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Brawn’s Mercedes Deal Still Pending

Ross Brawn

Ross Brawn

For a number of weeks, rumor mongers in the Formula 1 paddock have been hinting at a pending deal which would see Mercedes acquire a 75% stake in Brawn GP.  While there is a certain logic to this deal, for both Mercedes and Brawn, there are also some obstacles.

The buy-in would obviously be a lifeline for Brawn, who were able to squeak through the 2009 season on a budget based on a 140 million euro gift from Honda, and a minimal sponsorship deal with the Virgin Group.  There were also one-off deals with regional sponsors at some of the later race venues.

Despite the likelihood that Virgin will not renew their deal for 2010, as Brawn will be demanding a higher funding level (Virgin kicked in about 200,000 euros per race, according to reports), Nick Fry at Brawn has said that the team is quite well funded.  Even so, they have not announced a marquee sponsor name for the coming year, and one suspects that a deal with Mercedes would answer many of their fiscal needs.  It has been estimated that Mercedes currently pumps about 70 million euros annually into the McLaren budget, and the Stuttgart giant owns only a minority stake in that team.

As for Mercedes, a Brawn buy-in would give them what they’re currently lacking in their McLaren partnership – a majority share.  A 75/25 split would be very similar to the equity allotment maintained by BMW and Peter Sauber, who sold 80% of his team to the Munich-based company.

In their current arrangement with McLaren, Mercedes must contend with the occasional veto from the Woking team, with respect to deployment of Mercedes technology.  Example: Mercedes had an opportunity to supply Red Bull with engines in 2010, but McLaren nixed the deal, apparently unwilling to see the Merc powerplants, the current class of the field, go to a team which this year ran a chassis that was clearly superior to McLaren’s.  With a majority stake in Brawn, Mercedes would presumably not have such vetoes as an obstacle.

However, one suspects that the Brawn buy-in would only be feasible if Mercedes terminated their relationship with McLaren.  It seems unlikely that they would fund two major teams on a large scale, at least in the current economic climate, and certainly McLaren would object to Mercedes giving equal support to a rival team.

Norbert Haug, head of Mercedes motorsports, has said publicly that the Mercedes-McLaren partnership will remain intact.  While he has not addressed the possibility of a Brawn acquisition, it would seem that an investment in Brawn would be predicated on Mercedes’ sale of their 40% stake in McLaren.  So, taking Haug’s statements at face value, a Brawn acquisition seems unlikely at this point.

Meanwhile, Ross Brawn has been coy about the future direction of his team vis a vis Mercedes.  As reported in The Telegraph, Brawn said, “Mercedes is a very important part of our team and without the engine we would not have won the championship.  It was the best engine in Formula One and we have formed a great partnership together.  We are looking at all opportunities for the future but it is too early to announce anything yet.”

That could mean anything.  Ross Brawn has become adept at making public statements that are suitable for all occasions.  One suspects that some sort of deal with Mercedes (whether a buy-in or just engine supply) is in the works, and that its final form has yet to be agreed upon.

It’s worth noting that Ross Brawn is being equally coy about his driver line-up (presumably Jenson Button and Nico Rosberg) for 2010, and one would not be surprised to learn that this delay is linked to the protracted negotaions with Mercedes.

Image by Esthr, licensed through Creative Commons.

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