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Renault and McLaren reap financial rewards

NEWS STORY
14/11/2006

2005 was an excellent year for Renault and McLaren - who finished first and runner-up in the Constructors' Championship - with both teams enjoying success on and off track, write Christian Sylt and Caroline Reid.

The Renault F1 Team, which in 2006 went on to win back-to-back titles, increased its turnover by 27 percent to £120m, mainly due to new sponsorship deals, such as Spanish insurance company Mutua Madrileña , and performance-related bonuses from other sponsors. The team also saw a stark increase in merchandise sales, which have increased 15 times in the last five years, not to mention prize money and other sponsorship deals.

That said, the French team's turnover doesn't reflect the massive investment from its owner in terms of engine costs, thought to be as high as £60m. This is because the directors at Renault do not believe it is possible to give a reliable estimate of the cost of providing the championship winning powerplants.

In 2005, the French F1 team's profits increased by 31 percent to £3.6m, but as it sought to remain competitive, the team's operating costs increased by 28 percent and staff numbers by 10 percent.

There had been a major question mark over the team's future in F1, and it is widely thought that this played a large part in Fernando Alonso's decision, in late 2005, to sign a deal to join McLaren in 2007. However, any doubts as to the team's commitment to F1 were dispelled at the launch of the R26, when Carlos Ghosn, President and CEO of Renault, said that his company would remain committed to F1 as long as it remained competitive, that the sport continued to put on a good show, and offered a good return on its investment. The back-to-back titles in 2006 will surely have gone some way to meeting Ghosn's demands.

As for McLaren, the Woking team increased its profits by 83% to £4.9m on a turnover of £113m. The Mercedes powered - and partly owned - outfit's greatest one-off gain was a payment of £10m received in settlement of a dispute with a supplier. The question is, which supplier and why the dispute?

Although McLaren failed to win a single race in 2006, the first time since 1996, the team has signed a number of new significant sponsorship deals, including Vodafone, Mutua Madrileña and Banco Santander pending the arrival of Fernando Alonso.

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