There are certain Formula One teams that come with deep pockets. Ferrari and McLaren come to mind. Other teams, however, are always a bit on edge and the Renault F1 team was just dealt a brutal blow.
Formula One is made up of three types of teams. The first one is the privateer. It is a private race team that uses engines and other components that it buys from manufacturers. The Williams team is an example. The second type of team common in Formula One is the manufacturer team. As the name suggests, this team is started, owned and run by a road car manufacturer. BMW Sauber is an example of such a team. The third type of team in Formula One is a hybrid that combines the other two. The classic example is McLaren Mercedes.
Given the economic downturn, we’ve seen manufacturers come under heavy pressure to cut costs. If they cars aren’t selling, there simply isn’t enough money to go racing when a team can expect to spend $150 to $300 million dollars to be competitive. Honda was the first team to give up the ghost, but now Renault is in trouble. The problem? The main sponsor for the team, the ING bank, just dropped Renault for the 2010 season.
Renault has always had an interesting relationship with Formula One. At certain points, the company has had its own teams. At others, it has just supplied engines. At yet others, it has bailed completely from the sport. In short, it isn’t the most stable of teams even in the good times. Now the Renault team looks like a duck swimming on a pond with crocodiles. Everything looks calm above the water, but those feet are kicking madly.
Renault’s retail business is a disaster much like every other car company. It recently was granted a $3 billion dollar loan from the French government to keep running as well as another $1 billion to keep its financing division from failing. While ING will continue to pay sponsorship deals this year, the loss of the revenue for 2010 is devastating.
What kind of dollar are we talking with the ING sponsorship? The numbers are not made public by the team or bank, but estimates from financial groups have put the deal at $65 to $120 million a year. That is a huge chunk of the budget for Renault to lose. Given the current economic condition and forecasts for little if any economic recover in 2010, one has to wonder where Renault will find a replacement sponsor. You can bet Renault is thinking about it.
Is this the end of Renault? Well, the team appears set for the 2009 Formula One season, but 2010 looks very iffy at best .Given the massive losses the company is suffering in addition to the loss of ING, all indications point to a grid without a Renault in 2010.