What is the end game for Red Bull & Renault in F1?

Since the introduction of new regulations at the start of the 2014 Formula 1 season, Red Bull have struggled. An interview given by Daniel Ricciardo the weekend of the Canadian GP suggested this was not just related to the Renault engine but also the Red Bull chassis, about which they are, according to him, “lost”. Nevertheless, under the current F1 regulations the power unit is essential for competitiveness. Renault’s power unit lacks power and efficiency of the energy recovery components compared to the Mercedes and Ferrari power units, and also has driveability issues and problems with its integration into the Red Bull chassis.

To some degree, this was antiticipated in the lead up to the change in regulations. Renault had arguably the best engine under the existing (2009 – 2013) regulations and was focused on the success of their partnership with Red Bull during that period. It is difficult,not to mention extremely costly, to split resources between two separate projects. Mercedes, the current dominant team, on the other hand, were focused on building themselves up with a view towards the introduction of the new regulations. It was therefore understandable that Renault lagged behind in 2014. However, after a year under the current regulations and the opportunity for upgrades at the end of the season, the Red Bull-Renault partnership has gone backwards rather than make any progress. This is evident in the comparison to Ferrari. In 2014, Red Bull and Ferrari were thereabouts with each other in terms of performance. If anything, Ferrari were in fact behind them and Williams: Ricciardo was the only non Mercedes driver to win races and it was Red Bull and Williams who occasionally challenged Mercedes. This year, Ferrari are outright the second best team, with the Mercedes-engined Williams third and Red Bull languishing somewhere behind them in a mix of several teams.

For a team that forged a direct path from inception in 2005 to success in 2010 and then dominated the sport with four consecutive double world championships (WDC & WCC), this raises two burning questions: how did this happen and where are they going from here?

Mercedes and Ferrari have an advantage over Red Bull, which is that they are “works” teams: chassis and engine are part of the same organisation. This makes complimentary development of the two components far easier and any necessary integration much more straightforward. It also means that the two departments can easily work together to address issues and resolve problems and a change in design direction of either component can be better accommodated. In short, collaboration is more natural. Indeed, one of the first changes Michael Schumacher and Ross Brawn made to Ferrari when they arrived was to move the chassis department (which had been operating out of England at the behest of the former Technical Director) to Maranello, next to the engine department.

The closest comparable arrangement when chassis and engine are from two different organisations is an exclusive or prioritised partnership, such as the former McLaren-Mercedes, Williams-BMW or McLaren-Honda (which McLaren are seeking to replicate now) ones. The two organisations are invested in a common goal and work closely together, replicating the relationship that exists in a works team between its two departments. This has proven to be successful historically: McLaren-Mercedes won world championships with Mika Hakkinen and Lewis Hamilton; McLaren-Honda is synonymous with the success of Ayrton Senna.

The Red Bull-Renault relationship has always been different to this. Renault had their own works team from 2000 until 2009. At that point they sold 75%, followed in 2010 by the remaining 25%, to investment company Genii Capital, who merely retained the Renault name. Red Bull were always just a customer; Renault a just a supplier. Even after 2009/2010, Red Bull and Renault never developed a partnership approach and Renault continued to supply other teams. Certainly Renault prioritised Red Bull and this was both a part and product of the success over those four years, but the relationship was nowhere akin to the McLaren-Mercedes or McLaren-Honda version. It worked out, however, because Renault, having been a works team at the beginning, had already heavily invested in the engine development appropriate to the 2009 – 2013 set of regulations and because that series of regulations placed a lot more of the focus of performance on the chassis and aerodynamics, of which Red Bull had the master, Adrian Newey.

The subsequent change in regulations for 2014 exposed the Red Bull-Renault relationship for several reasons. First, it is when changes in regulations occur that works teams or paternships are most beneficial, if not essential. Collaboration and flow of information take on even greater levels of importance. Given the extent of changes with these particular regulations, that goes even moreseo. Second, the change in regulations shifted priority in performance from chassis and aerodynamics to power unit, making Renault significantly more integral to Red Bull’s success. And third, this occurred right when Renault had less reason to invest in their involvement in the sport, being merely a supplier.

The logical solution to this would have been for Red Bull and Renault to develop a genuine partnership. This makes even more sense in light of the fact that as of this year Renault only supply the two Red Bull teams, creating a perfect opportunity for partnership. The focus of success would have been with the senior team, but Renault could have enjoyed more feedback, greater development and testing opportunities and other reflected benefits of having the second team. Instead, the Red Bull-Renault relationship is at breaking point. As the team goes backwards (literally in some races), barely a week goes by without Team Principal Christian Horner publically criticising and chastising Renault. Meanwhile, Red Bull owner, Dietrich Mateschitz, has steadily increased his threats to quit the sport if the engine situation doesn’t improve.

Horner’s frustration is understandable, but the public verbalisation, sometimes in quite scathing terms, is an issue. Such an approach will neither help the relationship nor motivate Renault to improve things independently; in fact, it is even possible that it may make them consider leaving the sport. It would not be the first time that an engine manufacturer started the process of backing out of a relationship when it felt it was getting undue blame or not enough credit within the relationship. In 2005, when Kimi Raikkonen’s Mercedes engine blew up every other race, possibly costing him the championship, it was Mercedes who were blamed, both by the public and (subtley) by the team. This was poor form and also somewhat inaccurate. The McLaren chassis (perhaps ironically designed by Adrian Newey) was so “tight” (a consistent feature of his designs) that it did not allow adequate cooling. Part of Mercedes’ frustration was that they felt they were being treated as a mere supplier: they were expected to simply make an engine that worked for Newey rather than the two organisations work together to find a solution that maximised utilisation of the engine as well as the chassis. That planted the seed that, following a few more issues in subsequent years, led to Mercedes setting up their own works team. In contrast, that same year, Ferrari had an easy scapegoat for their forgettable year when Bridgestone did not design tyres that matched Michelin’s durability over a race, yet they never publically said a bad word; rather Schumacher praised Bridgestone’s hard work and involvement every chance he got.

Horner is one of the best political operators, networkers and relationship builders in Formula 1. He is not touted as a possible, some would say very likely, successor to supremo Bernie Ecclestone for no reason. So he would be acutely aware of the impact of his lambasting Renault, and would not be going down that path without there being a clear purpose.

Although possible, it’s unlikely that purpose is a more engaged partnership with Renault. It isn’t the way to go about that. Besides which, even if such a partnership were to be developed, it would not solve the fundamental problem of Renault’s power unit being uncompetitive with that of Mercedes and Ferrari. This requires changes to the regulations, which would have to be altered in such a way that allows greater development throughout and in between seasons without compromising Formula 1’s cost cutting objectives or simply allowing Mercedes and Ferrari to get further ahead and/or shifts the emphasis on the power unit to more of a balance between power unit and chassis without negating the work done by other teams. Mateschitz’s threats to quit the sport if the issue isn’t addressed can be seen as an attempt to put pressure on the powers-that-be in F1 to find a solution.

However, Red Bull faces significant challenges in getting such a change. Certainly, Red Bull is an extremely valuable organisation to Formula 1. It funds two teams, has the financial capacity to compete at the front of the grid, brings a steady supply of new talent through its driver development program, engages fans and has an exciting story of success. But at the moment there are two other equally or more mighty and powerful teams: Ferrari and Mercedes. Ferrari’s importance requires very little explanation: they are synonymous with F1, have more fans than most (if not all) of the other teams combined and compete at the front of the grid. Mercedes are important because of the level of investment they have made in F1 and look set to continue. They are not only a works team competing at the front of the grid, but supply multiple other teams with their engines. The significance of these three teams can be seen in the carrots that have been offered to ensure they are part of the sport. All are paid financial incentives. Ferrari’s is the largest and historically Ecclestone has won his stand offs with the teams by getting Ferrari on side. Meanwhile the shift to the current regulations played a key part in securing Mercedes’ continued and substantial involvement in the sport. Their strength is engines and they wanted their investment in the sport to be worthwhile: hence the emphasis on more road-car relevant technology and the prevalence of Mercedes engine customers.

So Red Bull will struggle to elicit change without the support of Mercedes or Ferrari and at the moment, the latter two’s interests are aligned and contrary to Red Bull’s. They are seeing success (or the potential for success) with the regulations as they stand. F1 teams only care about their own interests and therefore only appear to care about the good of the sport when it aligns with their business interests (ie more fans means more TV revenue). They are certainly not going to compromise merely for the sake of a competitor and at this stage there doesn’t seem to be a reason for change in the interests of all teams. Earlier this year, when some teams put forward the idea of allowing a fifth power unit (teams are limited to four before penalties apply), it failed to get the unanimous support required for an in-season rule change because other teams felt it did not have enough benefit for them compared to others. Any regulation changes would require Ecclestone to work his magic to find a mutually beneficial solution or one in which Mercedes and Ferrari get something else in exchange for compromise.

Another thorn in the side of Red Bull achieving regulation change is the lack of value of Renault to the sport. Red Bull are valuable, but a disinterested engine supplier with no apparent desire to invest further in the sport is not. There’s no motivation for Ecclestone to work on regulatory change simply for Renault’s benefit. And, to be clear, it would be specifically for Renault’s benefit. Though Honda are struggling, this is the beginning of their (re)engagement with the sport and McLaren and the problems they face and changes required may be different. Moreover, Red Bull are not intrinsically tied to Renault: they could become a customer of another engine manufacturer. In fact, from the sport’s point of view, this may actually be a better approach. Three engine suppliers are easier to keep happy and on similar pages than four and fits better with the number of F1 teams (10 – 12). In fact, it would not be beyond the realms of possibility that Ecclestone has manoeuvred this situation to enable him to get rid of Renault and that Horner’s derisive comments about them are deliberately stirring the pot.

That would leave Red Bull to switch engine supplier. However, Mateschitz has expressed his aversion to that this weekend, again threatening to leave the sport, this time in terms of “it’s Renault or no-one”. This is understandable. No works team wants to be beaten by its customer team, so Mercedes and Ferrari would be reluctant to supply Red Bull, knowing they have the depth in the chassis department to mount a challenge. If they did, latest developments and upgrades would go first to the works team, and the engine would not be optimised for the Red Bull chassis, so Red Bull would be curtailed from the outset. The other possibility is Honda, but their relationship with McLaren is a partnership, and Red Bull would face similar second-rate parts and service as with the Mercedes and Ferrari engines.

The more it’s analysed, the more it appears that Red Bull do not have an optimum way out of this situation, certainly not one that ensures they have control over their destiny and a clear path to future success. Which brings the issue right back to pondering why Red Bull and Renault did not develop a partnership in the first place. Without it, they lack negotiating power and, potentially, the type of exclusivity that breeds success.

It is hard to judge the degree of interest in a partnership on Renault’s side. Their involvement in F1 has declined over the past few years, but that could be because they anticipated a partnership with Red Bull that wasn’t forthcoming and have been left high and dry. If they wanted out of the sport, the change in regulations would have been the time to do it, rather than spend the (considerable) money on research and development of a new and different power unit. So it seems that the resistance is coming from Red Bull’s end. Which is also baffling given that the price they are now paying and appear set to pay for the foreseeable future is substantial and was likely avoidable.

Unless the plan all along has been to exit the sport.

When Red Bull entered F1, Mateschitz made it quite clear that they were in it for the success and to gain positive brand association aligned with Red Bull’s other involvement in extreme sports. He and Marko followed a formula: throw money at the right people, give them autonomy to build the team and develop the car, find a driver from their program around who to focus their efforts. It was understood that had that not born fruit, Red Bull would pack up and leave. But now that has born fruit, though, and to such an extraordinary degree, Mateschitz may equally feel that Red Bull has gained all it can from the sport. Better to have come in, prospered and left, taking with you the legacy of four mindblowing double championships in a row, than flounder for several years trying to adapt to new regulations amidst fierce competition that may prove insurmountable. The glory is over and the gloss is gone and who knows when it will return. Some of the key personnel have already moved on and more look likely to in the near future. Red Bull are a consumable company, not a car manufacturer with a reputation linked to motorsport success or an independent team who live to race. It doesn’t serve them to become part of the woodwork of F1. They were seeking promotional success, not history or tradition.

Of course, Red Bull’s reputation would suffer if it appeared to be abandoning the sport for no good reason. But rules that are “impeding” them and “unfair”, and an “unwillingess” on the part of the sport to find a solution provides them with an out. Mateschitz is himself an extremely canny operator and more than capable of manufacturing that scenario.

He is also a close associate of Ecclestone’s. It has even been said that Mateschitz’s purchase of Minardi to form the second Red Bull team was a favour to Ecclestone. So it is unquestionable that whatever is being played out in the press is part of a broader strategy, of which they are at least both aware, more likely collaborators. Given this, it is certainly possible that Mateschitz and Horner’s public agitating are to assist an agenda of Ecclestone’s. The F1 Supremo has made no secret of his disdain for the current engine regulations, but unfortunately lacks influence with the FIA under current President Jean Todt, unlike with his predecessor, Max Mosley. A powerful force in the sport being relentlessly critical of the regulations in the media certainly helps his cause, while still pushing their own barrow.

Equally, however, the agenda could be Mateschitz’s with Ecclestone working around the edges. Given their history, it would be surprising if Mateschitz were to leave Ecclestone in the lurch by simply removing two teams from F1. Red Bull’s exit would therefore almost certainly wait for Ecclestone to find a replacement.

It could be that we are about to see a major changing of the guard in F1: Red Bull exits the sport with another major organisation taking their place, and Horner moves on to become Ecclestone’s right hand man in anticipation of taking over the reigns of F1 at some point.

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What is the end game for Red Bull & Renault in F1?

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