Take Red Bull's quit threats seriously

A fortnight ago we analysed the root cause of Renault's predicament as a Formula 1 engine supplier, then outlined the three options facing the French company.

Speaking during last week's Formula E round in London, Renault/Nissan Alliance CEO Carlos Ghosn confirmed the three options, adding that Renault Sport was committed to supplying the two Red Bull teams - Red Bull Racing and Scuderia Toro Rosso - only to the end of 2016.

That Ghosn should be present at the electric series' finale was no surprise, for the Alliance is the world's largest producer of electric cars, and its subsidiaries played a crucial role in integrating McLaren Electronics-supplied motors and electronics with batteries from Williams Advanced Engineering.

What was, though, significant is that he spoke out after refusing to be interviewed last month in Monaco.

Red Bull has a presence at the sharp end of other series, including MotoGP

On that grand prix weekend he held a meeting with F1 CEO Bernie Ecclestone during which he outlined various conditions for Renault's post-2016 presence, including swingeing changes to F1's governance - more precisely Renault's exclusion from the official regulatory process - but, according to sources, the atmosphere was not at all convivial, which may explain his willingness to speak out in London.

Whatever, his comments follow recent withering attacks on Renault's F1 effort from Red Bull boss Dietrich Mateschitz, comments that point to a Red Bull withdrawal from F1 unless it procures a winning "works" engine. Although various senior Red Bull figures played down the threats, they had recently voiced similar comments, so the chances of a Red Bull exit must be taken seriously.

While F1 has been a vital component of Red Bull's marketing mix - in the process elevating the brand to the top of the world's energy drink market, with over five billion cans sold annually - is not the only motorsport platform in town despite F1's much-trumpeted beliefs to the contrary.

Check out MotoGP and Red Bull-liveried bikes are at the sharp end; watch WEC and Red Bull's logos are linked to winning crews. World Rally Championship? Volkswagen's dominant "works" cars are bedecked in Red Bull colours that overshadow VW's own roundels; ditto Peugeot's and KTM's respective Dakar efforts.

In short, Red Bull is spoilt for choice when it comes to global championships - before taking feeder series into account. For all that, though, motorsport is still far from the only "adrenaline" platform open to Red Bull, as its support of ice hockey, air racing, soap box derbies and any number of weird and wacky bespoke events across the globe attest.

Space jumping? Think Red Bull's Stratos mission - which remains high in the public mind despite being shaded by a budget project which jumped further, higher and cost less, but lacked imaginative marketing oomph. In short, if it's edgy, it's prime Red Bull territory - something an embattled F1 would do well to recognise.

Mateschitz pulled the plug on his under-performing NASCAR team © LAT

Regardless of genre, sponsors come and go, with companies withdrawing immediately once marketing objectives are achieved, and Red Bull would be utterly delinquent were not all activities - motorsport and otherwise - constantly re-evaluated for return on investment. F1 is just one such activity, albeit highly expensive and visible.

After utterly dominating F1 from 2010 to 2013 with Sebastian Vettel, Red Bull now risks a phase of diminishing principle, a situation compounded by Renault's dire straits, and, this year, a chassis not up to scratch. That Adrian Newey, the team's design genius, no longer seems committed to F1 hardly helps. Pull-out time?

The issue is, though, that Red Bull is not simply another sponsor. The company's preferred modus operandi is to own properties, explaining its ownership - as distinct from partnering - of two teams. This is not restricted to F1: it is not simply a sponsor of the Red Bull Ring, scene of Austria's F1 grand prix (and, from 2016, MotoGP), it owns the facility outright - having spent a fortune on upgrades after acquisition.

When it comes to advertising, Red Bull does not target just any broadcaster/publication - it owns the free-to-air (and online) Servus TV and Red Bull TV stations - and punts its products in print via The Red Bulletin. It has its own music label, with works by the artists later promoted via music concerts staged by Red Bull Media House.

So widespread are Red Bull's activities that it requires bespoke weather services: true to form, rather than subscribe, it acquired UBIMET - since appointed F1's official weather service. Red Bull's list of promotional properties is restricted not by budgetary constraints, but, seemingly, by what Mateschitz would like to own.

While ownership provides control over runners, riders, drivers, venues and such-like, this approach creates problems in that exits are not simply a matter of walking away at contract-end. Any RBexit - to paraphrase Greece's dilemma - involves complete shutdown if no buyer is found. When Red Bull elected to withdraw from NASCAR, it sold off cars and kit before putting staff on notice - virtually overnight.

However, that step - in the company's largest market, at that - provides a lesson in just how ruthlessly the company acts once decisions are taken. If further proof is required, ask any number of disillusioned former Red Bull development drivers/riders who were unceremoniously stripped of their 'wings'.

Whether solely down to Renault or not, Red Bull clearly cannot afford a protracted run of poor results, in particular being regularly trounced across the world - including on home Red Bull Ring soil - by Monster energy drink-backed Mercedes while blowing upwards of £150m annually on RBR and half that on STR. Certainly not when rival activities beckon at a time of dwindling live and TV ratings.

Both Red Bull-owned teams are struggling with Renault power © LAT

Thus Red Bull faces a variety of options going forward, none of which are, though, likely to return it to the top in the short-to-medium term unless good fortune and financial fortune align immediately. In short, whatever remedial action is taken will require a total restructure of RBR (and, given its current facilities upgrade programme, to a lesser extent STR), likely combined with major investment on the engine side.

The first option - namely bumble along in the hope that both chassis and engine departments deliver massive improvements as though by magic - is, frankly, only an option if the question marks hanging over the heads of both Renault and Newey are resolved.

There exists, of course, the possibility of swapping Renault for another engine partner, likely Ferrari, which in Austria signalled its willingness to supply power units to both Red Bull teams. However, this would still reduce Red Bull Racing to a customer operation - which Newey kicked heavily against in the past, initiating a swap with STR for Renault engines.

Then, in 2014, both teams standardised on Renault power - to STR's regret - but Horner believes, probably correctly, that Red Bull cannot return to championship-winning potential without a dedicated "works" engine partner, and one wonders how dedicated Ferrari would prove should Red Bull regularly beat the red cars across the line.

The same applies to Mercedes power - which Horner is said to have attempted to procure by various means. Thus, unless another options transpires, it is Renault or bust - failing which Red Bull could acquire Renault's Viry-Chatillon base, then convert it into facility dedicated to its two teams - in line with Red Bull's ownership policy.

Red Bull already has ties to Mario Illien - he of Ilmor fame - who is said to be assisting Renault on engine development. In addition, the internationally acclaimed Austrian automotive consultancy AVL is known to have undertaken data and simulation work for both Red Bull teams, and could be contracted on an on-going basis.

Thus Red Bull could do what it did with the Jaguar team in the first place, i.e. acquire a failing motor manufacturer operation, then throw vast amounts of money and the right people at it until championship success follows - hopefully on a serial basis. It is not as easy as that, of course, but the blueprint exists.

While Mateschitz has continuously denied his company intends entering the F1 engine business - insisting Red Bull's F1 business is racing cars - in real terms the final decision comes down to just how badly he craves championship success. If yes, there may be no other option.

Could Red Bull expand its presence in sportscar racing in the future? © LAT

The third option would be to retain the facility for another motorsport category. Red Bull's headquarters in Milton Keynes, or STR's equivalent base in Faenza, could just as easily build Le Mans prototypes as F1 cars. Imagine a Newey-designed WEC racer, powered by an Audi (or VW Group sister Porsche), crewed by Mark Webber and Brendon Hartley, who finished second in this year's Le Mans classic.

Sound far-fetched? Consider that Audi's programme in any event is contracted to Joest Racing, with the cars entered under the Audi Sport Team Joest banner, with former Le Mans star Reinhold Joest the de facto manager of the programme, reporting through to Audi motorsport head Wolfgang Ulrich. Why not then Red Bull with a similar programme? According to sources this avenue is being investigated.

The final option is the most obvious: shut shop and get out totally, with either one or both teams. While on the surface this appears a scorched earth policy gone crazy, the facts remain that failure is tarnishing the brand, and Red Bull Racing (formerly Jaguar Racing, nee Stewart Grand Prix) was acquired for a relative song from Ford Motor Company, and all guarantees issued at the time of acquisition are either long fulfilled or expired.

While Red Bull is committed to F1 through to 2020 - strangely, in his attack on Renault, Mateschitz alluded to a contractual commitment to 2018 - Formula One Management would need to prove any material damages were Red Bull to leave in breach of contract, and the counter argument would be that F1 has indisputably done more than enough to damage itself of late; that Mateschitz is departing in part due to the situation.

As for the facilities and championship entries, these are negotiable instruments, and could be sold subject to willing buyers being found, either as individual components or as going concern. However there are not many buyers around given F1's present state and the prevailing economic climate - as RBR discovered when it attempted to sweet-talk Audi into F1 entry via a takeover.

Still, if Red Bull had to shut up shop totally, the costs of any such programme could be covered out of the petty cash reserves of a company grossing almost a quid per can - or five billion per annum.

Ultimately whatever decision is taken will be driven by F1's future regulations, for if these promise to substantially enhance the show and enable Red Bull to attract a competitive engine package for both teams, then Mateschitz may well stick around.

If not, watch out for his red pen, and four fewer cars on the grid.