What will Renault do regarding its involvement in Formula One? This has been the question on everyone’s lips for some time.
Well the options for the French manufacturer are simple. Quit Formula One, continue supplying engines only or buy a works team and sell engines to anyone else who wants to buy them.
Renault has contracts with the Red Bull family to supply the Toro Rosso team and Red Bull Racing with F1 engines to the end of 2016. Though whether the French manufacturer – who is third on the all time F1 engine race wins table – wishes to continue being slagged off repeatedly by Christian Horner, Helmut Marko et al. for another season, is questionable
Red Bull Racing have clearly indicated they would be happy to bail out of their engine supply arrangement with Renault which runs to the end of 2016 and have been courting Mercedes recently but so far – to no avail.
However, the Daimler Corporation and the Nissan Group (which owns Renault) announced at the end of July that they were about to invest $500m each in a new production facility for the next generation of premium compact Infinity and Mercedes cars.
Given this joint venture, Mercedes are unlikely to upset Renault by supplying Red Bull Racing with their F1 engines whether in 2016 or from 2017 – unless Renault give them the green light.
Due to Renault’s success in Formula One, it would appear tat to throw away its affiliation with the sport and quit – is for many unthinkable. Yet Carlos Ghosn, who is chairman of the Nissan-Renault alliance, stated in 2010 he saw Renault’s involvement in Formula One as a ‘profit centre’.
This is clearly not the case for Renault at present. They now have revenue from just two engine customers and have to spend more than planned on engine development to try and catch up with Mercedes.
Maybe Mr. Ghosn now sees Renault’s involvement in F1 from a different financial perspective, after all Mercedes clearly view their spend in Formula One as part of their marketing budget for the road cars.
Alain Prost began the speculation the Renault would reconsider owning a works team in an interview he gave to Sky Sports back in June last year. In a rather coded conclusion, he stated:
“You need to analyse and change the situation in terms of organisation and the way you organise yourself. We have four teams but maybe [Renault need to] do something a little bit different. I know what to do, it would be the best, I don’t know if they are going to make it [the changes].”
Earlier this year, Franz Tost fueled the flames of this story by offering Toro Rosso for sale. However, the Toro Rosso team principle admitted following the Hungarian GP that the talks had faded away and revealed, “I assume that they have decided to buy another team.”
The natural home for a re-born Renault F1 works team is obviously Enstone, though Vijay Mallya made what for some – were surprising comments during the recent F1 event in Spa.
“Yesterday was a conversation from their side to update me on the fact no decision [to buy Force India] has been taken, they haven’t made a proposal about the board of Renault.”
Mallya went on to reveal the detailed discussions included the current Force India owners retaining a minority stake in a potential Renault buy-out.
As Joe Saward suggested, this level of disclosure is unusual because F1 bosses tend to keep this kind of detail close to their chests. Therefore Mallya’s revelations to the media may indicate Force India have other suitors who were being publically informed that time for their F1 investment opportunity, may be limited.
Of course, when buying an F1 team it is prudent to discuss the opportunity with more than one party, however, Renault could be being driven away from a deal with Enstone (Lotus) for other financial reasons.
Both Force India and Lotus are short of cash and have debts, so Renault is in the driving seat as they look to strike a deal.
Yet the Lotus debt structure is primarily to the investors behind Genii, and it may well be they are refusing to take a significant haircut to sell the business to Renault.
This is unlike the Marussia situation earlier this year, where suppliers agreed to slash the debt in return for some level of payment. The suppliers were a disparate group of individuals, each concerned they would receive nothing if Marussia went belly up.
Genii investors are however the owners, and may feel they can withstand the pressure to offer a significant cut price sale agreement, which is why Renault have made it known they are talking to Force India.
It appears certain Renault will buy a works team now – one way or the other – but when this will happen is uncertain.
Interestingly it may be the influence of Red Bull Racing which will decide when this deal is done.
TJ13 learned last weekend that Red Bull Racing has a clause in their engine supply agreement that prevents any other team receiving ‘preferential treatment’ from Renault. Milton Keynes clearly believes a Renault buying works team is in breach of that clause, and is confidently expecting to be allowed to do a deal with Mercedes for 2016.
Renault would obviously like to retain the income from Red Bull for one more year, and could well be hoping if they can delay as long as possible buying a works team, Red Bull will run out of options.
So for now the speculation over who and when Renault will buy as a works team, will run and run.