03/09/2019
NEWS STORY
While Brexit continues to dominate the headlines in the UK, Formula One is facing its own October deadline in terms of the signing-off of the rules package for 2021, arguably the biggest shake-up the sport has witnessed in living memory.
A whole raft of issues have yet to be agreed and rubber stamped, including the budget cap, distribution of the prize pot, standardised parts, calendar expansion, engine regulations and a whole lot more.
Strange then, that in recent times a number of media outlets have claimed that Renault alone has a contract to race in F1 in 2021 and beyond.
Strange in the sense that with the rules yet to be agreed, the French company wouldn't have a clue what it was signing up to... and at what cost.
As you read this, the sport's owners and the FIA are negotiating new terms with the team as the contracts - known as Team Agreement - expire at the end of next year, which basically means that currently there are no teams committed to racing in 2021.
Amongst other things, the Team Agreements specify the manner in which the prize money is paid to each team, which currently sees Mercedes, Ferrari and Red Bull take 48% of a pot that totalled $913m last year.
Renault, one of three engine manufacturers on the current grid which also has its own works race team, spent $342.7m on its 2017 F1 programme, and having already repeatedly admitted a keen desire to see costs reduced is anticipating that the 2021 rules package will have just that effect.
The French outfit quit F1 at the end of 2011, following the infamous Crash-gate saga, selling its operation to investment firm Genii which subsequently rebranded the outfit as Lotus.
However, true to the age-old adage, 'how do you make a small fortune in F1... start with a big one', the Genii operation ran into financial difficulty and eventually Renault bought back the team for £1.
However, as if this pound shop bargain wasn't enough, Bernie Ecclestone stepped in to broker a deal.
At the time, the private equity firm CVC owned F1 and was in talks with Liberty about buying the sport. Investment bank Goldman Sachs had been appointed to advise on the sale, and it was thought that having Renault back on board would be a smart move, for, if nothing else, it prevented the sport losing another team.
As an incentive to Renault to sign on the dotted line, Ecclestone put a clause in its Team Agreement promising a bonus of $22m should it win back-to-back titles, and at least 22 races in the process.
Stop tittering at the back.
Since returning to the sort in 2016, Renault hasn't made it to the podium, far less a win or back-to-back titles.
That aside, one wonders why it has been claimed that Renault is alone in having a contract to race in F1 in 2021 and beyond, when a year ago Cyril Abiteboul told Crash.net: "We don't know what 2021 is going to be... We don't know what Formula 1 will look like, who is going to be in, who is not going to be in. There's lots of movement... Will there be a budget cap or not? Will there be a new engine regulation or not?"
More recently, he told Auto Motor und Sport: "We have to self-finance our involvement [in F1]. With the budget cap and the fairer distribution of money, two of our demands are met. But that isn't enough for us. If Formula 1 is to cost us nothing it has to be all about freezing engine development from 2021 onwards."
In February, Renault F1 team president, Jerome Stoll told Reuters, that F1's contracts "will come to an end within two years, and we need visibility to know what is going to be the next step after." He added that "his main concern is to have a decision. We are pushing. I had several discussions with (F1's chief executive) Chase Carey about that. He promised the decision would be taken by late last year. No decision has been taken. So I'm going to push. As soon as I meet him again at [the season-opener in] Melbourne or maybe in Barcelona [for testing] next week I'm going to start again to push him. What is your planning? When can you take a decision? It's crucial for us."
While Renault is under no obligation to reveal whether it has signed a new contract or not, Liberty, which is listed on the Nasdaq, is bound to inform investors about the risks it faces.
As Forbes reveals, in its annual report, which was issued at the end of February, it states that: "Formula 1 cannot provide assurance that any of the Teams will commit to participate in the World Championship beyond 2020."
Consequently, whatever you may have read, there is currently no deal for Renault to remain in F1 beyond 2020... or indeed anyone else.
That's not to say that Renault, or anyone else, has the intention of quitting at the end of 2020, but at the same time there is currently no guarantee that it will remain.
Which, once again, has strong overtones of Brexit.