This morning in London Mr Justice Birss will listen to a case in Court 11 at the Royal Courts of Justice, to decide whether or not to put Lotus F1 Team Ltd into administration. The case, between the team and the Commissioners for HMRC (the British tax authorities) will either lead to an administration order or to a stay of a week or so if someone turns up offering money to solve the problems.
Renault is poised to try to take over the team, but they do not appear to have the cash to do it – buying F1 teams is not considered such a smart idea by big publicly-owned car companies, with advisory boards and institutional investors, and I am hearing that the plan to use historical payments from the Formula One group to fund the takeover may have fallen apart over the Monza weekend. There is still a chance that money might come from Red Bull as it continues to try to get out of its 2016 Renault deals, but that would take weeks to sort out.
The word in Monza was that CVC Capital Partners, which owns the Formula One group, does not want to meet the requests/demands of Renault in the matter of historical payments. This is a problem because we have a number of celebrated hardball players all playing super hardball together.
This situation has arisen because there is no official scale of how these payments work, and from what we can gather from the outside they are negotiated individually. Ferrari gets a shed-load of money, but several other teams managed to get themselves a slice of the pie and CVC is now getting tired of more and more people holding out their hands and expecting money. They only have themselves to blame because they have allowed F1 to get into this state. They don’t want to move because it is affecting their take. We should not weep for them because they have taken plenty, but it seems that Renault’s attitude is fairly robust. If the French don’t get what they consider to be a fair share from the pot then they may be stamping their feet and saying they will walk away. That is the negotiating position anyway. Would they really do that? Hmmm… I’m not sure it would be good for Carlos Ghosn to tell the Renault board that half a billion in research and development into F1 has been wasted, but Ghosn is no shrinking violet when it comes to negotiations.
Interesting times…
What is key for the real people of F1 is that the folk at Enstone should be treated fairly and not be left in the dark about their futures. If the team gets into administration things will be complicated to sort out, but it is not the end of the road, unless the team is deemed to have been insolvent at any point. The definition of that is complicated, as was seen last winter with Marussia.
We may hear more later.
joeblogsf1 
Thank you for the update Joe.
I can only hope that Team Enstone survive and a suitable buyer with plenty of funds and the wish to bring back the glory days can be found.
surely Renault is the only buyer and if BE wants them to continue in some shape or form a (initially self/CVC/BE financed) deal will be done
The Gazzetto this morning brought it as a fact that Grosjean will be driving for Haas next year, having lost faith in Lotus/Renault (I don’t blame him). As I only believe it when it comes from you, can you confirm this?
You should buy my newsletter. It is in that
“I’m not sure it would be good for Carlos Ghosn to tell the Renault board that half a billion in research and development into F1 has been wasted”
The Renault board is already well aware that the half billion in research and development into F1 has been wasted, and that the additional hundreds of billions to buy and fund a team’s engineering and operating budgets would also be wasted. They just don’t have the fortitude to stand up to Carlos Ghosn and tell him “no”.
If anyone fancies popping along it’s in the Rolls Building. Was due to start at 10:30 though. Wish I still worked round the corner…
COURT 11
Before MR JUSTICE BIRSS
Monday, 7 September 2015
At half past 10
GENERAL LIST
5528/2015 In the matter of Lotus F1 Team Ltd
Between: The Commissioners for HMRC v Lotus F1 Team Ltd
Joe, Autosport seem to have that crystal ball again and are reporting that Red Bull definitely won’t be using Renault power units in 2016 but there we go.
That is true
Makes sense. Either buy Lotus and have no customers, or pull out entirely. Any thoughts on who Torro Rosso would use? Presumably Ferrari’s?
Hi Joe,
There does appear to be a trend in many of the posts on your blog. This seems to present an inverse ratio between the capability to be involved in running the F1 show and the desire to be involved in running the F1 show.
Apologies to any mathematicians or statisticians out there, I’m sure there is better way of presenting this,
I think the truth is that F1 is actually too big and so many stakeholders are involved for the potential of financial reward and not the enjoyment of motorsport. It seems to have become a hunting ground for snake oil and dodgy financing schemes. Did Caterham really need to be as compelx as it seemed to be for a small race team and niche car builder?
I believe that Renault may well walk away, despite Bernie’s efforts to broker some sort of deal with Lotus.
It’s a shame for the Enstone guys.
“There is still a chance that money might come from Red Bull as it continues to try to get out of its 2016 Renault deals, but that would take weeks to sort out.”
Oh please please ye gods let this happen! What delicious irony if Red Bull provide the means for a Renault team to appear next season, having finally had the breakthrough with engine technology that makes the Renault engine 10% more useful than the Merc or Ferrari rivals.
Without our Adrian “seeing the flow” (like Neo) Red Bull would continue to trail behind the pack even with the Merc engine. (for which they would have to pay handsomely, thus financing two of their major rivals)
Back when we were supporting the then, “nice Tony” against “Golden floppy hair Bahar” for the right to race as Lotus, little did we imagine that things would end in court again, nor that lack of money and shortage of sponsors would have cut deep into so many of the F1 field. We have not seen the last of this effect yet, there is worse to come.
We might be seeing the limits of Bernie’s powers. How far away are we from “Shell Presents the Formula 1 World Championship Powered by Ferrari” ?!
I was under the impression that although those ‘bonus’ payments were originally spoken of as historical payments, Ecclestone clarified last year that they were paid to teams who guaranteed they’d still be in the sport by 2020. Although this makes sense when one considers the desired flotation of F1 and certain expectations from investors, because Ecclestone said it, it’s not necessarily true.
But it raises the question: if those payments *are* for historical reasons then what on earth are Red Bull being paid for? And arguably Mercedes.
If Renault really are offering this purported 10 year repayment plan then surely they’d qualify for the same payments that Ecclestone claimed were given to teams with long-term commitment to the sport – especially amidst Red Bull’s threats to walk away.
That’s always been my thoughts on the “historical payments” as well – do Williams and McLaren get a big share of the pie, for example…and heck, Sauber are what, the 4th longest running team in F1 these days?
I don’t know if the project of F1 flotation still runs, but the mere fact that MacLaren still doesn’t have a major sponsor should shy away potential share buyers, as it is, on a financial level, very uninspiring
Red Bull are receiving payments for being ‘The first F1 team to be owned by a supplier of energy drinks that taste like diluted mouthwash’ I believe. Or something equally tenuous.
They have been around for getting on for 20 years now in one form or another, but it’s still a bit of a joke.
If you look in the F1 dictionary under ‘historical payments’ there is a picture of a large brown envelope …
I think brown envelopes apply to many things related to F1..
Do you think there is any truth in the rumour that Romain Grosjean is interesting Haas F1?
Saracastic but “CVC is now getting tired of more and more people holding out their hands and expecting money” not as tired as everyone is getting of CVC holding its big fat and greedy hand out for doing absolutely nothing for F1 and pushing Eccles into unpopular decisions. Time they left.
How do you see this playing out Joe?
No idea
I don’t hope for the sake of the Enstone operation, but I can’t see the logic for the Renault board to approve the purchase of the Lotus team.
Renault need to sort out their engine first and from the looks of it – and the last 2 years of desperation, embarrassments and PR disasters, this still seems to be a big mountain to climb – maybe too big.
So what makes Renault think that by adding a myriad of complexity in running a whole team, their engine problems will be resolved?
Regardless of the way RBR treated them, it wasn’t the chassis that helpd back engine development. So building their own chassis now, will help Renault engine improvement in what way exactly?
Honestly, it makes no sense to me and I wouldn’t be surprised if Renault would walk out of F1. Sad – yes, surprised – no …
Renault will take over Lotus as a works team.
Beginning to doubt this, as a lifelong fan of the team from the early Toleman days, I honestly think the end is in sight. I really feel for the folks at Enstone. Good luck all I think you are going to need it.
To be honest, I’m speaking more from hope and an assumption that it simply HAS to happen. Also, I was thinking that in no way can F1 have only 2 engine mfrs supplying all the teams, completely forgetting about Honda… But I do think it will happen. That said, I’m still smarting from BMW and Williams parting ways.
Supposedly, Mercedes have already rejected RBR’s engine supply request, leaving Ferrari as their only alternative.
Wouldn’t it be deliciously ironic if they find themselves without a PU supplier in 2016? That’s what you get for bagging on the guys who powered you to four double world championships.
I think it would be even better if their only option ended up being the Honda!
At least that would give us a clue as to how competitive the McLaren chassis really is 🙂
So any news on what happen in court today then Joe?
I don’t think anything major happened
One can only imagine the price of a Ferrari PU contract has gone up over the weekend.
Do Ferrari really need to supply Red Bull anyway ?
Report in the Telegraph
Lotus survived an attempt by the taxman to force the cash-strapped team into administration on Monday night, but they will be back in the High Court again on the eve of the next race in Singapore.
Joe – thanks for again bringing focus on the staff at Enstone. Given the complete lack of resources they have had since splitting from Renault, their performances have been great. Sure this must be down to the passion of the staff involved and the Brabham-esque talent of being able to do a lot with not much. It would be great if you could do a profile on some of these figures in GP+.
Why wouldn’t the logical step be for any interested party to wait until the team is in administration? At that point unprotected creditors usually are out in the cold and the asset can be bought with proceeds going to protected creditors, still possibly below market value and a fraction of what protected creditors are owed. Fairly common practice in business circles, no?
It may be more honourable to step in and pay creditors but it may not be beyond the Renaults of the world at this point to play the discount game along with everyone else. They probably still have a bad taste in their mouth from subsidizing the sale of the team and giving it away for a pittance.
Depends how important those creditors are to the future of any new team. I am sure some will be vital to keep on side.
Any company has the right to refuse to supply or more likely change terms (and prices) under which they do business.
Any short term saving on not paying creditors could turn out in the long term to cost/burden on the new company.
Understood, logically, a creditor defaulted on or severely having their outstanding debt written down and being paid out 10 pence on the pound would never do business with that party again. In a perfect world adhering to principal would be the way to go, but the realities of the business world with finite clientele in specialized environments like F1 make it necessary to be open to doing business with the new incarnation of the devil that just burned you. Manor is a good example.
In this case Genaii would be deemed the non-paying debtor that is now down the road and Renault are the good guys stepping in clean slate saving jobs, supporting the industry and with a multi-national reputation to uphold, they pay out when they shut down (that’s probably why they refuse to overpay the same guy’s they subsidized to take the former Renault team over) so far safer bet for bruised creditors.
Hi Joe,
Just wondering of there’s any news on how the court ruled re Lotus? I haven’t heard anywhere else yet that they’ve gone under so that presumably is a good sign at least.
There was bn adjournment yesterday and another hearing today, but I don’t yet know what happened
Joe
Why is there generally no reporting about Lotus’s perilous position in the mainstream press? It’s almost as if someone is trying to keep it secret. The bailiffs were present at one race (which wasn’t generally reported) and now this. There’s some kind of cryptic story in Autosport that they had to borrow other teams’ tyre blankets at Monza because the were drenched in a downpour and unusable (really?). There just seems to be a wall of silence everywhere (except here) over what I would have thought would be a big news story – another F1 team going to the wall.
Why?
Because Kim Kardashian’s bottom is a bigger story
To be fair Joe, she’s certainly got a big bum, which is fine if you like that sort of thing I suppose, but newsworthy? probably not.