Turning the Lotus Renault GP story on its head

The immediate future of the Lotus brand is about to be settled – and not just in Formula 1. For some months there has been speculation about what will happen with the Lotus Renault GP team with a number of different scenarios being discussed. To begin with one must look back to when Genii Capital, run by Gerard Lopez and several partners, bought the team from the Renault car company, using Renault’s own money, borrowed from Renault’s in-house bank DIAC, to fund the acquisition. This meant that Renault did not have to shut down the operation and saved a lot of money while also being able to get rid of the team quickly, thus ending the embarrassment that it had caused with the Singapore Scandal. Genii had a date by which payments needed to be made but, unable to find a suitable partner, the company took a loan from Russian banker Vladimir Antonov’s Snoras Bank and paid the Renault bill. The team’s sponsorship changed accordingly at the time. To complicate matters while all this was going on Lopez agreed a long-term sponsorship deal with Group Lotus, with Group Lotus CEO Dany Bahar being appointed a board member of the team, which suggested that there was more to the deal than just money. The word was that Bahar had an option to buy Genii’s shares. Later there was talk of a second option that Bahar had acquired from Antonov if Lopez failed to find the money to pay his debts. For a while, therefore, it looked very likely that Group Lotus would take over the team but there were problems with Team Lotus and two legal actions have failed to solve the problem. So even if Group Lotus does buy the team, there will be problems changing the name of the chassis from Renault to Lotus because of Bahar’s previous relationships in the F1 world, which have not all gone swimmingly. Bahar had the money to fund the team thanks to a consortium of Asian banks which agreed in April to loan the group $440 million. This is believed to have been guaranteed by the Malaysian government, which controls Proton, Group Lotus’s parent company. With Bahar’s plans stuck because of the fight over the Lotus name, Genii then started to look for alternatives and concluded that it might be worth asking the French government to help out in order to keep the team with a French flavour, with funding from Government-linked companies such as Renault and Total, with the goal being to relaunch the French motorsport industry, which has been largely moribund for the last decade, since the disastrous Prost GP. This was a good idea as there was also talk of a revived French GP and no fewer than four young French drivers on the way up: Romain Grosjean, Charles Pic, Jules Bianchi and Jean-Eric Vergne. The problem with the idea is that bureaucrats are by nature frightened by politicians and politicians are frightened by the electorate and there is a French Presidential election coming early next year and no-one in the government wants to be seen to investing in motorsport in the run-up to an vote.

The other options for the future of the Lotus name were for Proton to offload Group Lotus from the Proton books, which would help it improve its miserable finances and get rid of the debt load. But who would take over a company with $440 million of debt and a strategy that promises only the possibility of success. There were no guarantees and in the automotive world there is little faith that such a strategy will work. Lots of people have joined up to bang the Group Lotus drum in recent months, but will they still be there if the loans run out? The only likely buyers for the firm were private companies: one option was obviously Tony Fernandes; the other option was Genii itself. The third option was to sell the whole thing to Bahar, and let him try to sort it all out with a management buyout.

Failure would in many respects help the Malaysians because someone else would take the blame for the poor performance of the company over the years. Ironically, there is a certain element of political danger in selling the business to Fernandes because he might, given his record, turn the business around and make it successful – which would not reflect very well on the previous ownership. That may sound unlikely, but he did exactly that with AirAsia and was recently handed a great deal of influence in The national airline MAS, in the hope that he would do the same thing again…

Thus in terms of damage-limitation, Genii is the best bet. Lopez’s risk would be to take on the debts of the firm, but a bigger business plan gives a good salesman a better chance to hook investors. In gambling terms, it would clearly be a case of double-or-quits. With Bahar out of the way, the Lotus name change could go ahead as well…

In that scenario Team Lotus would switch to become Team Caterham Air Asia, runnings cars called Caterhams and Lotus Renault GP would become Team Lotus, running Lotuses.

It is not clear which of these scenarios is the most likely but the matter could be settled by Malaysian politicians in the course of the next few days. The knock-on effects of all of this in F1 is relatively limited, although the identity of the drivers will largely depend on who owns the team.

If Genii buys Group Lotus the links with Russia will remain strong, so Vitaly Petrov’s future would be more secure. If the French government steps in the team would almost certainly employ Romain Grosjean. Bruno Senna is well-connected and can raise money with his name so he is in with a good chance if he can perform well on the track. The problem is that no decision can be made until Robert Kubica has had a chance to test a simulator (and perhaps later a car). He must be accommodated if he can return from his injuries. At the moment no-one knows if this will be possible.

Lopez said in Singapore that he hopes that the team will break even.

“We’re involved in a lot of businesses,” he reported. “This one is one that we hope is going to be break-even at some point in time. It’s not, but it’s not one that needs to make money for us. We make money somewhere else. I think the team that we took over had about 480 people. We saved those jobs and added about 40 jobs to those. Facts speak for themselves. We are investing, we’re adding sponsors. We get on with the things that we have to do. We make the investments that we have to make and at the end of the day we will see – in terms of results – what will be in the future.”

Indeed we will…

The smart money is on Lopez becoming an automobile executive.

51 thoughts on “Turning the Lotus Renault GP story on its head

  1. Well, if Lopez becomes an auto executive, he’d better hope he’s a bloody good one — he’s got a lot of messes to clear up, not the least of which is trying to service that massive debt with minuscule sales, sponsorship commitments out to here, and a growth strategy that is doomed to ignominious failure. Too bad they can’t run Jean Alesi in the Las Vegas Indycar finale and try to bag the $5M…

    Incidentally, great post, Joe — sterling stuff.

  2. Would you reckon that Genii would take over the engine manufacture as well, and do you think this story has any relation to Team Lotus acquiring Renault KERS for next year?

  3. I know this is not the point, but, the french industrie moribund for the last decade since Prost GP? As far as I know the Team Renault winner in ’05 & ’06 used to be french…

  4. I know this is not the point, but the french industrie moribund for the last decade since Prost GP? As far as I know the ’05 & ’06 winning Team Renault used to be french…

  5. So it’s not a real Renault, it’s not a real Lotus, and not a real Senna…

    Rather convoluted scenarios there Joe, thanks for at least trying to clear up! 🙂

  6. I am going to get as justified clip around my ear for this. But i am pretty sure that Joe was on this case early enough, that a turnaround was not only expected but predicted here. When this was legal argy bargy about trademarks, i sussed it. When it was the follow on from that, i could understand it. When all this sinks in, i think i want to really let rip. I genuinely think that Tony has a problem knowing what he wants. I obviously do not mean that badly. I have been after the same thing since i can remember, but i am also sure that i have no idea where that takes me sometime. I am on record somewhere here saying that TF is the right kind of guy to be involved in F1.I shall back my instinct there. Retrospect, i think the Lotus debacle has educated him. I want this bloke to pike in, not give a toss. Catherham. Whatever. Was Hesketh as big a name? I really want to twist Tony’s arm about this. I think he could do real good. But he is talking like the big company exec he actually was, before he made his mark, and i want him to drop that. Yes, TF you can be bollocks up to the wall in F1 and keep right attention to the rest of your game. But i do not like the signals. If you don’t get stuck in, you will not enjoy it, and it will all be “We’re involved in a lot of businesses,”

    Bottom of my heart, i could take a backhand swipe at the linguistic tripe. But i would never do that is we can have a decent team, whatever the name. Is my ideal. – j

  7. So Lopez probably gets Lotus (surely he can make more of it then Bahar, having been in the running for SAAB previously and the russian connection might work as well).

    Any clues on how Lopez and Fernandes relate, do they behave/feel like competitors or rather bussinessmen who do their own thing? Or are they even possibly in for cooperating.

    I guess Lopez will target Lotus more into Russia, the US and Arabic countries as well as doing Asia and Europe, while Fernandes is probably looking to a main focus of Asia and then the rest of the world for Caterham.

  8. Could group REALLY rename LRGP’s Renault chassis as a “Lotus” for 2012, given that that would have been the name of the 2011 Caterham chassis.

    I can understand the evolution Toleman-benneton-renault-LRGP, and Lotus Racing – Team Lotus – Caterham, and the resurrection of long dead names (Honda) but using a name that someone else had last year does look really confusing (and not just a little confusing as Lotus / Lotus was)

  9. Joesaward,

    I know what you mean and you’ve your point, but the anthem played on the podium was the Maeseillaise as now we hear the Austrian when RB wins. I think that is enough French flavour…
    On the orther hand if Toyota had won a GP, should we have heard the German anthem or the Swiss when Kubica achived his won?

    1. Centello,

      The anthem played is not an indication of the nature of the team. It’s window-dressing. There has been no French team in F1 since Prost GP. My original point…

  10. I’d like to know how much of Italian was the nature of Ferrari in Todt’s era or when Barnard had the desingn team placed in England.

    1. Centello,

      Ferrari is a rank-and-file Italian team. It had some foreign management and some engineers but the men on the ground were – and are – Italian. Just as the men on the ground at Renault were – and are – British.

  11. ….Exactly Joe…… the “french” Renault F1 Team was based on a small industrial estate just outside Norwich… or was that Oxford? 🙂

    Great post Joe.

    Personally, this whole debacle leaves a rather bitter taste in ones mouth really. Firstly, people cashing in on the names of past glories, with no real heritage (aside from TF having the decency to set up shop in Norfolk), foreign companies and governments owning a large, British, culturally signficant company (OK, so they saved Lotus the car maker from doom), venture capital companies buying debt to gain control of F1 teams that they dont even own, then selling that debt on for a profit. How can Lopez buy Renault F1, using Renault’s own money, with a loan from Renault’s own bank. Thats like me saying, “Joe, I will buy a pack of sweets from the shop, with your money, that you have taken out of your piggy bank, then sell part of that packet to a Russian”

    All a little distasteful, made worse by two foreign ego’s battling it out like rutting stags for prestige of a British marque…. and not being very successful on the track at that

  12. I’ve seen this come up elsewhere – most notably at the Autosport forums – and a lot of people seem to disagree with the idea that Dany Bahar will actively avoid selling Group Lotus to Tony Fernandes simply because of their feud.

    However, I disagree with that particular analysis because it underestimates a human being’s potential for pettiness. If anything, Bahar’s string of bad decisions while running GL makes a strong case for him avoiding a sale to Fernandes on the basis of personal dislike of the man. Assuming, of course, that his decision-making process is as consistent as it is poor (which it largely has been). I see no reason for him to break character and do something intelligent.

  13. So, on that basis, Honda was Japanese, isn’t it? And you mean that in two month became fully British and a year later quite German maybe? Because the people on the ground as you say were Japanese and German in both cases…

    1. Centello,

      This is a waste of time. Honda was a British team. Mercedes is a British team. I don’t understand what you are trying to achieve with these comments.

  14. I like to think I’m reasonably intelligent, but I just cannot get my head around all the various machinations of this!

    One question (or maybe two): if the French government is interested in getting involved, surely they would want the Renault name properly back on the team? Particularly given that the name never really left the team or chassis anyway, and so Renault (car company) never really distanced itself from Renault F1 team in the eyes of the watching public. Also, three years is an eternity in F1; if enough time has passed since Singapore ’08 for Flav to be touted for a return, surely enough time has passed for Renault to come back (though in truth I never really stopped thinking of them as Benetton!). I did use to love the old Renault team of the early ’80’s though: Prost and Arnoux stretching out massive leads over the rest of the field only for their turbos to explode with a few laps left. Those were the days!

    1. Jerry,

      Don’t waste too much energy on the French government. I don’t think that will happen. Politicians rarely have balls.

  15. tis true… the only “non british” teams on the grid are
    Ferarri
    Sauber
    Torro Rosso, and
    HRT

    Everyone else, nomatter what flag the fly, is British. They live here, they work here, they build their cars here

    G

  16. Joe, how about Petronas buying the F1 team? They are major stakeholders in Proton/Group Lotus and invest heavily in Motorsport, Mercedes in F1, Yamaha in MotoGP, plus a lot of other smaller projects.
    Politically and financially they are well placed to do so.
    The whole thing does sound like a huge political and financial mess right now.
    Really good article.
    John Mansfield

  17. Joe

    I see what you mean by “Turning the Lotus Renault GP story on its head” a bit like tail wag dog.

    But would not Group cost an awefull lot of money? Does he have that sort of personal wealth?

    1. RobbieMeister,

      The group is worth nothing (in my opinion). I think the government would accept a deal where someone accepted the liabilities.

  18. Hi Joe.
    Just to see if I understand it correctly: If the Group Lotus doesn´t separate the Lotus Renault GP team from their accounts, they could end up having a race team with a debt of $440 million? Is that understood correctly?

  19. Genii was in 2009 was also interested in buying Saab (together with Ecclestone). So they already had their eyes on a car company.

    The funny thing is that the name Antonov also pops up regarding the Saab story.

    Maybe a wild idea, but I post it anyway:

    – Antonov has some connection with Genii/LRGP
    – Antonov want’s a car company (wanted Saab and Spyker)
    – He can’t own Saab (at the moment)
    – The deal to buy Spyker went sour

    Will Antonov help Genii/Lopez to buy Group Lotus? His CPP business (coachbuilding, Bowler etc) could profit from a close coöperation with Group Lotus.

    And remember that Saab’s new Chinese partner (Youngman) works together with Proton & imports Lotus cars to China.

    Too much coincidence?

  20. This article made my head hurt although I think I understand…………..

    I think the best thing Robert Kubica could (might have to) do in the light of the above (trying to understand the three-dimensional chess involved) – is to spend the year at Ferrari getting ready for the following year – assuming he makes a full recovery (which I sincerely hope he does needless to say)

  21. In Joe’s world every F1 team other than Ferrari is British, which to be honest is more or less true. Since the departure of the real Mercedes Team in the 1950s or whenever and the real Renault and Honda teams virtually all F1 cars are designed, built, and maintained by Brits using parts built in England in the F1 business hub that Joe has described in previous posts. The rest is just corporate marketing bs. But I hear you Centello, to the casual fan the anthem played on the podium represents the winning country. But it’s fake, like most of the other stuff you see on TV.

    1. Lon,

      Sauber is not British. Nor is Toro Rosso. Nor for that matter is HRT. The rest are, although in all cases there are exceptions where there are talented engineers from other nations.

  22. Joe,

    sorry for getting it all mixed up, and apologies to TF. Totally my fault.

    I had just got back from visiting a pal, whose dad used to race bikes, thought son a wimp, wimp joined army . . spinal TB case*. Cop a load of this: my pal does have Sky everything. But he’s right off F1 because he thinks something stinks right now with that deal. Hence very long meet.

    Anyhow, sorry again, i came back, bit frazzled** and just thought “here we go again”. Glad that is NOT the case! – j

    *are strict fathers out of fashion these days? I just belatedly realized it’s the common denominator amongst my otherwise eclectic bunch of pals.

    ** tubes etc suck so much i walked the last mile or two, and bumped into two local guys i’d been trying to reach (mobile phone destruction of society) so whatever i say for my patch, there are nice people about, in the small hours.

  23. Centello can’t seem to understand that a Japanese company (Japan) can own a British race team that is now owned by a German company (Mercedes). Renault (French company) owned a British race team. All these teams play the national anthem of the home country of their parent company. In the case of Ferrari, under Todt, the race team was managed by mostly foreigners but was owned by Italians (FIAT), was based in Italy and the vast majority of its staff Italian, thus it was and still is Italian.

    Rocket Science, I know.

  24. My understanding is Lotus Renault GP a) have a structured repayment plan to Renault over three years (and therefore have not fully paid it), b) the loan from Snoras Bank is due for repayment at the end of this year and c) the team changed from being registered as a French team to a British team so in the unlikely event of them winning a race the UK anthem would be played.

  25. I’m guessing the LRGP wouldn’t quite be able to change to being Team Lotus, without another court case, as Fernandes has the rights to the name “Team Lotus” in motorsport, is that correct? Presumably they would just call themselves Lotus?

  26. Joe;
    In reference to Robert Kubica you said “He must be accommodated if he can return from his injuries.”

    Were you stating an ethical position or a contractual obligation?

    Just wondering. If a decision were left in my hands I wouldn’t give Robert another shot as he so cavalierly risked his F1 career and my team’s performance for his own amusement in a rally car.

  27. Joe, Great read. U got this feeling that the future of Group Lotus is now depends on IF Genii purchase the group or NOT. After Team lotus changing its name to Caterham, Tony will most likely move on with single prfile rather than two. No car company will but Group Lotus as it is unlikely that the mark will produce money that Dany Bahar aimed at with what they are.

    This means,… Lotus Cars are possibly facing the end of operation…?

    But certainly there is a situation where tony may not be met with his condition to give up Team Lotus name on track. In such case, should you think that Tony can keep on going with the Team Lotus name? I fo one think that he will park it in his garage and TL might not roll out his garage for some time…

  28. This team has a long history and it is sad to see the team go down this route. Renault made a mistake and they should have sold it to Prodrive rather than Genii!

    Renault went for free publicity which has now become an embarrassment with the whole Lotus fiasco.

    Joe, If i do remember ART was supposed to bid for the 13th spot and then they pulled out because of funding. Any possibility that this Renault team can become ART’s F1 team. Also ART does have a tie-up with Lotus in GP2 & GP3, so maybe the team can be Lotus-ART.

    Hope this team does not go down as it has won WC before as Renault and Benetton.

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