The leading F1 teams are in the thick of an argument at the moment about how much money they should be allowed to spend every year to go racing, with Red Bull out on a limb, taking a different view from other FOTA members about the next phase of the Resource Restriction Agreement.
If it all goes wrong, as some predict, this could lead to a new arms race in F1 with Red Bull, Ferrari and Mercedes able to spend more than McLaren (which no longer has Mercedes factory backing as it did in the last “Arms Race”) and far more than the midfield teams. Let’s hope it doesn’t come to that because everyone loses in that scenario.
Against this backdrop it seems a good opportunity to review some quotes which came to light during the preparation of a Financial Times Special Report on F1, which I helped produce last week. My colleague John Reed spoke with Jean Francois Caubet, who manages Renault’s F1 engine programme, and he spelled out the amount Renault used to spend on the sport and how that compares with what they outlay now, being just an engine supplier. He also confirms that Renault threatened to quit the sport completely this summer over the 2014 engine rules.
“We are a total cost around €120m,” said Caubet, explaining how much they spend on the existing engine programme. “The net cost – total cost minus sales – is €60m. For €60m you have a big exposure in the world”
This is interesting for a number of reasons. It shows that
the costs are still high; Renault still spends €120 million a year even though the V8 engines are frozen from a development point of view. The company supplies 16 racing engines a year plus test engines to Red Bull, Lotus Renault and Team Lotus (soon to be renamed Caterham). Next year they will add in Williams to the roster.
This is a huge saving compared to the time when the French car maker ran its own team, which it sold at the end of 2009.
“In the past the total cost of the team was between €250-280m. (But after deducting) sponsorship and TV rights, net cost about €180m.”
In other words Renault is now spending a third of the amount it spent to run its own team in 2009. It has won the world championship for the last two years with Red Bull Racing. This arrangement seems to be working well.
“We have a five-year deal with Red Bull. In the past it was difficult to have a long-term strategy, because the strategy was linked to results. For a carmaker, you can’t explain what’s your budget in 5 years on a team,” added Caubet.
“Also we have a long-term strategy on advertising – Renault will do more advertising, more pr and more communications.
“When you control the team, you must win. And if you don’t win, the cost is so high. If you have a crisis, the sponsorship stops like BMW, Toyota, Honda. Because you are a carmaker, you need to win. If you don’t, the board asks the question.”
Caubet also confirms that Renault threatened to pull out of F1 altogether if the new generation 2014 engine wasn’t introduced, “We pushed the FIA to conclude on new regulation – concluded in June. Either the new regulation is clear and we will stay in F1 or we keep the same engine and Renault will stop,” he said.
The 2014 engine is very important to Renault because it wants to scale down road car engines and the push is towards turbo hybrids, which is what the F1 engines will be. Just as Renault pioneered turbo engines in F1 and then took them to road cars, now turbo hybrids will tie F1 to the consumer market.
“It will be downsized, fuel efficiency, and a big part on the electric side.” he said. “We think in 2015-20, probably 80% of all the engines in the world will be downsized, probably turbo, and with hybrid or electric power.
“We took the decision to stay in F1 only if the new engine was relevant and the new regulation was relevant. We now start the race with 170kg of fuel. In 2014 we will start the race with 130kg – nearly 35% less. Each year we are pushing to decrease the fuel consumption by 5%. It’s difficult to reach this goal.
“Today the engine is more of a commodity; in three years, it will be the key thing that makes you win or lose the race.”
It will be fascinating in 2014 when engines become performance differentiators again, something they have not been since the V8 engines were frozen.
You can read the Financial Time F1 report HERE
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