Charles Dunstone, Richard Branson and Jamie Oliver are all fellow-sufferers.

But the young Richards was certainly not without talent. An RAF assessment day at Biggin Hill led to the offer of a prestigious service scholarship to study engineering at university. Driving and flying would become his twin passions. 'I passed my driving test at 17 and was flying light aircraft a month later,' he says. He still flies today, but prefers a helicopter - which he uses as casually as lesser mortals ride the bus.

He didn't take the RAF scholarship, however, dropping out of sixth form to take Articles at a Liverpool accountancy firm instead. 'It was pretty clear to me that I wasn't going to get the A-level grades I needed, or anything near them. Dad suggested I try accountancy instead.'

That smile again. It's a vital part of the Richards package. It helps him stand out in a business not noted for the cheery bonhomie of its major players. Without it, he'd run the risk of being seen as another joyless Bernie Ecclestone or Ferdinand Piech, a master strategist who doesn't get out of bed in the morning without first weighing up the risk/reward ratio of doing so.

The grin puts paid to such unworthy thoughts, although he's not averse to using it occasionally at unexpected points, to put you off the scent. For example, it only occurs to me on the way home that despite his cheery summary, flunking the chance of the front seat in a fast jet must have stung badly at the time.

Weekend rally driving filled the gap, tooling around the countryside at the dead of night in, of all things, his Mum's Ford Zodiac. 'I'd disconnect the speedo, tell her I was going to youth club and then disappear off around North Wales, putting hundreds of miles on the car without her realising. Then one night I took the side of the car out on a bridge. I parked it back at home with the undamaged side facing the house, but Dad spotted what had happened the next morning.'

Such minor setbacks aside, international competition beckoned - as a co-driver, because continuing crashes made driving too expensive - and Richards soon realised that to get on board with the best drivers called for more than an iron stomach and the ability to read a map under extreme conditions. 'They needed sponsorship, I was good at raising it. That helped persuade top drivers that I was the best co-driver for them.'

In 1981, sponsored by Rothmans, he won the World Rally Championship sitting next to Vatanen in a Ford Escort RS1800. He promptly retired, and didn't get back in a car competitively for 25 years. 'Winning was a boost to my self-esteem, but it was always a stepping stone. I wanted to run my own team, and being a World Champion opened doors to support I wouldn't otherwise have got,' he says, matter-of-factly.

Confirms Vatanen: 'He had an eye on the big picture even then. He enjoyed rallying but it was part of a bigger plan. He always had to have a project going, to be moving forward.'

Thirty years later, not much has changed. 'I do work too hard, especially at the moment. The more I see of Aston, the more I see how much of my time it's going to take. But the potential rewards are huge, and if I don't have too much to do, I find it hard to get out of bed in the morning. When I'm busy, I'm up straight away, I can't wait to get on. It's all such fun.'

He flashes one last, departing smile, and strides briskly from the room.

THREE CHALLENGES FACING RICHARDS

1. To make running a Formula One motor racing team a paying proposition (rather than a rich man's money pit) within three years

2. To extract more value from the Aston Martin brand, without killing the goose that lays the golden egg

3. To generate enough cash to keep Aston Martin's product development plan on track in the longer term

RICHARDS IN A MINUTE

1952: Born 3 June in Kent, brought up in Ruthin, Denbighshire. Educated Brynhyfryd comprehensive

1974: Wins first national rally championship, co-driving for Tony Drummond

1981: Wins World Rally Championship, co-driving for Ari Vatanen. Retires from rallying

1984: Founds Prodrive

1989: Signs Subaru World Rally Team deal

1900: Subaru World Rally Team wins both World Drivers and Constructors championships

1999: Sells 49% of Prodrive to Apax Partners

2001: Brought in to manage struggling BAR F1 team. Ousted 2004 when Honda buys BAR.

2006: Announces intention to launch Prodrive Formula One team in 2008

2007: Buys Aston Martin from Ford for £479m, in partnership with John Sinders and a consortium of Kuwaiti investors.

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