Renault Buys Back Lotus F1… For About $1
If your team didn’t have the words “Mercedes,” “Benz,” or “AMG” in it in 2015, chances are the Formula 1 racing season didn’t go quite as you would have hoped it would. Between drivers Lewis Hamilton and Nico Rosberg, Mercedes-AMG walked away with a 1-2 finish in nearly every Grand Prix of the 2015 season.
If you aren’t in the winners’ circle, then fielding an F1 team is a huge undertaking — between the physical toll and the financial one, mid-pack teams without manufacturer or substantial backing often fold before getting a real shot at honing their cars to become successful contenders. It’s so expensive that Renault recently bought the remaining share of the Lotus F1 team from private equity firm Genii for 1 euro, or about $1.50. And that was hardly a good deal for Renault.
Some financial sleuthing by The Telegraph revealed that Renault — which sold the team to Genii in 2009, incurring a 118 million-euro loss on the deal — is now inheriting the $274 million in combined net losses since the sale nearly seven years ago.
That doesn’t include the $146 million in loans that Genii wrote off as a part of the deal with Renault. Lotus has had a notably hard time with debt over the years, involving some high-profile court cases. A sponsorship from the Venezuelan oil firm PDVSA helped cut net losses to $13 million, according to The Telegraph via Jalopnik’s Black Flag.
Back in the hands of an automotive manufacturer, the Lotus team now has more access to the capital it needs. “There has also been a dramatic fall in financing costs, as well as cost savings made as a result of the organisational restructure in February 2014,” said Genii’s chief executive Eric Lux, referring to a major overhaul of the team’s operations in February 2014. Ninety-three employees were cut, saving the team about 6.8 million euros in the process.
For Renault, it’ll be the first time owning an F1 team since the sale in ’09, though Genii will retain a 10% stake in Lotus — perhaps as a hedge to try to exact some profits in the future.
Lux also said that the team is working with a slew of parties to try to nail down a long-term title sponsorship, one that will supplement Renault’s deeper pockets.
Mercedes owned the grid for 2015, but 2016 is still on the table. With Renault’s resources and Lotus’s know-how, 2015’s sixth-place finish might be a distant memory this time next year.
Like classics? It’s always Throwback Thursday somewhere.