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Wesley Branton | July 14, 2019 @ 11:48 pm
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According to a private letter supposedly leaked by Rich Energy CEO Williams Storey, the Haas F1 Team’s sponsorship agreement has indeed been terminated, despite the presence of the brand logos at the British Grand Prix.
Get the backstory behind the Rich Energy situation here.
The letter, dated July 11, appears to be from The Ebury Partnership LLP. This is the company that represents the team in their sponsorship agreement. The letter states that, although Rich Energy’s exit is in breach of their multi-year contract, the team will allow Rich Energy to terminate the deal. However, the Haas F1 Team is entitled to significant compensation.
After less than a year, the company will be terminating a sponsorship deal that was supposed to continue until the end of 2022. The letter claims that the team is seeking £35m for damages as a result of the early termination. This consists of an outstanding 2019 balance of £6m, another £14m for the 2020 year and £15m for the 2021 year.
Ahead of the British Grand Prix, the company’s CEO announced that Rich Energy had terminated their sponsorship agreement, citing poor performance. However, the company shareholders opposed the decision, calling their CEO “a rouge individual”. The shareholders sought to overthrow the CEO but failed.
However, according to the company Twitter feed (which appears to be solely under the control of a bitter William Storey) claimed that the rights to distribute the company’s mystery energy drink were transferred to another company. However, Rich Energy will supposedly remain in full control over the Rich Energy brand, which includes the Haas sponsorship deal.
On the allegations of poor performance, the Ebury letter claims that the sponsorship deal did not include a performance clause and that could not be used as a basis to terminate the deal.
According to the letter, Storey also used the fact that the company’s logo has been absent from the car since the Canadian Grand Prix. While the company wordmark was still present, the logo was removed due to High Court judgement that deemed the logo was an infringing copy of the logo used by Whyte Bikes. Haas removed the logo as a result of the case outcome, giving them the legal right (and obligation) to remove the logo from their car.
The letter also states that Rich Energy has until July 25 (14 days from the date on the letter) to pay the outstanding £35m balance. Otherwise, Haas may pursue legal proceedings to get the money.
However, this may not be as easy as it seems. Rich Energy is often regarded as a shady business, with somewhat mysterious financial standing. Documents of the company show that it only had £581 in the bank as of the end of 2017’s fiscal year.
As it stands, the company still owes outstanding legal fees to ATB Sales Limited (the copyright owner of the Whyte Bikes logo) for more than £35,000. ATB Sales may need to seek further legal action to get that balance paid since Rich Energy has taken little action following their loss in the case. The infringing logo is still on the company website, merchandise and newly created “marketing materials“.
As for the validity of the Ebury letter, it’s difficult to say whether or not it’s legitimate. During the Whyte Bikes case, the judge claimed that Storey was uncredible during the trial and accused him of attempting to falsify documents that would support his case. A slew of recent reckless activity on the Rich Energy social media accounts paints the picture of disgruntled CEO at the helm of a failing company.
As for Haas, they appear (if the letter is legitimate) to be out of a title sponsor for the rest of the season, unless they can secure one over the summer break, if not earlier. However, the significant financial compensation owed to the team (assuming they can ever collect it) should protect the team from any immediate financial hardships.
While it’s a possibility that the company now holding the rights to the Rich Energy drink distribution could continue their partnership with Haas, this is not clear at the moment. Haas expressed interest in continuing to work with the company once they rid themselves of Storey, according to a similar letter leaked by Rich Energy on July 12.