Formula 1's unlikely partners in strife

"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us..."

Thus opens A Tale of Two Cities, Charles Dickens's classic novel in which peasants were hounded by aristocracy, ahead of the French Revolution. Substitute 'teams' for 'cities' - Red Bull Racing and Lotus, specifically - 'aristocracy' with Formula 1's commercial masters and 'peasants' with fans, and those wise words apply as readily to 21st century Formula 1 as to revolutionary Europe 200-plus years ago.

Those two teams have, of course, dominated the output of the rumour mill during the two grands prix just past. Both face uncertain futures that are very much the by-products of management decisions. Indeed, their possible demise could precipitate a collapse of the entire ecosystem in which they survive, and once thrived.

Yet, despite being inextricably bound by uncertain futures, these teams reached their predicaments from diametrically opposite directions, the fateful year in each case being 2010. In the case of RBR, it marked the first of four consecutive Renault-powered world constructors' championships, and as many driver crowns.

For Genii Capital, the purchase of the team currently competing as Lotus marked the capital fund's entry into F1 ownership after it acquired majority control - later escalated to full title - of what previously raced as Renault from the French company, which had purchased the team from the Benetton family. Under those guises 'Team Enstone', so called after its Oxford domicile, won four drivers' and three constructor titles.

'Team Enstone's presence in F1 dates back to Toleman's maiden season in 1981 © LAT

Saliently, 2010 marked the start of a new two-year Concorde Agreement, the tripartite covenant that then set out the regulatory (sporting and technical) and commercial obligations of the sport's governing body, the FIA, commercial rights holder Formula One Management (majority controlled by venture fund CVC Capital Partners) and the teams, acting collectively under the auspices of the Formula One Teams Association.

It was the first such agreement signed after F1's commercial rights were officially leased by an FIA then led by Max Mosley to entities controlled by Bernie Ecclestone, and marked the first Concorde negotiated by CVC after formally acquiring the sport's rights from three banks and Ecclestone's family trust in 2006.

The covenant was named after its place of signing, namely the FIA offices situated at the northern end of Place de la Concorde. A location known during France's dark years as Place de la Revolution, the scene of the beheading of Marie Antoinette - who, unable to understand peasant starvation, said, "Let them eat cake..."

Back, though, to F1 history. Red Bull Racing and Lotus mutated out of manufacturer-owned teams originally founded by entrepreneurs. Jackie Stewart founded his eponymous team, then sold out to Jaguar Racing, which sold on to Red Bull. The Tolemans founded their team, then sold to the Benettons, who in turn did a deal with Renault, which sold to Genii Capital, which eventually named its team Lotus.

In 2008/9, F1 suffered wholesale manufacturer withdrawals - ostensibly due to the economic crisis - with RBR emerging to force a '10 title showdown. Coincidentally Vitaly Petrov, in the Genii-Renault (ahead of the full renaming), sufficiently baulked Ferrari's Fernando Alonso to enable Sebastian Vettel to score his maiden crown.

Jaguar sold to Red Bull at the end of 2004, just before Renault's last two titles © LAT

That set the scene for a further three championships, which stood Red Bull in good stead when Ecclestone negotiated the structures to replace the Concorde Agreement from 2013 ahead of CVC's plans to list F1 on the Singapore Stock Exchange. To do so, the venture fund needed long-term contracts, to 2020, with F1's primary teams, and thus approached the reigning champions first. Only then did Ferrari and McLaren cave in.

In the process, Red Bull committed to F1 for eight years from 2013, in return receiving Constructors' Championship Bonus payments and a guaranteed seat on the contentious Strategy Group. Despite being a drinks company without guaranteed access to a competitive engine for the full duration.

Lotus? The usual financial terms and a seat on the Group only if it finished as best 'other' team. Despite having a full-scale manufacturer infrastructure after winning two titles in 2005/6, it was offered and accepted F1's usual independent revenues, which meant that even if the team won eight straight titles and Red Bull retired from every race, it would take home less.

To stay in the running, Lotus annually outspent its budgets, eventually incurring an £80m loss in 2013 and totalling an estimated £130m over five years. This accumulated loss roughly equals the premium payments received by RBR over the past two years - any wonder Lotus F1 Team has been a regular visitor to Britain's county courts recently, avoiding winding up orders?

Twice hearings into the team's full administration have been postponed only by intervention from Renault, which recently flagged its intention of returning to F1 as full team owner rather than as a supplier of engines to Red Bull's two teams.

For two years the French company has been at the receiving end of vicious criticism from Red Bull - despite having served RBR exceedingly well since 2009. The net result is that Renault decided not to supply customer teams from 2016, whether or not it eventually acquires a team - with Lotus being the most likely candidate after a Letter of Intent, with 60 days validity, was recently signed by the two parties.

Vettel's first championship in 2010 put Red Bull near the top of F1's financial tree © LAT

Thus Red Bull is wishing for an engine partner prepared to provide total parity - despite its chassis generally being accepted as being a cut above the rest. If Red Bull could be a threat at 'chassis' circuits such as Monaco and Singapore, despite estimated shortfalls of 80bhp to Mercedes and Ferrari, imagine its performance with equal engines.

So why would either manufacturer be prepared to provide current-specification engines to a competitor potentially able to run rings around them? Why not simply supply engines to Red Bull, then flee F1 with tail well between rear tyres? Clearly no appetite exists in Brackley or Maranello to be royally beaten by a customer fielding an Adrian Newey-engineered chassis.

Thus they rejected Red Bull's advances for equal treatment.

In Spain, Red Bull made clear it wished (that word again) for Audi to commit to F1. Red Bull and Volkswagen enjoy long-standing ties, as engine partner or even team owner. Then Audi parent VW's emissions scandal broke, and one wonders whether an entity that some doubt will survive a crisis some estimate could cost £20bn will ever consider F1...

That said, that Red Bull could enter into long-term contracts with the sport's commercial rights holder without holding, at the very least, a firm engine contract for the duration beggars belief.

"Well, as Bernie Ecclestone would say, circumstances change and circumstances now are very different, obviously, to when we entered into that agreement," Christian Horner explained in Japan.

What value, then, Red Bull's alleged long-term commitment to F1, if it can be so glibly evaded?

Despite having every possible advantage, from premium payments through to a privileged seat on F1's rule-making body, the ear of Ecclestone and arguably the biggest chassis-only budget, Red Bull Racing could find itself out of F1 on account of not having competitive engines.

The Lotus hospitality unit was quiet during the Japanese GP weekend © XPB

The history of Lotus is, too, pocked by wishes. Back in 2013/14, the team believed optimistically in a partnership proposed by a group of Middle Eastern investors known as Quantum - despite all evidence over a six-month period pointing to abject caution. And so it eventuated, for no deal materialised.

Lotus had also been victim of a phantom deal which had been supposed to generate sponsorship from US technology corporation Honeywell. So far down that road did Lotus go that its 2013 livery incorporated red on the airbox, sidepods and wings - to match Honeywell's branding when the deal was finally signed. It never was.

In June this year, Lotus salaries were paid late and in July the team requested that previously agreed deductions for advances were not made from that month's FOM payment. Since July, the company has made numerous civil court appearances

At Spa bailiffs descended on Lotus kit after claims were proven by three creditors - including former test driver Charles Pic - while in Japan the team's shipments were not released by DHL until Thursday. All weekend, the team was locked out of its hospitality unit after alleged non-payment of previous invoices. Indeed, team personnel were fed in the Paddock Club after Ecclestone decreed F1's equivalent of "Let them eat cake..."

The day after the Japanese Grand Prix, Renault announced that it had signed said Letter of Intent, but the list of caveats is believed to be longer than Paris traffic at peak hours. Crucially, the final paragraph of the announcement contains the words: "provided all terms and conditions are met between [Renault and Lotus] and other interested parties".

The Cyril Abiteboul-led Renault is going from Red Bull supplier to works team © LAT

Those "interested parties" are said to be CVC and subsidiary FOM, with reference to negotiations between Ecclestone and Renault CEO Carlos Ghosn over premium payments and Strategy Group status. In Singapore, an insider with knowledge of the situation indicated this to be the potential stumbling block, that Ghosn would not accept less than others for equal historic performance - and Ecclestone is unable to accede owing to deals struck with the rest.

Thus, as matters stand now, the Letter of Intent may remain just that.

The situation for both teams is further complicated by news this week that Sauber and Force India have lodged complaints at EU Commission level over F1's inequitable revenue and governance structures. One possible outcome is that the Strategy Group is scrapped in its entirety, with privileged teams forced to repay any premiums received, and all teams (including Ferrari) placed on an equal footing.

Not only would that scupper Ghosn's plans for CCB funding to pay a portion of Renault's purchase of Lotus, but such a decision could strike the death knell for both Red Bull teams. Would company owner Dietrich Mateschitz be prepared to race through to 2020 without competitive engines while facing potential shortfalls totalling of £300m over the period should the EU force change? Better to clear out while (partially) ahead.

Thus F1 faces losing two teams with successful histories if uncertain futures. They could not have reached their individual fates more differently, yet their pasts are intertwined and interconnected on an almost incestuous scale having been influenced by that fateful 2010 season and subsequent developments.

In taking any decision about the respective F1 futures of Red Bull and Renault, Mateschitz and Ghosn could do well to recall Dickens in Hard Times. "There is a wisdom of the head, and... there is a wisdom of the heart."