To Monza

Decided to take it easy en route to Monza, and rather than the usual 1,000 km dash in a day, the journey has been broken in the Alps, at the charming town of Annecy, on a turquoise lake, in the Haute Savoie. Today the journey will continue across (and under) the mountains and then we will go down through the picturesque Val d’Aosta to the plains of Piedmont (literally, at the foot of the mountains) and across to Milano.

While I am travelling, the Lotus saga will continue, the Renault cheerleaders will go on shaking their pom-poms about the takeover bid, but I am still to be convinced that it will happen. It is clearly NOT a good deal for those who have put money into the team (and that is a bigger group of people than we know) and no-one likes to lose money, so that will only be signed if there are no alternatives. All the positive spin being put on the bid in the leaks to the media are designed to keep the creditors feeling comfortable that they will get paid, without a haircut, so they have quieted down. The first thing would be an option to buy, probably for 30 days, during which time things will be put in place. Given that Renault itself does not have the cash to buy the team (the company will not agree to that) the only way it can happen is with money that is what one might term as being “off the books”. I would imagine that this would come from two sources: Bernie Ecclestone has said that he would be willing to pay Renault a historical bonus for its loyalty to F1, and I suspect a big chunk of money will come from him; secondly, I would guess that Renault would happily settle its 2016 engine deal with Red Bull in exchange for a lump sum payment. This money could then be applied to the purchase and while this is all being sorted out, all that is required is about $10 million to settle with the trade creditors and to keep the team running through the changeover. After that Renault will have to cobble together $50-$60 million from suppliers and government-related firms to cover the costs of running the team for the first 12 months. It may be wise to keep Pastor Maldonado for another year, if his PDVSA money is really there. Are there others willing to come in and fund such a revival? Probably, and the Lotus team owners would obviously prefer refinancing to a sale (for financial and egotistical reasons), but that would annoy Mr E, who wants a Renault deal to stabilise Enstone and wants Mercedes engines at Red Bull. When you look at it this way you conclude that a Renault takeover of Lotus might ultimately be dependent on Mercedes agreeing to supply Red Bull.

Now, there is a funny thought.

49 thoughts on “To Monza

  1. Joe , what will happen to Jolyon Palmer if Renault buys the Lotus Team? Will he stay on as 3rd Driver, get a race drive with them or leave the team? Also who do you think will driving for Manor Marussia and Haas F1 next season? More to point do you think Manor will still be around in 2016?

  2. That was an eye opener into what’s actually happening with the Enstone squad. And they also had the Pic affair to deal with at Spa…

  3. You have to play Matt Munro singing “On days like these” as you come down the mountain and watch out for bulldozers in the tunnel.
    (Yes I know it was Torino not Milano)

    Remember to keep off the kerbs.

    1. Great stuff – that opening sequence is imprinted on my brain from a very young age and it would be great to do that one day.

      If Mr E wants to keep Renault in F1 and to spice up the show with RBR getting Mercedes engines then according to Joes figures to sort this out this is peanuts for all the individuals and companies involved.

      Then, Renault, please get your finger out and subsequently beat RBR

  4. I know the common sense approach would be that a Red Bull Mercedes beating a works Mercedes team is bad for Mercedes as a brand…but is it really?

    I’m basically their target buyer. The “young” 30-something Dad that has enough spare cash to buy a Mercedes and yet, because their cars are dull and drab, I’m normally drawn to BMWs or Audis. The F1 coverage of Mercedes doesn’t really wash with me because I know its Tyrrell/BAR/Brawn roots so the association feels temporary at best. Also, there’s the fact that their team, their colours and everything else is so dull, grey and German. Mercedes road cars are boring, their F1 team is boring and F1 with them in (at the moment) is even more boring. It only feels exciting when they cock up, blow up or crash out.

    HOWEVER…The idea of Riccardo in a young, spicy and exciting team with a bit of Mercedes in the back could make a world of difference to the appeal.

    I expect the more embarassing and awkward thing for Mercedes as a group wouldn’t be a Red Bull beating them on the track, it would be that a Red Bull with a Mercedes engine has a better marketing impact on road car sales than a full on Mercedes F1 team.

    1. I have reached the other end of the age spectrum and have still never considered buying a Merc. I also went to the British GP in 1977, totally unaware of what a Marlborough was, but I did afterwards, so there must be a notional credit for brand awareness.

      I did not know what a Red Bull was before they entered F1, I thought I should try one. I have decided that I prefer my caffeine in small white cups, preferably in a bar with a view like Joe is currently experiencing.

      The one F1 product that I actually desire is a Ferrari, but it ain’t going to happen. I have enjoyed many Honda products, ride-on mower, outboards generators and even a couple of their cars.

      Since Gold Leaf Team Lotus I can confidently say that the £millions blow on F1 marketing has mainly been lost on me.

      1. I have just thought of one.

        It used to be the case that if you bought a quick car, BMW, Porsche, they came equipped with Pirellis. I live in France, Michelin country, but two new cars I have bought here, Alfa and Porsche, have been equipped with Bridgestones and I have recently switched from Continentals to Bridgestones on another car. So their time in F1 must have influenced me – high performance with durability.

        Why would someone choose Pirelli now?

        1. The last Honda I bought was shod with Continental tyres. German. I bought the car in France. That makes sense..?

      2. When commercial sponsorship arrived in F1, it was business to consumer advertising from Players tobacco, Yardley cosmetics, Martini booze etc. By the 1980s, business to business promotion came alongside. The brand that sticks in my mind is Canon at Williams. That advertising was not necessarily aimed at consumers but it provided Canon with nice events for promotional jollies for resellers and distributors across the globe. If you were buying 1,000 cameras or 50 photocopiers a month from Canon, they’d provide you with a great weekend at the local GP. From the mid 1970s, Marlboro sponsored race teams in every European class — Marlboro was everywhere. Some young drivers earned their Marlboro sponsorship less on talent and more that dad knew a cigarette importer.

        There’s also vanity sponsorship where the sponsor is using their own money to back the sport. When Tom Wheatcroft backed drivers he used his business so that it was tax deductible. Red Bull’s F1 involvement is partly a vanity exercise and like Marlboro in the past, Red Bull is promoted all over the sport with the brand appearing on WRC and rallycross cars for example. If the company boss gets bored with F1, the loss of Red Bull sponsorship will have a massive impact beyond F1. Who will replace the Red Bull young driver programme?

        F1 (and lots of motor sport) has not pulled in the consumer-targeted sponsors to replace tobacco money. One of Red Bull’s competitors, Monster, is a big sponsor in MotoGP but the money involved is tiny in F1 terms. Bernie’s mates will do everything possible to keep Red Bull involved in F1.

        The Mercedes-Benz involvement in F1 makes excellent promotional sense. If you’re financially well padded and in your 30s, other marques might seem more sexy. That’s fine. But there are more wealthy 50 year olds than 30 year olds.

        F1 might not bring a buyer to the dealer but it can keep them there. Buyers will be thinking that Mercedes is not all that fuddy duddy with the shiny displays of F1 technology that *wins races*. Remember also that the Mercedes colours may look dull on the track but they glow under lights in the showroom.

        Years ago, fans kept track of which cars Grand Prix drivers bought for themselves with their own money. Mike Hawthorn had a hot Jaguar saloon (he’d sell you one) and John Surtees had his beloved BMW 507. Many other drivers owned a quirky town car (Mini Cooper, baby Fiat, James Hunt’s Austin A35 van) and a Mercedes for long distance driving. Sex might have been the breakfast of champions but Mercedes delivered staying power.

    2. Totally this ! I would never think of buying a Merc (owned by ‘old’ (50+, i’m 36..) men with late life crises), i’d definitely go VW or Audi.
      Perhaps it would be the case that a Red Bull with a Merc Engine would do more for Merc sales, but I haven’t noticed a million Infiniti’s on the road since RB’s 4 world champs, but perhaps that says more about Infiniti cars.. 🙂

      1. In 1985-ish, there were about 500 car models for sale in the USA, of which 120 models perhaps sold 50 or more cars a year, the others selling fewer. Hundreds of thousands of US buyers purchased a Honda Civic, built in the USA. It was still worth the risk to sell and make small production volume cars.

        Infiniti, along with Lexus and Acura, is a brand invented for the US market in the 1980s to sell expensive Japanese cars. Rover also tried it with the Sterling brand but sensible people bought the Honda version. The Toyota/Lexus brand has been introduced to other markets, notably the UK. Infiniti was introduced to the UK five or so years ago with twelve dealers who have sold about 1,200 cars according to the DVLA. I’ve never seen an Infiniti advert anywhere so the 1,200 sales (registrations, to be fair) are impressive to me. Those are word of mouth or ex-pat sales, which means that buyers like them.

        Current marketing of Mercedes cars, intentionally or not, is for the more mature driver. Funnily enough, Daniel, us old codgers can remember when Audi advertised itself for the intelligent, sporting driver who considered BMWs to be a bit flash Harry. Today, Audi promotes the brand as an alternative to BMW, for the sales executive who wishes to show off. Advertising really works, but nobody knows how it works…

      2. Daniel, VW is a rep’s car, it’s well known. Surely, men with late life crises don’t buy Merc’s, they buy Porsches and the like? I agree with you about Infiniti, their sales must be ‘infinitesimal’. Don’t worry about being rude to us older readers – whippersnapper!

      3. I’m not embarrassed to say, although maybe I should be, that after umpteen years of the Red Bull/Infiniti association I had no idea that Infiniti was the name of a range of cars.

    3. I agree with Merc’s image, outside the top of the range, but Audi and BM are just the same really – silver or white or black, strictly Ron Dennis tone. Don’t want to rude but they have company car written all over them. BM couldn’t cut it in F1 and Audi obviously aren’t up to the challenge. At least Merc put their money where their mouth is – who knows, it might be paying off, haven’t seen the figures.

  5. I’m a new reader and am loving ‘being in the know ‘ courtesy of Joe.

    Great informative and entertaining writing, thanks.

  6. Have a safe drive!

    When Renault was sold to Lopes et al it wasn’t quite a fire sale but not far short of it given how quickly Renault wanted to exit F1 at that time. Lopes/Genii picked up a fully operational works team for a fraction of the investment – perhaps Renault feel they’re (Lotus’ current owners) not entitled to get their investment back because they never had to stump up for the full value of a works team.

    I had read previously that Renault would want to maximise their group branding: Total, Nissan/Infiniti as well as Renault and so the PDVSA branding wouldn’t gel at all well with that.

    However, perhaps Hulkenberg’s management knows more about this, having signed with FI for another year they don’t feel that Renault are about to re-enter and would seek out a driver of his talent.

  7. All of that makes for interesting stories in the media but it doesn’t sound like Renault has the money to make the team competitive.

    Cobbling together $50-$60 million might keep them racing next year but surly not winning. If Renault aren’t in it to win why would they bother. And why do they only need to do that for the first year, what happens after that?

    1. Renault won’t be able to win in 2016, it’ll be a building year, sorting out a longer plan for 2017/18. Was much the same in 2016 will be similar to their 2001 year (though hopefully not as bad…)

    2. When Renault go racing, other people pay for most of it. Somebody will wrap the French flag around the enterprise and French sponsors will be found.

      The money that matters at the moment are the foundation costs to buy Enstone. The oversight board at Renault need to be convinced that they want to buy Enstone; the board have to believe that it is the right thing for Renault; then they’ll pick over the financials and concur that a ten year purchase deal (for a company which stays in F1 for eight years) is a bit silly; a more sensible deal will be agreed.

  8. Great review Joe.

    Why would Mercedes do this!?

    Imagine if the Renault engines had been great and the Mercedes bad. Can you see Red Bull agreeing to Renault lending a hand to the Mecedes guys. Hmmmm……..

    1. Mercedes-Benz have engine contracts with Williams and Force India. Let’s assume that one is bought out by somebody with deep pockets and the other gets a decent sponsorship deal. One of those hypotheses might plausibly happen.

      That would mean that M-B official team supplies equal race engines to one/two teams with development resources for two/four chassis. Whether or not Toto likes it, M-B board is already committed to provide engines to competitors.

      If you were on the Daimler board and wanted to pull the plug on the expensive F1 programme, it would be easy to announce that there are two/three competent teams using the (brilliant) M-B engine (which they can keep) but we’re ducking out; we get more promotional bucks per Euro from silly tin top DTM than F1.

      Mercedes-Benz departed motor sport in 1955 following the Le Mans crash, but not until after winning the F1 World Championships; they made sure that they left in glory.

  9. Annecy is the most beautiful place. Great for hiking, sight seeing, swimming and cycling around the lake or the many cols nearby. Pity the French can’t do coffee.

  10. And the driver’s get scolded for their off-track excursions.

    Thankfully, we have you, Joe, to paint some lines on the vast unmarked course of F1 machinations.

  11. There are a few people reporting the PDVSA money not coming through. Is that just because their wating to see if the new owners want to keep Maldonado?

    1. I am sure that this is next year’s PDVSA money, not this year’s… If you were PDVSA would you not wait? However, check out the political situation in Venezuela and ask yourself if this is a logical thing to be doing

      1. I do hope Maldonado stays. He’s good entertainment on the track and has his occasional great day. If not at Lotus/Renault, I’m think another team will pick (and his money) up. I’m sure Kaltenborn for instance has no problem signing him (and thus making another driver’s contract worthless).

  12. If I am to believe the numbers that (freely) come and go, Maldonado’s PDVSA pays Lotus 50millions to have Pastor run (and crash) one of their cars. Well, this sum is about three fourth of what Renault would pay over the years to buy Enstone?
    Talk about nonsense, as Joe maintains, we’re being fooled

  13. I wonder how jazzed Merc would be supplying engines to a competitor who has the Infinity car brand plastered on the side pods. That would make me think twice about such a deal.

    1. I’m sure the Infiniti thing isn’t a problem. Daimler supply Nissan/Infiniti with technology for the new Q30 road car. It’s part of the alliance they have with Renault-Nissan

  14. Joe, what’s your take on Italy’s La Gazzetta claiming Sergio Marchionne wants to offer Red Bull the latest specification of Ferrari’s power unit, along with Toro Rosso? It would let Toto Wolff off the hook (from what I hear he’s 100% against letting Mercedes engines into an arguably aerodynamically superior car) and give Ferrari almost twice as much engine data.

          1. Joe there is thought Pirelli will ask teams to increasel tyre pressures by as much as 5 psi and impose a limit on the number of laps teams can use tyres for . What do you think of these ideas Joe?

  15. … Putting the ball squarely in Mercedes’ court. Well, and Bernie’s of course, to provide a sweetener (an automatic Bernie (TM) put down every time Red Bull gets lippy about the Merc engine, or wouldn’t he do that to his precious Horner?), or maybe it’ll come down to a deal between Renault and Mercedes in the interests of their non-F1 dealings.

  16. If Renault and RBR split up, the Infiniti and Total sponsor money should return to the Regie. But what if Maldonado/PDVSA stays at Renault, both petrol brands on a car shouldn´t be possible?

  17. Joe do you think it possible that Pirelli will be as good as there word and pull out of if they are not allowed to do extensive development testing for 2017 tyres in 2016?

  18. Appreciating it will never happen, but I got a post from Williams today and as you are aware Joe, Monza, Spa, Silverstone and Monaco are the last remaining circuits from 1950. All, bar Monaco due to it’s special nature, are constantly under financial threat. Wouldn’t it be great to have these as the F1 ‘majors’ with financial rewards to teams and drivers completing the grand slam. Maybe even double points…

  19. My concern with this obsession to get Mercedes engines into Red Bull, is the suicide factor for the Mercedes F1 team.

    After 3 years with only Rosberg’s China win to show for it, the Mercedes, or Daimler, Board were making noises about pulling the plug on the team, till Brawn showed them there was a chance of getting Lewis over from McLaren.

    Even with him on board in 2013/ 14, there were still performance targets imposed on the team, podiums, wins, etc., if Mercedes wanted to continue existing.

    So the risk factor of giving your best-chassis-creating, up-their-own-×××, rivals, your power unit is more than a bit of embarrassment if RBR make WDC and WCC on it, for the Mercedes F1 team and factory, there could be jobs on the line.

    Of course, for all those who believe a Mercedes-led F1 to be the end of everything, the loss of the team would be no bad thing.

    1. Forgot to say, Val D’Aosta and the city(?) of Courmayer above it, have a special place for my non-F1 side, as I went to an Italian Star Wars convention there, two decades ago. 🙂

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