Renault has ended months of speculation about its future in Formula 1 by confirming it has successfully acquired the Lotus F1 Team to return as a fully-fledged works outfit in 2016.
The French carmaker has been assessing its future in Formula 1 for much of the 2015 season after ongoing criticism over the competitiveness of its power units by its principal works team, Red Bull Racing.
Subsequently, it declared it had signed a contractual intent to take over the financially struggling Lotus F1 Team – which was borne from the former Renault works team when it exited Formula 1 at the end of 2010 – and on Thursday night it announced that the deal had gone through.
“Renault had two options: to come back at 100 percent or leave. After a detailed study, I have decided that Renault will be in Formula 1, starting 2016,” Renault’s Chairman, Carlos Ghosn, said.
“The final details supplied by F1’s main stakeholders gave us the confidence to accept this new challenge. Our ambition is to win – even if it will take some time.”
In announcing its comeback as a works team, Renault took a backhanded swipe at its former works partner, Red Bull Racing, declaring that its current role as an engine supplier “proved to be limited”. Renault had powered the team to win four consecutive Drivers’ and Constructors’ Championship titles – achieving very little credit for doing so – before being very publicly trashed by the same team when its current-specification engines proved to be uncompetitive.
Nonetheless, it sees Formula 1 as a critical component of its brand identity and strategy.
“As the pinnacle of motor sport, Formula 1 demands technological and operational excellence. The championship serves as a showcase for the technological expertise that Renault dials into its products for the benefit of its customers,” the Renault statement added.
“In January, we will provide more detailed information about Renault’s F1 programme ahead of the 2016 championship that begins next March.”
Renault itself is investing relatively little, financially, in the initial stages. As part of the terms of the acquisition of the Lotus F1 Team, it is understood that most of the Enstone team’s existing debts will be saddled with its existing shareholders while Renault secures revenue from other sources.
That income principally stems from the Red Bull group (by dint of a penalty fee it will have to pay for early termination of its engine contract Scuderia Toro Rosso), the sponsorship being brought in by its 2016-contracted drivers Pastor Maldonado and Jolyon Palmer, French fuel giant Total and legacy payments from the Formula One Group in recognition of Renault’s long-term commitment to the sport.
This revenue will allow Renault to borrow against future expected revenues to generate the cash flow it needs to pay off all of Lotus’ equipment and facility liens and non-shareholder debts (believed to total around $55 million) and to invest in rebuilding the team back to competitiveness. Renault has predicted that it is unlikely to get the team to front-running competitiveness for at least three seasons.
Image via XPB Images
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