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Why would Mercedes take a stake in Brawn?
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Why would Mercedes take a stake in Brawn?
Posted By: James Allen  |  07 Sep 2009   |  7:56 pm GMT  |  53 comments

I must admit when I saw the story in the Telegraph this morning suggesting that Mercedes might be buying into the Brawn team I wasn’t sure. On the face of it, why would they need to do that, when they already have a 40% stake in McLaren?

Brawn&Button
It seems all the more intriguing that they should be doing this at a time when other manufacturers like Honda and now BMW are pulling out and Toyota are dramatically reducing their spend on the sport. Who knows what Renault’s next move will be after the judgement is made on the Singapore race-fixing allegations.

And yet the more you look into it, the more substance there appears to be to this story and this looks to me like a classic case of a company zagging, while everyone else zigs, which is a great attitude when dealing with an economic downturn; look for opportunity, not excuses.

Mercedes may be choosing this moment to pile into F1 in a bigger way than ever because the opportunity is there like never before to make a real impression on the sport. Up to now they have had the three pointed star on the McLaren, had some great wins, (but not as many as they should have had) and survived some painful scandals with their partner.

But this year, with Brawn, they have spread the net wider, gained a significant secondary benefit in terms of wins and positive image – and they’ve been making money from the deal to boot.

Unlike the other manufacturers in F1, Mercedes has always been happy not to pay for the whole team, instead using the team’s ability to find decent sponsors. Mercedes concentrate on funding a really good engine programme and contributing to team funds, but not underwriting them.

Now with F1 contracting and the manufacturers in retreat comes an opportunity to grab more of the sport’s real estate at low cost. The Brawn buy-in, if it happens, is part of that and it makes real sense, leaving Mercedes as a major player in F1, while still paying out a fraction of what it has cost Toyota to achieve very little. Timing is everything. It also strengthens a key FOTA member. Brawn is a team of the future, with a structure and business model, which is the blueprint for post-Mosley, post credit crunch F1.

They zig, we zag; it’s set to become one of the winners’ catch-phrases of the Great Recession.

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53 Comments
  1. Lady Snowcat says:

    And what about diversifying away from the team that:-
    1. Effectively spurned you when Ron and Ojjeh sold out part of their investment that you thought would come your way…
    2. Is investing in a new super car production facility that some will see as in competition with your own product range…

  2. Adron Gardner says:

    The roots of MB’s engine shop goes way back to Ilmor. Those guys didn’t start life from the marketing department, they only lived and breathed to make race engines. They warmed up to Mercedes with the Penske Indy tie up and that love of racing is the foundation for how they’re still running the company today.

    MB buying into the former Honda team here is interesting too, as Ilmor builds the IRL V8 engines for Honda in America.

  3. eddyr says:

    And all this coming at a time when Mercedes are already high profile within F1 for their outstanding engine reliability- it makes sense for them to boost their profile with the public by getting their name more prominence with successful teams.

    Perhaps they’ll buy in to Force India next!? (you laugh now… stranger things…)

    1. Why not?? they already put an awful lot into the Force India team…

      @ James,
      Any chance of Paul Di Resta snaring a seat either at Force India or Brawn in the coming seasons??

      1. James Allen says:

        Heard his name a lot this time last year, less so recently, but Mercedes like him a lot, especially Norbert Haug

      2. Werewolf says:

        Outside of F1, I am a big supporter of DTM, despite its problems. I have watched Di Resta with interest, both at Mercedes and previously in F3, when he regularly beat Vettel. I have met him several times, too, and he appears very sponsor/team friendly, extremely competitive and virtually unapproachable when things go wrong, which is probably a good thing in an ambitious young racing driver.

        Yet I can’t help but feel DTM is a blind alley on the route to F1. I am thinking of the damage it did to Magnussen and the disappointing impacts of Albers and Paffett. Despite their nearly 500bhp thoroughbred performance, the cars are front engined, relatively heavy at over 1000kg and require quite different lines and breaking distances to F1 cars.

        I would dearly love to see Di Resta in F1 but my personal opinion is that he needs to prove himself (again) in monopostos, ie GP2, before that is likely to happen.

  4. Jonathan Dye says:

    This is obviously great news for Brawn and a great business move for Mercedes. If the worst case scenario happens and Toyota and Renault completely leave at the end of this year that would leave only Mercedes, Ferrari and Cosworth as engine suppliers. The Mercedes as been the class of the field all season and the more teams that use the engines will only make them stronger. But with only 3 different engines on the grid it would remove a big differentiator between the teams.
    I know Mosley was all for standard engines, saying that most fans don’t really care about differences in engines between the teams, but for hard core F1 fans its a key element. I would be worried this could lead a step closer, maybe only a tiny step closer, to standard engines. Or am I just paranoid?!?!

    Also a side point I noticed, Lewis won the Championship last year in car 22, Jenson is leading the Championship at the moment in car 22.

      1. Snail says:

        And both of you missed that they were both Mercedes powered!

        More spooky?

      2. James Allen says:

        …and are both British

      3. monktonnik says:

        If only they were both dating a Pussycat Doll

    1. Paige Michael-Shetley says:

      So does that mean Sebastien Buemi will win the championships next year in car 22 with STR?

      1. Antoine says:

        Not to mention they’re [Jens & Lewis] both second by Brazilians in the drivers Standings

      2. James Allen says:

        The spookiness knows no limits!

      3. Surely Toro Rosso would be 20 and 21 if they finished last…

  5. jw1980 says:

    I agree it’s great news that Mercedes are doing this. Will they have a greater say in drivers at Brawn than they appear to have at McLaren?
    It would be great if F1 did follow the Mercedes model of engine supplier rather than manufacturer’s being outright teams (with exception of Ferrari).
    It will be very interesting to see what happens at Williams who could be a team of the future. Could the classic Williams Renault partnership of the 90s be back on again? Rather than asking for three car teams why don’t Ferrari put some real backing behind a second team?

    1. Snail says:

      Rather than asking for three car teams why don’t Ferrari put some real backing behind a second team?

      I don’t see that that helps Ferrari. The whole Ferrari thing, to me, is that they are the best. It wouldn’t do to have Ferrari being beaten by “Vevvari powered by Ferrari”. Its not the same as Mercedes powering several teams and possibly owning a stake in 1 or more of them.

      Mercedes business model is to sell nice, high value business saloons and some funky sports cars. Ferraris’ is to sell absolutely top end sports/super cars, nothing else. Thus the damage to the brand by being “beaten” in a race is different for Mercedes than Ferrari.

      Even if Ferrari were beaten by Maserati (whom they own) that would be bad..oh..er. (sorry, couldn’t resist).

  6. Red Kimi says:

    Kimi or Rosberg are headed to Brawn is what this tells me…. Mercedes wants a German on one of their teams so I would lean more towards Rosberg. If Rosberg was going to McLaren their would be no need for Mercedes to do this… That leaves McLaren for Kimi should Ferrari waive his contract for next year. McLaren know Kimi well and their cool feel towards things works well with Kimi, vs Ferrari’s love for emtional drivers….

    1. Werewolf says:

      If Mercedes were to supply Williams, they could get Rosberg and be paid for the privilege …

  7. Antonis says:

    Great insight James, thank you! (Actually, i was waiting all day for your post :))

  8. Could Mercedes be behaving as a venture capitalist in F1? Take stakes with the hope of a sell later on?
    It is certainly a very surprising decision. Did I read somewhere that they would stop building the SLR with McLaren?

    McLaren must be seriously surprised. And what happens to Ron Dennis idea of building road cars within McLaren? He moved to the road division didn’t he?

    F1 doesn’t cease to surprise nowadays…

  9. Alex Yarnell says:

    It makes sense, but isn’t there the whole thing of deminishing returns – doesn’t it become tedious just beating yourself on the racetrack? Also do you think this is what Ross Brawn was talking about when he said that the commercial future of the team was secure?

    1. James Allen says:

      No I think he was speaking more about the title sponsor and two secondaries that they have lined up.

      1. Rory says:

        Hi James,
        I too was waiting for your post all day. The situation puzzled me. However as always your impartial explanation and in depth knowledge of the F1 world has shed light on the situation.

        Do you have any idea which sponsors Brawn might be linked to?

        Keep up the excellent website.

      2. James Allen says:

        I have suspicions, but wouldn’t like to say just yet. There are three, apparently.

      3. Shad says:

        Other sites have mentioned Emarats Airlines.

      4. Shad says:

        Sorry typo: Emirates Airline

      5. James Allen says:

        They were a possible sponsor when the team was Honda

  10. Patrickl says:

    Are they “zagging”? Or are they feeling they should finally get their own team?

    The main dispute might be the top driver. McLaren seems happy with Hamilton and Haug quite clearly said Mercedes want a German WDC.

    I thought the statement was quite rude at the time Haug was quoted, but maybe it runs deeper than that?

    This Mercedes Brawn connection reminds me of BMW buying Sauber and ditching Williams.

    1. Supervly says:

      This Mercedes Brawn connection reminds me of BMW buying Sauber and ditching Williams.

      There is one small difference – McLaren are willing to sell off a stake in the company , BMW wanted to buy Williams – but Frank and Patrick had no intention of selling any part of their company off

  11. rpaco says:

    Some teams will become profit centres when the amount spent on running the team is reduced, I would suggest that Brawn will become one of these once it acquires a bunch of sponsors. So for the long term it’s a reasonable investment for Merc which will pay for the engines. Of course Ross will come out of this quite well off too. (Assuming he owns most if not all, of the team assets and/or shares, it was all a bit hazy as to who owned what after Honda gave it away)

  12. Werewolf says:

    I have always thought the partnership approach was the answer for manufacturers, providing hi-tech engine and powertrain solutions beyond most teams, who create bespoke racing chassis and aero packages beyond most manufacturers. Renault is essentially Benetton, BMW was Sauber, Honda was BAR (itself born out of Tyrrell, if my memory is functioning tonight), even Ferrari was a race team long before the Fiat buy out and was left more or less to its own devices for many years.

    Vanwall, Cooper and Lotus brought an end to the original manufacturer era and it has never really gone back, other than financially, in terms of true success. Only the Renault name has won a World Championship. As well as the technological advantages of a partnership, the true racing teams are capable of making much quicker and more focussed sporting, development and arguably commercial decisions than vast corporations.

    One final observation. Frank Williams and Patrick Head appeared very friendly with Mercedes brass at the Brands Hatch DTM over the weekend …

    1. Rudy Pyatt says:

      Yup. Shrewd move by MB. Get greater market share on the cheap. And, Vanwall, aside, good call on the teams. They built their own engine, derived by grafting Norton motorcycle cylinders and valvetrain onto a Rolls-Royce military crankcase and adding water cooling.

      Actually, I’d go further. The manufacturers didn’t get back into the sport until the turbo era, itself ushered in by the Renault factory team. Prior to that, the British teams survived ONLY because off the shelf engines were available – in particular, Coventry-Climax and Cosworth. Cooper and Lotus could NOT have established themselves without these engines. The British teams (and therefore F1) would have died off without these engine suppliers. Post-Vanwall, only BRM, amongst the British teams, was willing and able to build the whole car.

      Once the turbo era was in full swing, and rendered the DFV obsolescent (causing desperate and dubious measures by Tyrrell and Williams, and ending F2 in the bargain by the creation of F3000 as a DFV dumping ground), the only way to compete was by a manufacturer tie-in. And that even if the manufacturer only provided money and badge to private builder. That dynamic has held ever since.

      Maybe F1 needs to get away from that dependence, the “we beg you please sell us an engine or we can’t race” garagiste’s mindset. If it gets down to only Cosworth and MB as engine suppliers, that won’t change.

      I’ve always thought that every team should build the whole car, as BRM did. Granted they spent a good deal on dead ends, but I think the costs of F1 as a whole would be less if teams were really constructors. It’s hard to run multiple windtunnels around the clock if you have to budget for design and development of your own engine at the same time. That approach might drive the car companies out, but so what? EVERY BRM sounded good. Hearing the V12 up close in a P160 was a highlight of going to the USGP! It would be nice to see and hear that kind of variety again.

      Besides: Hewland can build a tranny for just about anything.

      1. Werewolf says:

        Excellent post, Rudy. The point about Vanwall was not their own, rather clever engines but that, as a bespoke racing team rather than a carmaker, they were part of the end of the manufacturer era. I agree absolutely that Cooper and Lotus (and others) could not have survived without Coventry-Climax but the point was these teams through specialist racing smarts beat the manufacturers. Whether the engine is off the shelf, such as the Climax or later the DFV, or supplied and developed in partnership with a manufacturer, it seems to me the greatest successes other than Ferrari have come from this approach.

        I agree the BRM V12 sounded great (and that mismanagement latterly played a greater part in the team’s decline than its engine philosophy), so did the Ferrari flat 12 and the Matra V12 sounded even better! Oddly enough, a well sorted DFV sounds better today than it seemed to in period, probably because the others aren’t often heard in the same proximity now! But with modern rules unfortunately dictating the number of cylinders and restricting so many other variables, I’m not sure it matters too much how many engine suppliers are out there – although I too would hate to see standard engines – so long as there are enough to go round.

        I guess at the end of the day, the chassis and the racing team (and of course the drivers) appeal to me more than the engine (sorry, Enzo) but that’s a purely personal feeling. Perhaps if they all sounded different again, though, my feelings might change!

      2. Rudy Pyatt says:

        Thanks ‘Wolf! Ya, I love chassis variety, so I’m glad we at least have that. And even that’s less than it could be. Probably like everyone here, I spend a lot of time scheming, dreaming and sketching various chassis!

        I do wish we had a variety of engine notes. if it ever does get to standard engines, it’ll be the IRL with more glamour (much as I love the IRL — seeing them in full flight at Texas is awe inspiring and terrifying in equal measure).

        Actually, now that I think of it, this control of engine layout, rev limits etc., is exactly the same as NASCAR’s approach (ditto USAC, at least in their top series, because they use fuel injected, aluminum block, methanol burning versions of the same engines), proving once again that F1 and NASCAR have more in common than their obvious differences.

        Hmmmmm. The mad scientist in me says it would be very interesting to see how a downsized NASCAR V8 would work in an F1 car, and how an upsized F1 V8 wold work in a NASCAR. Crazier still: How about a DFV in a front-wheel drive chassis, sort a modern update on the Miller/Blue Crown/Novi continuum? (Insert evil cackle here…)

      3. Martin Collyer says:

        Nice trip down memory lane, I always preferred the sound of the Ferrari, BRM note to that of the Matra. There was a gruff, mean, business-like growl to those engines against the wail of the Matra. But the variety!!!

        On Vanwall, didn’t Tony V once say to Enzo, “Trouble with your cars is all the power is coming out of the exhaust pipes in the form of noise”, or words to that effect. I think he was referring to the Ferrari modified Lancia V8s.

        On chassis, Lotus 78,79 even the 80, who said if it looks good it must be good, the 80 wasn’t. Lotus, again, 72,76, Ferrari 312T seies with the very wide front wings, Williams FW06, FW07. Variety!!!

        On Miller, Novi, “get on with it, get it done”

  13. Osman says:

    Poor Frank Williams – this was his lifeline for getting Williams out of the doldrums.

  14. Ray.C. says:

    James,
    Is there anything in the rules that limit the number of teams an engine manufacturer can supply to?

    I can’t see how a monopoly can be good for the sport… maybe A1GP.

    Speaking of A1,
    Ferrari leaning towards Italian drivers, Mercedes-Benz want a German. (Sutil seems to have a fairly quick Benz under him).
    Nationalism, understandable, but very limiting.

    1. James Allen says:

      Yes. It is four currently

  15. Paige Michael-Shetley says:

    Good move by Mercedes. By escalating their involvement with a team looking to be a competitive one in the future, they have a stake in not one, but potentially two championship teams in the future. Imagine the benefits to Merc if, for instance, McLaren and Brawn fight it out for a championship in the future: two Merc teams dominating F1.

    I wonder how this will affect the potential engine deal with Red Bull. They’ve got to be uncomfortable about the idea of getting engines from a manufacturer who has ownership stake in not one, but two different constructors.

    1. Werewolf says:

      Red Bull must be worried right now. As Paige says, the stakes issue must be playing on their mind, and with Renault’s future in the balance … Is the likely-to-be former Williams deal with Toyota becoming attractive? Do they stick it out with Renault? Do they trust Mercedes to be sporting, as they have been with Brawn (but against the background of an uncompetitive McLaren)? And how will this affect focus and performance for the rest of 2009?

  16. Martin Collyer says:

    “…survived some painful scandals with their partner…”

    Very little of the dirt seems to have stuck to Mercedes (Stepney/Coughlan and Hamilton/Ryan). They might be getting a little tired and weary and wary of this, buying into Brawn gives them a good alternative for the future.

  17. Silas Denyer says:

    This is all quite strange, to be honest. I don’t see the imperative for Brawn to sell out at the moment. Either he can sell some of his shares – i.e. take a quick personal profit, which doesn’t really seem to be the way of the man – or the company can issue new shares, using the MB money as fresh capital.

    But does the company need that capital? I suppose it is possible that, in these uncertain times, potential sponsors want to see a strong capital base, and borrowed money might be expensive and/or unattainable right now.

    Either way, I really can’t see the “good news” angle on this story; either Ross wants a yacht or the team is desperate for capital. Unless, of course, Ross believes they won’t win the championship this year, and that the value can only go down from here on in…

  18. Finn says:

    I can see Merc running Brawn as their own team and becoming a regular engine supplier to Macca, etc.

    Would make sense for them to have all the branding and at some point they are going to want to have their name on the WCC trophy without it being tied to another team’s name.

    1. Rudy Pyatt says:

      Bang on. That may be exactly what’s going on, a lot like the BMW-Williams situation. Could be that the MB board got tired of the hyphen, and that they see RD’s departure as a chance to subordinate McLaren.

  19. rpaco says:

    No doubt James will start another thread on this,but we note that it was Norbert and not Martin saying that they were talking to Rosberg, on whose behalf I wonder.
    However Ross has said that the driver lineup is fixed for 2010.

    1. James Allen says:

      No, when I asked him if he saw any reason to change drivers, he said “No”. But he didn’t say they were fixed.

  20. matt says:

    I would like to see best engines (Merc) and best strategies (Ross B) combined together to rule the circuits… Well, they might also need the best drivers… Perhaps getting Kimi at a discount price for a couple of years (it’s said that Kimi just renewed a 5-yr contract with his managers) would be a wise move.

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  22. Jonathan Chan says:

    As a Mclaren fan this news does disappoint me, it seemed only yesterday Lewis successfully won his first world championship and despite Mclarens underdeveloped 2009 spec MP4-24 being a dog of a car you’d expect Mercedes to remain faithful of Mclarens abilities to turn it around for next season [As did Mclaren for sticking with Mercedes during the many DNF's of the 2004/2005 season] Yes Brawn have made a stunner of a car but at the expensive of their 2008 season. I highly doubt Brawn would have achieved such a significant advantage had Mclaren not been commited to fighting for the 2007/2008 world championship.

    Mercedes maywell want to rethink their long term goals. Honda pulled out for a reason as did BMW, they were both fully pledged formula 1 teams with huge development costs forcing them to banish their Formula 1 ventures by focusing on their core businesses ‘Commericial Vehichles… What concerns me is Mercedes have successfully utilized their ability to be an engine supplier but fancy a crack at being a manufacturing team. That is a big step interms of financial resources and what concerns me is they maywell fail.

    Why rock the boat? Mclaren have the best resources, globally recognized sponsors a world champion who became the youngest worldchampion in F1 history and the most successful formula 1 colaboration with an independent team…

    1. Jono Chowdhury says:

      As another McLaren fan, I find this move by Mercedes rather interesting and the fact that their contract with McLaren is only up to 2011 (I think) is worrying for McLaren fans.
      But the new MP4-12c is powered by a McLaren engine and not a Mercedes unit, this leads me to believe that Lewis will be driving a McLaren engined car in 2012 if Mercedes buys Brawn.

  23. I always assumed that it’d be McLaren funding any possible buy in to BrawnGP, effectively doubling the testing/windtunnel time available to them being a huge bonus. Do you think this could be a factor at all?

    1. James Allen says:

      No, I think this is Mercedes finally getting control of a team. The question is, why?

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