The busy folk of Hethel

Group Lotus has money to spend and plenty of it by all accounts. The aim is turn the Lotus brand into a rival for Ferrari. From what I can gather, part of the plan now involves taking over the Renault F1 team. There is logic in this as an F1 team is the perfect way to promote an automobile brand, particularly if sponsorship and TV rights money are paying for it. It is basically free advertising and while performance is important, the fact that a manufacturer is in F1 is in itself a bonus. And if that sounds far-fetched, ask yourself this: when was the last time you saw a Ferrari advertisement in a newspaper or magazine, or on television? When was the last Ferrari billboard spotted? Ferrari is happy to be involved in the advertising programmes of others, who want the brand association, but F1 is its marketing strategy – and that is incredibly successful.

Lotus wants to do the same, perhaps only because the people running Lotus were formerly employed (albeit briefly in some cases) at Ferrari. The fly in this ointment is that Tony Fernandes is already in Formula 1, using the Lotus name, and there appears to be no reason why he should not be doing this. The courts in England are examining who has what rights, but the signs are that Fernandes has a perfect right to do what he is doing. This may be inconvenient for Group Lotus, but it is probably wiser for the company to find a way to work with Fernandes, rather than trying to bully him into submission and claim the history of Team Lotus, which may not belong to the Group. These things will sort themselves out in court in time, but it is worth noting another emerging story.

The other day I received a press release about a planned new motor racing series in India. It is called the Indian Motorsports League (IML) and the press release said that it is made up of “a global group of racing, engineering and marketing professionals”, who want to create a sports car series which will race on circuits across India, with eight races in 2012 and as many as 25 by 2015. When you cut through all the jibber-jabber the concept is as follows: teams and circuits will pay to be part of the series. Cities will buy into the idea because of the economic benefits of involvement, in tourism and job creation. Teams will get involved because they will get money from the promoters. Fine idea. Bernie Ecclestone has been doing it very successfully for decades in F1. The difference is that the cars will be identical, which makes this idea more like an A1GP for sports cars, which is a less certain business model.

The IML press release talked of money being used to create a 350-acre motorsports campus with a racing circuit, with a racing school, plus a technical college, to train engineers, officials and volunteers, and a museum.

The only thing that made me sit up and take interest in this story was that nowhere was there any mention of who was involved. And, in my experience, when that happens there is always a story, because someone somewhere is hiding something. So I decided to delve a little into the subject. This revealed nothing, until I stumbled upon a defunct management consulting firm called Proesq Ltd, which closed down at the end of last year. A website called www.proesq.com mentioned a “Project IML” which it described as being “a sports entertainment business concept and master planning for the event format, venue locations and technical infrastructure”. There was no indication as to who was involved.

Curiouser and curiouser…

A little more research revealed that the man behind Proesq Ltd was an engineer called Sanjay Walia. No surprise there. This is a suitably Indian name to match the concept. What was interesting was that Walia was obviously British-based, having studied technology management at Liverpool John Moores University, before spending six years with BMW, then Dana and later India’s KLT Automotive. He then set up Proesq for two years before shutting it down and joining… Group Lotus.

Lotus boss Dany Bahar is a man who would understand Walia’s idea. When he was at Ferrari Bahar was responsible for the decision for the company to become involved in A1 Grand Prix Series, although this turned out to be a less than brilliant strategy as A1GP went to the wall, owing rather a lot of money. Ferrari was very discreet about this mess, but did point out, just before the debacle, that there were “things that still need to be finalised concerning the engine supply and the licensing agreements which were valid in the past”. Today there are “twenty Ferrari engined single seat race cars, built in 2008 based on the F2004 Formula One Ferrari designed by Rory Byrne, Ross Brawn and Aldo Costa for the 2004 Formula One season” offered on the Internet by the liquidators of the A1 companies. One or two of these have been sold but they have not raised much money.

Lotus has already signalled its intention to enter open-wheeler racing, with its IndyCar team running in the United States this year, its plans for GP2 and GP3 in 2011 with Nicolas Todt’s ART Grand Prix and the launch of its Lotus 125 “Formula One-style track day car”, which is priced at £650,000 and, coincidentally, looks rather similar to the old A1GP car, although it has a different engine and different bodywork.

One can imagine that a Lotus one-make sportscar championship would be a useful tool to increase the company’s sales in India, a rapidly-developing economy which boasts 69 billionaires (according to Forbes) and 126,700 millionaires, according to Capgemini and Merrill Lynch Wealth Management. Ferraris will not be sold in India until January next year so there is a good opportunity for Lotus to be on almost equal terms with the venerable Italian carmaker. Earlier this year there were reports of a joint venture between Indian utility vehicle manufacturer Mahindra & Mahindra and Proton to sell Lotus cars in the Indian market. Mahindra & Mahindra is rushing to get into the fast-expanding Indian automobile market and is in the process of completing the purchase of defunct South Korean firm Ssangyong. It has also recently acquired REVA, which is involved in the development of electric cars.

28 thoughts on “The busy folk of Hethel

  1. “There is logic in this as an F1 team is the perfect way to promote an automobile brand, particularly if sponsorship and TV rights money are paying for it.It is basically free advertising and while performance is important, the fact that a manufacturer is in F1 is in itself a bonus.”

    I can think of a few folks in Germany that may disagree.

  2. So, it is not out of the question that Renault F1 will become Team Lotus and Lotus F1 will become Renault F1.. or Saab, Lada, or Porsche. What fun.

    Perhaps these are just my European prejudices, but I do not see how the Indian market is going to be any different with regards to branding, it is not like brand heritage stops at passport control. If a rich person wants to pick up a Sunday newspaper in their flip-flops, they will buy a Ferrari for the job.. or perhaps send their butler in his Lotus. Anyway, great post Joe, its nice to have a source that provides a good dose of objectivity in its content (unlike my comments).

  3. Joe, you never cease to amaze. I mean, this truly sensational news – both the Lotus connection and the Indian Motorsports League. Being in India this would be just great for fans like me who are tired of this IPL and always cricket-centric sports journalism. If what you say is true, then Lotus truly is going places.

    But at the heart of all this is the mess behind the Lotus name. I know Fernandes seems to have the rights to the Team Lotus name, but I’ve always considered Group Lotus as the real successor to the iconic F1 team. But it’s silly that people aren’t sure what they own! It would be great if both these forces combined – what a potent force they would bcome in teh business andteh sportng arena! If Lotus is involved in the Indian Motorsports League, it will certainly give it much needd pubilicity in Asian circles.

    Phew! I still haven’t taken all this in. Seems too good to be happening. Thanks Joe for bringing this to us.

    Pictures about how the Indian Motorsports League race cars would look like are here:

    http://www.team-bhp.com/forum/indian-motorsport/91077-move-over-ipl-indian-motorsports-league-here-street-circuits-too.html

  4. I’m increasingly thinking the not-F1 Lotus is trying to distract the real F1 Lotus (so far as it can be considered that) into costly diversions, then pick up the rest in bankruptcy or distress.

    The problem I have with the current F1 Team Lotus, is we need a good two more years to see if their hard work will amount to much. That’s one to see if their new drive train works, and another to see if they can really make it work. And pay for it.

    All this distraction is either a bonus: e.g. “screw that lot, we’re racing” or potentially fatal. I’ve played, under duress, enough fake – out games to smell this one.

    Have you considered meanwhile this non – PR “event” is just a ploy to sell of those motors?

    best,

    – j

  5. Group Lotus is also developing an LMP2 sportscar for Le Mans 2012 (supposedly on-track next year, but thats pretty optimistic)

  6. And, aside, what the hell kind of reputation does the Lotus name have without F1?

    The level of covetous behaviour displayed by the former Proton lot, merely confirms the value of the name.

    In advertising terms, this is the purest shell play ever.

    MY [sic] money on Fernandes, though.

  7. Very interesting Joe, very interesting indeed. All manufacturers say they want to take on the big boys in any league, so in that area Lotus is no different.

    However, if (and it is a big “if”) Lotus can pull all these pieces together then maybe they can build the brand perception of their sports cars into a top level marque.

    But to reach Ferrari levels will take time more than anything else, you cant just buy Ferrari’s racing pedigree

  8. It always annoys me when a car manufacturer comes to F1 without developing its own engines. You might argue that Mercedes did and get away with it but at least their engines weren’t developed by RENAULT or any other car manufacturer.

    So for Lotus to come to F1 and using its image, they have to achieve success (remember the Jaguar episode) and they have to develop at least their engines.

  9. So Tony Dodgins is speculating that perhaps a deal will be announced in Brazil for Group Lotus to purchase Renault and race as Lotus-Renault, while Tony Fernandes gets Renault engines and a pile of cash, but folds up his Lotus tent and becomes Air Asia Racing or something similar.

    I am praying to all I hold holy that he is incorrect.

    Joe, any thoughts? Could this be the outcome of the meeting which was supposed to have been held in KL last week at which Group Lotus and T. Fernandes had their heads knocked together?

  10. This whole Lotus thing really is turning into a most convoluted saga. If Bahar is unsuccessful in his efforts to relieve Tony Fernandes of the rights to the Lotus name then could we see Team Lotus and Group Lotus formula 1 teams on the grid next year? This would give Legard and co. nightmares and be very confusing for all involved. Would this really happen? Would Bahar do it out of spite in an effort to force Fernandes to withdraw or change the name of his team? Wether Tony has the naming rights or not people will surely see the manufacturer of the road cars as the legitimate Lotus team, this could affect sponsorship opportunities for both teams. Also what about engines? Fernandes will use Renault engines next year, could Bahar manage to cause trouble with that deal as part of the negotiations? Could all this talk of Bahar buying a team simply be a bid to strengthen his hand in the upcoming court case? Maybe a Judge could be a bit more sympathetic if Bahar says he wants to enter F1 but can’t because nasty Tony has pinched his name! This one has a few miles left in it, great analysis again Joe

    1. Tim W,

      Tony F did not pinch the name. He simply used his business nous to come up a plan before Bahar arrived on the scene and tried to elbow him out of the way.

  11. Ash,

    Group Lotus cannot race as Lotus-Renault. All rights in relation to Lotus in F1 belong to Team Lotus, which belongs to Tony Fernandes. Until that is overturned there cannot be a second Lotus in F1.

  12. I know, but the implication of Dodgins’ piece was that Tony Fernandes would voluntarily sacrifice the Team Lotus name in exchange for various blandishments, thereby clearing the way for Group Bahar…

  13. I can’t help but think that with their absurdly ambitious road-car plans combined with their interest in going racing that Bahar and Group Lotus have simply bitten off more than they can chew. Looks like Fernandez has the more realistic gameplan, and thankfully the better understanding of the brand’s history and tradition.

  14. Pie in the sky….The IML business model seems to be based on IPL and other sports leagues selling franchises. But as A1GP & Superleague Formula and countless other motor sport series have proved, it is bloody hard to sell franchises in a new motorsport series with no identity or repute, where franchisees will also make money. And if they don’t the series is eventually doomed.

    Even though interest in motorsports is growing in the Indian market, it is still not big enough to sustain a series and there is very little permanent race track infrastructure to support it. Circuits too will never make enough money to be able to pay the league. If the plan is hold many street races in the hope of cities advertising to attract visitors, forget it…Major metropolitan cities have bigger fish to fry….

    All in all a total non starter of a business plan that can only be dreamt up by “suits” out of touch with ground reality…

  15. Not true Joe. Group Lotus own the rights to “Lotus” in F1 as well as road cars. Tony Fernandes owns “Group Lotus” in F1 – not a problem when the two companies were cooperating, but in current circumstances the courts will have to sort out the conflicting trademarks on the IPO database

    1. John McGregor,

      I am not an expert in these matters and I believe that it is up to the High Court to decide who is right and who is wrong. However, the Trademark Office ruled in 2002 that Team Lotus owned the trademark in Class 35, specifically relating to “advertising services included in Class 35, all relating to Formula One motor racing”. That is fairly clear. It should also be pointed out that Group Lotus accepted that Tony Fernandes had no right to use the Team Lotus name, which he did not own at the time, when it granted him the licence to use “Lotus Racing” this year. Team Lotus Ventures has also applied for the use of Team Lotus in Class 41, which is “sports entertainment services, motor racing, club services, hospitality, organisation of competitions, and events”.

      You see somewhat confused when you state that Tony Fernandes has the right to Group Lotus in F1. This is not true.

  16. Indian Motorsports League (IML)?? Dream on!

    Although I’m a huge motorsports fan, I don’t see it happening. The commonwealth games just took place, and the stadiums were empty. Hockey is India’s national sport, and no one really cares about it. A hockey league was created a few years ago which flopped big time. People don’t even bother to go watch test cricket in this ‘cricket crazy nation’

    I think the interest in F1 is hyped up as well. I’d like to see how the Indian GP goes first.

  17. So obvious… are the benefits of Group Lotus and ‘F1-thingy-Lotus’ sitting in a room and agreeing to join it all up together.

    So obvious… each individual side thinks the benefits rest in seeing the other one decimated so they can pick up the pieces alone.

    So obvious… this will quickly destroy both parties and the whole lot will go down the swanny.

    Ah let ’em do it. They can all tell us how it was all too complicated, too twisted up and too intractable for a deal to share to have been made when its all over for the lot of them.

  18. apologies Joe. I meant “Team Lotus” not “Group Lotus”. My excuse is that I am trying to work from my mobile phone as I have no landline or broadband for the last 24 hours , thanks to the incompetence of BT. Still down now and no sign of a fix anytime soon

  19. For John & Joe,

    There’s some fun to be had, looking at the OHIM search results.

    (no direct links but just google “OHIM” and input “lotus” in the “contains” field. OHIM = Office Harmonisation Interior Market. Bloody mouthful, but it’s responsible for things called Community Trade Marks, which are as simple as the office’s acronym.)

    There are three pending for Team Lotus. 009428525, 009289761, and 009289737.

    One of those for sure (i guess, busy this a.m.) is using Filing Priority. i.e. precedence of the date of a local trademark.

    And then this this:

    – – – – –
    LOTUS RACING

    Trade mark No: 008993586 Type of mark: Word
    Filing date: 30/03/2010 Date of registration:
    Nice Classification: 6, 9, 12, 16, 21, 25, 26, 28, 35, 39, 41 Status: Application published
    Name of the owner: GROUP LOTUS PLC
    Applicant’s reference: AWP/P109590EM00
    Trade mark basis: CTM
    – – – – –

    Notice Classification 35??

    None of these are adjudicated. Yet.

    Ultimately, WIPO has the ability to arbitrate multi – jurisdictional disputes like this.

    Meanhile, for the EU, OHIM in Alicante is where it’s at.

    Just no-one forget most of the world’s legislation follows the British model, so a High Court decision here in the UK carries more than local jurisdictional weight, even if not precedence.

    This could get very very expensive. You don’t even think of international arbitration unless you have an really big budget to hand in cash. And, say, 5 years. (so it may be a red herring due to time, but bear in mind the Proton lot are playing longer games)

    Assuming there’s basis for competing claims.

    Just a hint at the end-run the ex – proton guys are up to.

    cheers all!

    – john

  20. Hi Joe,

    I now have my broadband connection back, so can give you the links to the relevant trademarks.

    You are of course correct that Team Lotus Ventures Ltd (now owned by Tony Fernandes, formerly David Hunt) holds the trademark for “Team Lotus” in F1, Trademark no. 2297413B
    http://www.ipo.gov.uk/types/tm/t-os/t-find/t-find-number?detailsrequested=C&trademark=2297413B

    Group Lotus PLC claim to naming rights in F1 comes mainly from trademark E2708196
    http://www.ipo.gov.uk/types/tm/t-os/t-find/t-find-number?detailsrequested=C&trademark=E2708196
    This covers the use of “Lotus” on all racing cars and, unlike almost all other Group Lotus trademarks, does NOT exclude F1.

    Both these trademarks are properly registered, but clearly are contradictory. How can the owner of the “Team Lotus” trademark use it on an F1 car without infringing the “Lotus” trademark held by another company.

    Both companies have also filed new trademark applications as part of this battle, but none has yet reached the registration stage. Highlights of these as yet untested claims include –
    1) Group Lotus PLC claiming trademrk on a Team Lotus badge remarkably similar to the one Tony Fernandes has painted on one of his Air Asia planes
    http://www.flickr.com/photos/40168621@N07/5015894372/
    (Trademark 2560196)
    http://www.ipo.gov.uk/types/tm/t-os/t-find/t-find-number?detailsrequested=C&trademark=2560196

    2) Team Lotus Ventures (Tony Fernandes) claim to the rights on particular shades of green and yellow racing cars
    Trademark 2561143
    http://www.ipo.gov.uk/types/tm/t-os/t-find/t-find-number?detailsrequested=C&trademark=2561143
    This is particularly contentious as green and yellow racing cars have never been solely associated with Lotus.

  21. I know Tony didn’t pinch the name but surely this is how Bahar will play it in court. Personally I hope Bahar gets firmly put in his place by the Judge. The Lotus name was and is a great assett for any team coming in to F1 and I was surprised somebody didn’t buy the rights sooner. I still don’t understand why Group Lotus didn’t buy them when they had the chance.

  22. http://www.ipo.gov.uk/types/tm/t-os/t-find/t-find-number?detailsrequested=C&trademark=2560196

    surely this link proves Group Lotus owns the ‘Team Lotus’ trademark and not 1 Malaysia f1.

    As mentioned by other non Tony Fernandes fans, Group Lotus may have bought the Lotus name, but at least they have kept Lotus trading and in business.

    tony fernandes on the other hand, has just bought a name, of which there is contested rights, and nothing more.

    I fear now that he might go buy the name to Brabham, or March, maybe Wolf even ;P

  23. Steve,

    The trademark you mention 2560196 (for the colour badge in traditional Lotus style, but with “Team Lotus” on it rather than “Lotus”) is not YET accepted by the authorities.

    It is at the “Advertised” stage in the Trademark process. This means that people can now object to the trademark application, giving reasons. No doubt Tony Fernandes or one of his companies will object, not least because he has this badge already on one of his Air Asia planes.

    It will take several months for this trademark to either become “Registered” or be rejected, unless the 2 companies do a deal behind closed doors to agree on which trademarks both companies will not object to and which ones they will withdraw.

  24. @Apurva

    lets wait and watch , about the indain gp.

    u will be present in this country, lets all wait and watch.

    Regards & Cheers.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s