Rejecting offers – and offers never made

I read all over the Internet this morning that Tony Fernandes has “rejected” or “turned down” an offer of settlement from Group Lotus. The implication in this choice of words is that the boss of Team Lotus is somehow intransigent and unwilling to compromise, whereas if one knows a little more of the details it becomes very clear that the offer made to him by Group Lotus was derisory. If you spend $20,000 on a car and some spiv comes along and offers to pay you $500 for it, what are you going to do? You will say “No, thank you, go away you silly person.” If that silly person then wants to make a fuss they can perhaps claim to the newspapers that you rejected their offer, but as their offer was utterly unacceptable, it is perfectly understandable why it would not be accepted.

Sadly, this kind of reporting is so rampant these days that it is almost impossible to have a balanced idea of what is going on.

The various intertwined law suits between Group Lotus and Team Lotus are surrounded by smokescreens and diversionary arguments. If one fights through the murk there is really only one question in all of this: who should be allowed to use the Lotus name in Formula 1? At best, Lotus is a wildly diverse brand name, all of which seems to have been based originally on a flower, which floats on water and looks a little like the sun. This gave it mystical powers (apparently) and it is highly valued in certain religions. The white Lotus is the national flower of India and the pink has a similar position in Vietnam. Lotus seeds are widely used in Asian cooking. In the western world it is a name used by a celebrated software company, it is a brand of paper products sold by Georgia Pacific, it is the name of countless Chinese restaurants and so on.

When it comes to automobiles, the story begins in the unlikely setting of an old stable behind the Railway Hotel in Hornsey, a northern suburb of London. It was there in 1947 that Colin Chapman began tinkering with an old Austin 7 car, transforming it into a racing machine. He named the car a Lotus and there are several different theories as to why, including one that suggested that his girlfriend (later wife) Hazel, was nicknamed “Lotus blossom”, another that he worked on the car at night (he had a full time job as well) and that it had the same sleep-inducing effect as a Lotus flower. It does not really matter. What is important is that the first Lotus was a racing car. So were the next three cars that Chapman produced and raced in either trials or 750 Motor Club events. In 1952 Chapman set up the original Lotus Engineering Ltd and while the Lotus Mark 5 was never built, the Mark 6 was designed as a customer kit car. In 1954 he set up a separate racing company called Team Lotus, in order to make sure that the racing team did not drag down the car manufacturing business, and vice versa. They were designed to be separate entities.

Lotus sold more than 100 Mark 6 kits and this gave the company the money to create the Lotus Seven, a car that was very attractive to amateur racers as it was road legal, but could be used in races as well. It embodied the Lotus philosophy for high performance through low weight and simplicity. Thousands were sold in the years that followed and in 1973 Caterham Cars purchased the rights to manufacture the Lotus Seven – and continues to do so to this day.

Team Lotus in the interim built its first single-seater racing car in 1956. The Lotus 12 was designed for Formula 2 and was not particularly successful, but it was refined and in 1958 Team Lotus entered Grand Prix racing at the Monaco Grand Prix, with two cars driven by Graham Hill and Cliff Allison. The company structure was refined with the creation of Group Lotus in 1959 which featured Lotus Cars building road cars and Lotus Components Ltd building customer competition cars. Team Lotus continued to design, build and race cars in various different formulae. This structure remained unchanged until 1971 when Lotus Components Ltd briefly became Lotus Racing, although it subsequently closed down and most of the personnel moved on to establish an independent firm called Group Racing Developments (GRD), under the ownership of Griston Engineering.

The modern Lotus Engineering was established in 1980 to provide engineering consultancy services to car manufacturers. Team Lotus did use Lotus Engineering expertise for some of its technology, notably active suspension. It also enjoyed the reflected glory of Team Lotus’s achievements on the race tracks of the world.

In 1982 Lotus Cars was involved in the DeLorean Scandal, with the British Government paying $17.65 million for design consulting. This never reached the firm and after 20 years of investigation and litigation, it was found that Chapman, John DeLorean and Fred Bushell had divided it up between themselves. While this process dragged on Lotus first became a public company but then General Motors bought the firm. Team Lotus continued under Chapman Family ownership until 1990 when Peter Collins and Peter Wright, purchased the Team Lotus name and logo from the Chapman-owned Team Lotus International Ltd and ran an organisation called Team Lotus Ltd. This survived until 1994 when the team went into administration. David Hunt bought Team Lotus from the administrator just before the Japanese GP and a new organisation called Lotus Grand Prix Racing was established. This is believed to own the team’s machinery and equipment and the rights to run F1 cars with the Lotus name.

“We have a number of very promising opportunities which we are pursuing,” said Hunt at the time. “We are working dilligently to resolve a short-term cash-flow challenge in order to be able to achieve the long-term objectives of the company.”

His plans to ressurrect the team were destroyed at the last minute when a North American investor, believed to have been Tommy Hilfiger billionaire Lawrence Stroll withdrew his support. Unable to meet the running costs, Hunt decided to lay-off the staff in December 1994. In the weeks that followed there was talk of a number of possible buyers, including former Lotus directors Guy Edwards and Pete Hall, with other interest from Tom Walkinshaw and David Richards of Prodrive. At the end of January 1995 Pacific Grand Prix boss Keith Wiggins (who now runs the HVM IndyCar team) concluded a deal to call his team Pacific Team Lotus, which gave him the chance to market the Lotus name to sponsors. The Lotus badge and the green and yellow of Team Lotus appeared on the team’s cars that season.

Bertrand Gachot in his Pacific Team Lotus car in 1995.

At the end of the season, the team withdrew from Formula One and Wiggins went back to Formula 3000. Hunt retained the Team Lotus name and associated rights. It was not until 2009 that the name was really back in the spotlight when it was announced in June that Litespeed intended to enter Formula 1, using the Team Lotus name. Group Lotus reacted in a negative fashion. In the course of the summer Litespeed tried to put together a project, involving AirAsia boss Tony Fernandes and the Lotus name. In the end Fernandes liked the idea so much that he took over the team, agreed a deal with Group Lotus to use the Lotus Racing name for five years, in order to stop their complaining and then began to quietly negotiate with Hunt over the possibilities of buying Team Lotus. The Chapman Family supported Fernandes.

These are the facts. Perhaps we all do see Lotus in different ways. Some folk see Graham Hill at Monaco, many see Jim Clark, some remember Ronnie Peterson and Mario Andretti, some recall the days of Mansell and some of the younger generations remember the Senna and Piquet years, some will also be thinking of the era of Hakkinen, Herbert and Zanardi. The fact is that Lotus means different things to different people. Some race fans could not give a toss whether Group Lotus makes road cars or paper hankies. Equally there are people who are passionate about Lotus road cars and do not care about F1. When all is said and done, the question is not so much what people think, but what the paperwork says – although the image of Lotus will probably be part of the argument that comes up in court in March when the teams of lawyers get themselves into the legal ruck ahead.

The one question that the court ought to consider if it is looking for answers to this problem is why has this happened.
Why has it been impossible for Group Lotus to do the obvious thing and throw its money behind Team Lotus, rather than funding the Renault team? If it is logical for Group Lotus to control the Lotus brand in respect of all automotive activities, it should have been an obvious step for the Group to decide to get involved in Formula 1 as a sponsor of Team Lotus. All the problems would have been solved in a flash.

The only argument I have heard is that Group Lotus does not believe that Team Lotus is competitive enough for its elevated ambitions. Fine. That could be a fair point. But that does not fit in with the decision to fall into bed with Kevin Kalkhoven’s KV Technology team in IndyCar racing. One can understand the deal with Nicolas Todt’s GP2 team, because this is usually up there, fighting for victories, but KV has never been a frontrunner in the IndyCar Series and if Lotus had been following the philosophy it claims, it would have been far more logical to have put some money into Andretti Autosport and get badging with Marco Andretti (Lotus/Andretti geddit?) and media darling Danica Patrick. Or to do a deal with Roger Penske, who has been stretching his IndyCar sponsorship thin of late. Or perhaps even to help fund Chip Ganassi’s second team with two American drivers. All three of these options would have been better than giving KV some money and hoping that this will change the situation.

It does not add up, does it?