Cycle News - Archive Issues - 1990's

Cagiva's F4 superbike project moves forward, and the company plans to introduce the hightech machine at the Milan show in September. Though clothed in 916 bodywork for testing purposes, the F4 will definitely have its own identity. needed investment into Ducati which, for one reason or another, Cagiva was unable to deliver? Well, firstly, I am still chairman of the Ducati Motor board of directors, so I'm not exactly silent at the executive board meetings - which determine the company's future direction! But let me tell yOl.l something. Contrary to what many people understand, Ducati Motor in fact consists of a 49 percent shareholding by Cagiva, a further 39 percent held by TPG, and 10 percent by their independent merchant advisers, Deutsche Bank Morgan Grenfell. In addition to that, the remaining 2 percent of equity is presently owned by TPG, but, at the point at " ... Ducati owes me personally the SWIl of 82 billion lire - that's $50 million... " . assuming 13 billion - and Gianfranco and I 68 billion. The fact that, until now, I have which stock in the Ducati company is refused to get involved in a public arguthe subject of a public offer and it's ment about this has put Cagiva in a floated on the stock exchange - an operposition of weakness, because, it's not ation that is planned for the end of 1998, my style to get involved in name-callI]\uch earlier than is generally realized ing, even against thos-e who have this 2 percent will revert to Cagiva at a attacked me personally. But now I must predetermined price which has already raise my voice, through this interview, to state the real facts, including my fambeen agreed upon in our original contract of sale. ily's true position relative to Ducati. Therefore, I am not the poor, Because the fact is that Ducati owes me deprived failure that certain people personally the sum of 82 billion lire have made me out to be, but, firstly, still that's $50 million - that I, not a bank, the largest single shareholder in the have advanced the company over the Ducati company, and secondly, in the years and which it owes me on the balfuture, the majority shareholder at the ance sheet. If I had that $50 rnillion now moment of first quotation. So, I say to to invest in Cagiva motorcycle production, Cagiva would be an airplane waityou that Cagiva still has a significant' .ing to take off, instead of struggling to part to play in the future of the Ducati marque! reassert itself in the marketplace, To the extent of participating in the because of the lack of investment and exten'sive investment program now time I could have devoted to it during underway? the past 10 years since we - I repeat we, Exactly! When certain people state that the Castiglioni family - rescued Ducati "TPG will invest 70 billion 'lire (about from the scrapheap in 1985! $40 million) during the next three It sounds as though you've been grapyears" - a statement that has been pub- ' pling with this for some time, judging lished in the financial press all around by the intensity of your emotion. Why the world - this is complete!y incorrect. didn't you speak out sooner? TPG of itself will invest precisely nothBecause I believe you must sometimes ing. The company keep quiet when things tha t will make the are presented contrary investment is Ducati, to the way they really " ...1 will admit to one ludf-cr~ us~ng funds sourced are, so as to not rock from banks and ambition: I'm Ioolting forward to the the boat. TPG is perday when Cagiva of1£llS a fartary in financial institutions, forming a valuable serfor which the individvice for Ducati, and I Japan... " ual shareholders are do not in any way wish jointly responsible. to criticize them - only This means that, while it is true that certain individuals who misrepresent TPG and Deutsche Bank are together' the situation publiciy. But on September liable for 51 percent of that investment, 15 this year, I will present to the world Cagiva is responsible for 49 percent of the most beautiful motorcycle ever seen, Ute Cagiva F4 four-cylinder. At that it - but also 49 percent of the benefits, in terms of the profits that will accrue moment, the pain I have suffered in in the short or long term. Therefore, recent months and past years will be forgotten. A page will be turned, a new our participation in Ducati's entire chapter started in the Cagiva story. That operation is both an active and ongoing one. is my main concern right now - and What does all this mean? Well, it explains why 1 must speak out now to correct Cagiva's status in the eyes of the may sound like financial gobbledygook public. to your readers - who I'm sure are more But won't the launch of the F4 in 750 interested in learning what new Cagiva models they will be able to buy, rather 5uperbike form present a conflict of than who owns how much of Ducati interests, placing Cagiva in direct competition with Ducati? but there's an important point here I No - no more than it would have done must bring out into the open, because it had I retained full control of Ducati. Our affects the public perception of Cagiva, which is vitally important for our comtrue competition will be the Japanese, because Ducati makes only twins and pany's future. When I read in the papers that "TPG will invest 70 billion lire in will never build a four-cylinder bike whereas the Cagiva is the European Ducati," I get very upset, because it may appear to outsiders that Cagiva has answer to the Japanese fours, only washed its hands of Ducati, or is too bristling with technical innovation and poor to contribute to Ducati's investclothed in outstandingly beautiful ment program, so the Americans have styling by Massimo Tamburini. What is to do it for us - when they are, in fact, true is that from 1998 on, when the F4 enters production, Cagiva will follow assuming liability for precisely 57 billion lire of bank debt, with Deutsche Bank the same road of reconstruction that w~ kept investing more money, more people, more cuore into Ducati - and finally it started coming right. First, the 888, then the World 5uperbike Ducati is following today - we're about titles, then finally the 916 - designed in 18 months behind, but following in the Cagiva by Tamburini, just as the Monsame footprints. ster is also a product of Cagiva, too, But what will fuel this comeback? Do thanks· to Galluzzi. To arrive at the point you have the resources to pull it off? that Ducati was able to manufacture Let's look back to 1985, when we res25,000 motorcycles a year to an excellent cued Ducati fro,m oblivion by acquiring level of quality and unrecognizable it from VM. At that point, Ducati was standards of reliability compared to shut down, dead, finished, selling less even five years ago, took billions of lire than 3000 bikes a year, each with 10,000 and millions of man hours - much of defects, with a huge work force, low them provided at the expense of Cagiva. productivity, outdated machinery, zero But as far as Ducati was concerned, it capital investment, and no new models paid off - and we will repeat the same under development. achievement with Cagiva, which starts By contrast, Cagiva was flourishing, from a far stronger position today than Ducati was in back in 1985. Yes, but in spite of its success, Ducati " ...we love motorrydes, we love racing still ran Into financial problems two and we believe in the Italian W'9'." years ago. How did this come about? I'm glad to answer that, because I want to set the record straight. The Cagiva selling tens of thousands of bikes a year, Group's financial problems arose durwinning World Motocross titles and ing a period of worldwide recession, competing increasingly successfully which claimed many companies that against the Japanese in SOOcc GP racing, are far bigger and broader-based than where we alone flew the European flag. ours, and nearly resulted in the failure VM's strategy for Ducati was to cease of four other Italian motorcycle manumotorcycle 'production completely and facturers, all of which only survived concentrate on making diesel and induswith the help of external financial help trial engines - but we reversed that poliand complete restructuring. (Presumcy completely, and you know the results ably, this is a reference to Aprilia, Bimoof that decision. Gianfranco al).d I had ta, Moto Guzzi and Laverda). So we no need to get involved with Ducati were not alone in facing these probbut we did so for the same reasons that lems; but because of our high profile in we established Cagiva from the ashes of GP and superbike racing, and Oucatl's the Harley-Davidson!Aermacchi opera- . export-led revival, our situation was . tion: because we love motorcycles, we much more newsworthy, and so was love racing and we believe in the Italian more widely reported. Way. We couldn't let Ducati die. The effects of the recession were So what happened? Only that we exacerbated by the very success we had 'spent the next five years swimming achieved, by the worldwide demand for upstream against the current. We decidDucati products, which in turn created ed to enter the Paris-Dakar with Oucatithe need for facilities and components to powered bikes - then broke literally build them. So not only were Ducati's hundreds of engines in development technical department and Reparto Corse before we could even reach Dakar, let eating up millions of dollars a year - a alone win the world"s most prestigious critical investment that allowed us to off-road race, as we eventually did.. win six World 5uperbike titles and Then we launched develop a range of the Paso, which was street bikes to capital"The Cagiva Gr0"l"s financial originally a Cagiva ize on tha t - but we before we put Oucati problems arose dUring a period of added a new, computon ·the tank at the last worldwide recession, which claimed erized paint shop and moment, only to run many companies that are far bigger a fourth production into a pile of problems line, and then on top of • and brooder-based than OUTS... , with it, especially carthis had to purchase buretion. the components from Then came the Eleour suppliers to actualfant, and the first 851 otto valvole - same ly produce tile bikes. thing each time, a huge sack of probTo build 10,000 Ducati motorcycles lems that we eventually battled through, and in 1995 we were making 110 bikes a to create a product that today is the day, more than 25,000 per year - you most desirable sportbike you can buy' need 150 billion lire (over $90 million), from any source. 80 percent of which must be spent outAt any stage in the past decade, we , side to buy components: could and maybe should have walked So what happened. is that we were away from Ducati, because the human caught in a credit squeeze. At the height and financial resources it took to turn of the deepest recession in over 20 years, the company around were undoubtedly when the cost of money and indeed its delivered at the expense of Cagiva. But very availability became critical, we didn't walk away. On the contrary, Ducati's success meant that our capital 27

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