Could Mercedes really quit F1?

Between the re-signing of Nico Rosberg's contract and Lewis Hamilton's admission that he pressured FIA race director Charlie Whiting over his team-mate's possible yellow-flag infringement during qualifying in Hungary, an interview was requested with Mercedes motorsport boss Toto Wolff to allow him to comment on rumours that the company would withdraw from team ownership at the end of 2018.

The request was not granted, with the team stating: "Please feel free to say that the company declined the opportunity to comment on a story that it regards as very creative speculation!" However, investigating if there is any credibility to the speculation, a raft of factors indicate that Mercedes could exit F1 at the end of 2018 - if not totally, then as a team owner, with the engine operation continuing until the conclusion of the current technical regulations, which expire at the end of '20.

Intriguingly, no fewer than four vital Mercedes contracts expire during the 2017-19 period, with both drivers signed up to the end of '18. As a senior paddock figure pointed out in Budapest: "It is highly unusual among major teams for two driver contracts to expire simultaneously, particularly given that [Rosberg] pushed for a three-year deal, which would have taken him through to '19. Very strange."

The team points out that it is contractually committed to F1 until 2020, at which point Mercedes will have celebrated "27 seasons of continuous works involvement since 1994", although only 11 as a team owner.

As an aside, the brand won but a single constructors' championship with its factory partner during its 1994-2009 engine-supplier-only era - in 1998 with McLaren - the second coming courtesy of customer team Brawn.

However, forget not that in F1 the only intrinsic value in a contract lies in its break clauses. In addition, Formula One Management CEO Bernie Ecclestone is on record as stating that F1 operates as a "cartel", so it would be the work of a moment to take him up on that statement and effectively exit scot-free on the basis that a prestigious company such as Daimler AG does not wish to be associated with a "cartel".

That way the engine company - a separate legal entity - could continue supplying engines in F1 in order to fulfil contractual obligations to teams while enabling the race operation to exit.

So, assuming all this comes to pass, how would Mercedes exit F1? The company employs around 900 people in Brackley, and a further 600 at its High Performance Powertrains facility in Brixworth, making it an extremely costly exercise to lay-off 1500 highly qualified individuals.

HPP presents less of a challenge, for that would only come to pass at the end of 2020, plus the site could conceivably continue as an alternative energy research and development facility for Daimler - effectively its current role, but sans the competitive aspect. Already HPP has produced electrification projects for AMG and produced hybrid solutions for road cars, so there would be little change on that front.

The key to Brackley's exit from F1 (as Mercedes) lies in its shareholding structure: Daimler owns 60% of the company, with Wolff holding 30% and non-executive chairman Niki Lauda the final 10%. Lauda publicly admitted his contract expires at the end of 2017 - a fact confirmed by the team - so the question is not 'when?', but rather 'who acquires Niki's shares?'.

The likely answer lies in an interview granted to the Autocourse annual late last year: Wolff had originally been offered 40% of the company, but willingly forfeited 10% as an inducement for Lauda to come on board. It is fair to assume that Wolff holds an option on shares he was originally offered. Given Wolff's recent bonuses after winning double constructors' titles, payment should represent no problem.

In the interview, Wolff also stressed that part of his negotiations to buy 10% of Williams (now sold), with an option on a further 10%, was that the company listed - which it did on the Frankfurt development market.

"I said that for me it was very important to IPO the company," he told Autocourse. "I wasn't interested in being a long-term shareholder - I'm an investor. I go in and I go out."

This comment echoes his strategy at HWA AG (the company that contractually runs the Mercedes DTM and Formula 3 engine programmes), spun off from the original AMG operation - Wolff owned 39%, and was part of the team that took HWA to market.

"During the first six days of the listing I sold out and ended up with just 6%," he said. "I was gone, but I had a seat on the supervisory board, which was like a non-executive director."

On that basis, there is every possibility that, using his HWA and Williams experiences (plus lessons learned from previous, non-motorsport, investments in Austria) Wolff - estimated to be worth at least £250million by at least two authoritative sources - could acquire Lauda's shares, then package the whole shooting match for an IPO listing on Frankfurt's stock exchange.

Lauda is out, Daimler retains as little (or as much) of the operation as it cares for, Brackley continues operating as an F1 team (likely with limited redundancies), and Wolff is able to trade his 40% as and when he wishes while remaining on the supervisory board, if not as team boss. Current technical executive director Paddy Lowe has, of course, performed admirably, and as such is a shoo-in for the task.

The alternative scenario is for Wolff to assemble a group of investors - his Marchfifteen (formed in 1998) and Marchsixteen (2004) investment vehicles were set up for that purpose - to acquire Lauda's shareholding, then perform a management buyout on the Mercedes holding, then run the team for their own account much as Williams currently operates. A later listing cannot be excluded under this scenario, either.

All of which begs the question: why would Mercedes wish to exit F1 in the first place? The team is, after all, riding the crest of a wave to rival the tallest and most ferocious depicted in '60s surfing movie Endless Summer, with seemingly no end to this wild ride in sight - certainly not while Ferrari, Red Bull and McLaren continue on their ineffective ways.

The team has two of the very best drivers under contract for the next two seasons (2017/18), and dominated the last two championships at will. This year is simply a question of when/who wins the title for Mercedes, not if.

These successes have enabled the team to switch focus to 2017's regulations almost at will, with 900 dedicated staff working tirelessly at space-age headquarters in Brackley with a single objective: to extend this silver domination.

However, as that classic movie showed, there are waves and there are dumpers, and all surfers eventually experience that sickening feeling of plunging from the equivalent of 100-foot buildings at enormous speed. A monster of a wall of water threatening to toss its hapless rider - who just a split-second earlier gleefully rode the crest - aside like matchsticks. The dump, when it comes, arrives with sickening speed and force.

Only twice in F1's history have teams dominated to this degree: during the '80s it was the turn of McLaren-Honda, which won almost everything sight during 1988-91, and Ferrari, which dominated for five straight years from 2000-04. By 2018 Mercedes will likely have dominated for five years on the bounce, equalling the very best in this world.

The laws of F1 are that good times are invariably followed by 'dumpers'. Since its period of domination, McLaren has won just a single constructors' title, while Ferrari scored two - one of which came during that contentious 2007 'spy scandal' season.

Today both are shadows of their former pomp, yet continue in the category because they effectively have little choice: McLaren exists to race in F1, while, to Ferrari, F1 is not part of its marketing mix (as with Mercedes), but F1 is its marketing mix.

Now, extend such periods of drought to a proud brand such as Mercedes, then pose the question: why would it risk the dump? Surely better to get out while the going is good, before an inevitable downward spiral sullies those magnificent achievements for which the brand will be remembered.

There is another consideration: the contract of Dieter Zetsche, the 63-year-old chairman of the Daimler board and head of Mercedes (passenger) cars, and the man who campaigned more than any other to a) return the brand to F1 as team owner, and b) appoint Wolff as head of motorsport programmes. His deal expires at the end of 2019, when he will have exceeded the company's mandatory retirement age. It will not be renewed.

Although talk is that Ola Kallenius, who headed Brixworth before running the AMG high-performance road-car division, will succeed the moustachioed, Turkish-born German, there are no guarantees that a) he will get the big job, or b) that the board will countenance a continuation of F1 given that certain factions have been staunchly anti, with only Zetsche's determination for Mercedes to have such a major F1 presence said to carry the sway.

Would Zetsche like his final year in the chair to be potentially tarnished by defeat on the track in the company's highest profile marketing campaign after five years of utter domination? Taking into consideration all the foregoing factors, perhaps the (three-pointed) stars are slowly aligning for a total eclipse earlier than expected.