There will be a new partnership on the F1 grid next year as Group Lotus, owned by the Malaysian government via Proton, has bought a stake in the Enstone based F1 team, creating Lotus Renault GP.
This deal, which sees Lotus come in both as an equity partner alongside Genii Capital, the teams’ main shareholder, and as the main sponsor of the team, has been mooted for many months now and was finally signed off at the start of this week. In addition to a stake in the team, which is open ended, Lotus will be the title sponsor until at least 2017.
For the moment, Genii has bought out Renault’s 25% stake and will then sell a stake to Group Lotus, believed to be between 25% and 50%.
A photo with proposed livery has been issued and the car switches to the iconic black and gold of the JPS Lotus days from the 1970s. This was an idea that Tony Fernandes announced for Team Lotus for next year and he ran a fan competition to design the livery.
Although this move means the end of Renault having a stake in an F1 team, its name remains on several levels. First the chassis will still be called a Renault. Second, the car will have significant Renault branding, thirdly the engine operation in Viry Chatillon will operate as Renault Sport F1 and as such will be a profit centre for Renault, supplying the engines to Lotus Renault GP, Red Bull and the team currently entered as Team Lotus and owned by Tony Fernandes.
So without any of the liability of running its own team, Renault is still getting a lot out of this deal and there is a financial consideration for this, but nothing like what it used to spend. To the man in the street it will look like Renault is still heavily engaged in F1 and will benefit from any success the team accrues.
Viry will also collaborate with Enstone on gearbox and KERS development and will work on the preparation of the new generation of small capacity eco F1 engines for 2013, due to be announced by the FIA later this week.
This deal has its origins in discussions between Group Lotus and Genii Capital, which started in Autumn 2009, before Genii bought the Renault F1 team and were not involved with racing. It evolved an F1 dimension and this partially explains why Group Lotus was prepared to grant a licence to Fernandes to use the Lotus name in 2010 and then has been trying to reverse out of it in the second half of this year.
There is a wider business angle to the partnership. Lotus and Genii will collaborate on road cars, with Genii offering Lotus access to its the network of automotive technology companies it owns, which specialise in variable compression engine technology as well as vehicle systems and in-car VOIP and internet technology. Also central to the deal is that Genii with its extensive operations in Russia will give Proton a way into the Russian market, which will help Vitaly Petrov’s claims on a race seat next year.
The naming of the team as Lotus Renault GP, represents a fresh start. The team will not use “F1″ in its team name for two reasons; it is not allowed to use the words “Team” and “Lotus” in the same name and FOM stipulates that any team with “F1″ in its name has to also have the word “team”. Second the management wants no association Renault F1 team, after all the difficulties of the last two years over the Singapore crash scandal.
The new team will not claim any of Lotus’ F1 heritage, instead will trade on the history of the Enstone based team which as Toleman, Benetton and Renault has a proud history of its own in the sport.
This game of poker now leaves Tony Fernandes to make the next move. He has entered next year’s world championship as Team Lotus and has a contract for Renault engines. The entry states that the chassis will be Lotus Renaults. So there is a confusion which does not work for either party or for FOM or the FIA. The issue needs resolving as experienced F1 sponsors I’ve spoken to indicated that any prospective sponsors will be reluctant to engage with the team while there is uncertainty hanging over the brand.
There is still still a court case on this to be heard at some point in 2011, but this really needs resolving before the season starts.
The Group Lotus announcement contained statements of support for the deal from Malaysian government officials including a former prime minister. Tun Dr Mahathir Mohamad, Proton advisor and former Prime Minister of Malaysia, said: “This is an exciting development which delivers strategic benefits to both Group Lotus and Proton. I fully support the partnership.”
So it will be interesting to see what Fernandes does. His initial reaction on Twitter today was, “Dany bahr (sic) has done us a favour. Never felt better about our future and Team Lotus. Looks like the trying to hijak our black and gold idea.”
Fernandes’ team has a strong following, having taken on some of the underdog status of Super Aguri, which became phenomenally popular. Fernandes has a popularist approach and tweets to his followers regularly, but here he appears to be taking on Renault, Proton and factions of the Malaysian government. He may own an airline and have some powerful shareholders, but it’s still a David vs Goliath struggle and today’s move is a power play by Proton.
As a side note, under UK law, a 25% shareholder in a company can block the sale of the company if it does not want to sell to the preferred buyer of the majority shareholder.