A log-jam at Renault F1

Dany Bahar has knocked a few noses out of joint in Malaysia by suggesting in recent days that Group Lotus should tie up with a global car manufacturer in order to achieve its goal of becoming a rival of Porsche and Ferrari. This may be true, but the thing that Bahar seemed to have overlooked when making these remarks was that the Malaysian government-owned Proton company owns Group Lotus and it was the Malaysians who gave him the job of rebuilding Lotus on their behalf, rather than asking him to suggest possible buyers. Today Group Lotus issued as statement blaming the media for incorrectly interpreting what he said.

“I am happy to confirm that this is now all complete thanks to Proton’s help and together with Proton we can focus on completing the five year business plan to return Group Lotus to profit,” he said. “Despite recent media reports which seem to suggest that we are looking at alternative partners for the future, I’m happy to confirm that this is absolutely not the case. We have an incredible relationship with Proton, they back us 100 per cent and frankly speaking this is really important when you face challenging issues such as securing funding for our business plan. Group Lotus could not ask for a better share holder. Part of the business plan is the joint development of a global small car platform meaning that for the first time in the Proton Lotus history, the relationship will be mutually beneficial. This alone should demonstrate how close we are.”

This statement seems to be the result of heated telephone calls from Kuala Lumpur.

Group Lotus is the major supporter of the Renault F1 team and is committed to providing significant sponsorship to the team for a lengthy period of time. Unfortunately Bahar’s plan to shovel Team Lotus out of the way and use the Lotus name on the Renault F1 cars has failed, following the High Court judgement last week. This means that as things stand Bahar is committed to funding a team that will run cars called Renaults, even though Renault itself does not want that to happen. In order to change the name of the F1 cars, the owners of Renault F1 – purportedly a Luxembourg group called GenII – must secure the support of all of the other F1 teams. Unfortunately, the teams do not want to help because Bahar, the team’s primary sponsor, has a history with several of the teams and they are not keen to help him. Thus Renault F1 cannot change the chassis name to something like Elan Racing, which might be a possible way out of the problem. Nor does it seem that there is any money available to convince Tony Fernandes to give up his plans for Team Lotus.

If Fernandes will not sell – and there is no reason he should unless the money gets to eye-watering levels – Bahar is stuck. GenII is stuck. Renault is stuck and Proton is stuck paying for a team that promotes Renault. And the buck has to stop somewhere.

The word is that Renault is so unimpressed with the current situation that it wants to terminate its engine supply deal next year, leaving the team with the option of Cosworth engines. GenII, however, seems to have some sort of option to acquire Renault’s engine-making facility at Viry-Chatillon, which complicates matters, because while this is a good idea GenII cannot afford to run the F1 team, let alone invest in an engine business. Clearly what is required is more money, but finding that in the current economic climate is not easy.

Proton might decide that the best thing would be to do a deal with Fernandes and let him take over the whole Group Lotus business, which is what he would like to do, which would keep the English sports car company in Malaysian hands, perhaps with the government retaining a minority of the business, and enable the F1 team to be reconnected with the car company. The overblown plans thus far announced could be trimmed to sensible levels and the strategy altered to reflect Fernandes’s ideas about Caterham. The problem with this escape route is that if there is a signed sponsorship deal between Group Lotus and the Renault F1 team, GenII will want the money that Bahar has committed to giving them. Unfortunately, that is not enough to keep the team competitive and other money needs to be found. The option for GenII would be to give up on the Lotus sponsorship and find an alternative backer, thus getting Bahar out of the picture and opening the way for a change of name and other funding. This seems to be the route that offers the best opportunity for the team’s longterm survival.

There are also questions about who actually owns the team. On paper it is GenII, but the purchase was made with borrowed money and further money had to be borrowed to pay the initial lender (which was Renault itself). This explains why the cars carried sponsorship last year from Renault’s banking arm DIAC and then changed the livery to include Snoras, a Lithuanian bank. One assumes that Snoras wanted certain guarantees for such a loan and one can imagine that the shares of the team would have been a suitable guarantee. Snoras is interesting in that it is owned by a man who clearly has a taste for motorsport: Vladimir Antonov having recently bought the commercial rights to the World Rally Championship. He is also the owner of Spyker, which is producing road cars aimed at rivalling Ferrari. This used to run an F1 team and is an investor in Saab, which is run by Victor Muller, who was also involved in the Spyker F1 operation. One can imagine that if the debts have not been paid Antonov might consider a move to protect his investment…