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Renault Next to Go?

Renault on the bubble?

Renault on the bubble?

Several notable defections from Formula 1 have occurred within the past year.  The current exodus began last December, when Honda announced their departure from the series.  Then, in July of this year, BMW revealed that they would withdraw from the series in 2010. Finally, just this week, Bridgestone issued a statement saying they would discontinue their role as sole tire supplier for Formula 1 at the end of the 2010 season, and Toyota announced their withdrawal from the sport with immediate effect.

While the decisions by Honda, BMW and Bridgestone came as a surprise to many, the move by Toyota had been rumored for months.  They entered the sport in 2002, and failed to score a single victory over the next eight years, despite the fact that they’re reputed to have had the biggest budget on the grid.  Their best year was in 2005, in which Jarno Trulli stood on the podium twice.

The world’s financial crisis has had a significant impact on car manufacturers, as it has on the various other industries which are the source of sponsorship dollars to Formula 1 teams.  In recent years, with the banning of tobacco sponsorship, financial services companies have become more prominent in team funding, and this sector has been perhaps the hardest hit of all in the recent slump.  In particular, RBS and ING have suffered body blows to their balance sheets, and RBS was just the recipient of the largest bank bailout on record, thanks to the British government.

So it is no wonder that the ranks of manufacturers in the sport are suffering attrition.  Max Mosley warned that this day was coming, hence his determination to bring new teams on board.  Suddenly, the idea that the lower end of the grid might be occupied by such names as Campos, Lotus (related to the Lotus of old in name only), USF1 and Manor doesn’t seem so ridiculous.  Were it not for these fledgling teams, the total number of entries would fall below the minimum of 20, which would put the FIA in the position of allowing third car entries from the larger teams.

The current roster for 2010 includes only three teams with direct manufacturer ownership.  Of these, two are special cases.  Ferrari, a division of Fiat, operates somewhat autonomously. The company was originally founded by Enzo Ferrari as a means of funding his racing activities.  So, unlike the other manufacturers, all of whom produce road cars as a core business, the core business of Ferrari has always been racing. It is very unlikely that Fiat would pull the plug on Ferrari’s racing activities.  As a worst case scenario, it would be far more likely that Ferrari would be spun off as a completely independent entity.

As for McLaren, they are 40% owned by Mercedes.  The Stuttgart giant provides engines, technological resources and about $70 million per year in direct funding, or so it’s been estimated.  But these are all elements that could be replaced, should Mercedes decide to sever their ties with the Woking team.  McLaren is essentially an independent company, and its presence on the grid should not be threatened by a sudden change of heart by the Mercedes board of directors.

Of the three manufacturer teams, Renault is the only one that conforms to a conventional ownership model.  The current team was purchased from Benetton several years ago, and is owned outright by the French carmaker.   Since acquiring the team, Renault have enjoyed two world championships and one major scandal.

The scandal, stemming from allegations of race fixing at last year’s Singapore Grand Prix, led to the defection of their primary sponsor, the Dutch financial services giant ING.  (One suspects that ING, having incurred significant losses in the recent world financial debacle, might have welcomed the opportunity to call it a day.)

The Crashgate episode also led to the banning of Renault’s team principal, Flavio Briatore, and their technical director, Pat Symonds.  They have also just lost their marquee driver, two time champ Fernando Alonso.  Although Robert Kubica has been secured as a replacement, it remains to be seen if (a) he can match Alonso’s skills, or (b) he can do anything with the Renault chassis, which, at this year’s Abu Dhabi race, Alonso rated as the absolute worst in the field.

The sum effect of these events is that Renault are currently facing gaps in funding, management and driving talent (their current number two, Romain Grosjean, has proven himself to be completely unremarkable), and their performance over the past three years doesn’t provide a single indication that they might be able to pull out of their prolonged nose dive at any time soon.  All of this makes a compelling argument for Renault to reconsider their commitment to the sport.  In fact, the Renault board held a meeting this week to do just that.  Apparently, the meeting was either inconclusive, or Renault are not yet prepared to make their decision public.  As reported in The Telegraph, Renault CEO Carlos Ghosn recently told journalists, “You will have to be patient. We will make an announcement on our participation in Formula One before the end of the year.”

The current thinking, amongst paddock pundits, is that Renault will likely withdraw from the sport as an active team owner at the end of 2010, preferring instead to return to their former role as an engine supplier.  It is in this capacity that the company has known its greatest success.  During the golden era of the early and mid-nineties, Renault powered the Williams and Benetton teams to several world championships.  And just this year, the Renault powered Red Bull team finished second in both the drivers’ and manufacturers’ contests.  Clearly, they’re getting a bigger bang for their euro by making the lumps that sit behind the drivers, as opposed to funding an entire team.

Image by Klaus Nahr, licensed through Creative Commons.

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