COVER: IS RENAULT‘S F1 GAMBLE A MISSION IMPOSSIBLE?
Having bought back its old team, Renault is struggling to recapture the glory days of the mid-2000s when it stood toe to toe with Formula 1’s greats. As the total spend creeps past a billion dollars and the project remains way off track, we ask if this is now an impossible task...
IN GREEK MYTHOLOGY SISYPHUS WASTHE
king of Corinth condemned by the gods to an eternity of pushing a huge boulder up a hill, only for it to topple back and roll to the bottom as he neared the summit. How this scenario must resonate with the senior management of Renault F1 – and the corporation signing the cheques – as the team repeatedly falls well short of Formula 1’s peak, seemingly regardless of the effort and money expended.
When Renault reacquired the moribund ‘Team Enstone’ late in 2015 it set itself an ambitious but historically realistic target: to be in contention for race wins and world championships in five years. After all, when it bought the Enstone factory in 2000, after four seasons of progress Fernando Alonso delivered silverware in 2005 and 2006. Renault’s difficulties in following a similar trajectory this time around demonstrate that F1 is now a very different sport. The ground rules have changed beyond recognition.
On the face of it, they haven’t. In 2000 F1 was dominated by a single team that built its engine and chassis under one roof – Ferrari. While the Mercedes team of today has geographically separate chassis and engine facilities, the two factories are not so far removed and powertrain engineers are deeply involved in the car design process. This level of integration is essential.
Commercially and politically, though, the F1 landscape has shifted in ways that militate against Renault recapturing past glories.
HISTORY REPEATING
The Benetton team Renault acquired in March 2000 came with championship-winning pedigree, though it had recently entered a spiral of decline. Benetton’s Enstone factory and Renault’s engine facility at Viry-châtillon were not strangers to each other, having collaborated to title-winning effect in 1995, and Benetton had been running Mecachrome-built engines
– in effect the same Viry-designed V10 – since Renault stepped back from F1 at the end of 1997. In an explicit signal of intent to return to the glory years, Renault even reinstalled former team principal Flavio Briatore at the helm.
It wasn’t a painless transition. While fresh investment and new hires at Enstone – including an innovative parallel design team arrangement – yielded an uptick in chassis performance, Viry’s contribution was more problematic. Unusually wide, with the cylinder banks aligned at 110 degrees rather than the more conventional 90, the 2001 engine was overweight, underpowered and unreliable. Believing the aerodynamic gains and lower centre of gravity to be worth the initial growing pains, Renault persisted for three seasons before going the opposite way, building a 72-degree V10 for 2004.
It would be easy to view this period as one in which the team’s performance improved in a broadly linear fashion until it finally toppled Ferrari from its perch in 2005. But nothing is ever that simple, and many of the issues that bedevil Renault to this day are rooted in this era.
Firstly, questions remain about how competitive the basic product was. While the cars looked aerodynamically sophisticated, and Renault innovated in chassis technologies such as the controversial mass damper, the enforced switch to Bridgestone rubber after Michelin’s withdrawal at the end of 2006 revealed major shortcomings. By necessity – because of the
characteristics of the wide-angle engine – Renault had gravitated towards optimising its chassis around a rearward weight bias. It also enjoyed what was, in effect, a works relationship with Michelin while the tyre war was at its height, and this had masked a gradual loss of correlation between aero research in the windtunnel and the on-track reality. The disastrous 2007 season required Renault to rethink its entire car concept, right down to the suspension geometry.
At the same time, the FIA under Max Mosley was pursuing stringent cost-cutting measures, many of which focused on the powertrain. Engines had to last for two race weekends from 2005, 2.4-litre V8s became mandatory in 2006, and the following year the specifications were frozen ahead of a move to standard Engine Control Units in 2008. Briatore spotted an opportunity to make savings and slashed staffing at Viry, failing to spot a loophole his rivals had identified: you could change engine components provided you could make a compelling case for it to be done on reliability grounds.
By the time it became obvious that other manufacturers were smuggling in performance steps under a flag of convenience, the damage was done. Renault had fallen behind, and twice in the seasons to come it would petition the FIA to grant special dispensation to modify its engines - only once with success. Years later, the cutbacks at Viry would go on to impair its preparations for the hybrid era and provide the foundations for Renault’s present predicament.
STATE OF DECAY
By mid-2008 Enstone was beginning to get on top of its chassis issues but coming under increasing pressure from the Renault board to deliver victories. It was this, and the threat of job losses or outright closure as the road car market wobbled during the global financial crisis, that prompted ‘Crashgate’, in which Briatore conspired to disrupt the Singapore Grand Prix such that Alonso won it. Posterity now renders the sheer folly of this in even starker contrast: Alonso went on to win the following race, in Japan, completely on merit. The egregious act in Singapore was unnecessary.
By the end of 2009 the team was up for sale following the exposure of ‘Crashgate’, combined with another string of poor results. Briatore and chief engineer Pat Symonds received lengthy bans from motorsport and Renault began scaling back its role in F1 to that of engine supplier as the Luxembourg-based investment company Genii Capital took a majority share in the race team. Renault chairman and CEO Carlos Ghosn believed engine supply would provide both a revenue stream and sufficient branding kudos; he would be proved wrong
AS A MANUFACTURER, RENAULT ENJOYED POLITICAL CLOUT AS PART OF A BLOC NEGOTIATING WITH FORMULA 1 RINGMASTER BERNIE ECCLESTONE AND THE FIA FOR A GREATER SHARE OF PRIZE MONIES. AS AN ENGINE SUPPLIER, IT WAS STUCK ON THE SIDELINES ”
on both counts.
Enstone and Viry therefore went their separate ways. Mated to Red Bull chassis, Renault engines powered Sebastian Vettel to four consecutive world titles between 2010 and 2013. Stability in the rules, permission to ‘equalise’ its engine design with rivals over the winter of ’08, and clever tuning that enabled exhaust gases to boost aerodynamic downforce combined to winning effect.
But to what benefit for Renault? As a manufacturer, it enjoyed political clout as part of a bloc negotiating with Formula 1 ringmaster Bernie Ecclestone and the FIA for a greater share of prize monies and more influence over rulemaking. As an engine supplier, it was stuck on the sidelines as Ecclestone cut favourable deals with the likes of Mercedes, Ferrari and Red Bull, guaranteeing them a larger proportion of the commercial revenues and permanent seats on the new Strategy Group.
The core team at Enstone initially remained stable under Genii’s ownership, racing under the Lotus banner following a transition in 2010. Race operations were sharp and the cars innovative, if only intermittently successful, but Kimi Räikkönen won two races for the team in 2012 and 2013.
Behind the scenes, though, money was becoming a problem. Debts mounted and staff drifted away or were let go. Key figures such as technical director James Allison and aero chief Dirk de Beer left. Räikkönen himself sat out the last two grands prix of 2013, ostensibly because of back surgery but actually because he hadn’t been paid.
Having ended 2013 with arguably the second fastest car on the grid, Lotus fell to the back of the field in the first season of the hybrid era as its chassis – and the new Renault power unit – emerged undercooked.
It staggered on through 2015 with a modified ’14 car, now propelled by a Mercedes engine, but by then the owners were smoking this particular cigar down to the stub.
Come summer, creditors (including Her Majesty’s Revenue and Customs) were filing winding-up orders in the High Court. Hardly surprising: the accounts reveal debts of £107million in 2014.
WE BENCHMARKED THREE POSSIBLE TEAMS. WE LOOKED AT THE PROS AND CONS OF EACH ONE. SO WHEN WE WALKED INTO ENSTONE WE WERE COMPLETELY FAMILIAR WITH THE STRENGTHS AND WEAKNESSES OF THE PLACE ” CYRIL ABITEBOUL
SLIM PICKINGS
Renault’s sojourn as an engine supplier never delivered the returns expected. Tensions built between Red Bull and its partner even when their relationship was at its most successful; Renault felt it never got the credit or publicity it deserved, especially since Red Bull’s narrative of choice was one of success against the odds, of car-design genius overcoming a shortfall in horsepower. Red Bull resented having to pay for engines, resulting in Renault arranging a sponsorship deal with Infiniti, the Renault-nissan Alliance’s luxury car brand. But this was mutually dissatisfactory, since it meant Renault was effectively paying for its own engines and further reducing its exposure, while Red Bull felt the value – Us$30million a year – was less than the Infiniti branding on its cars was worth.
Divorce became imminent after Renault’s first two attempts at a hybrid engine proved disastrous. Having pioneered turbocharging in F1 in 1977 and powered many champions in the interim, the company colossally overestimated its ability to deliver a competitive solution. Viry, denuded after the 2007 cutbacks, was comprehensively trumped by Mercedes – which had been developing its hybrid engine for four years and conquered many of the pitfalls Renault spent 2014 and 2015 (perhaps also 2016, 2017 and 2018) encountering.
As Renault grasped the reality that its life as an engine supplier was a lose-lose situation, it began to consider its options – to quit entirely or return as a full-blown manufacturer. It chose the latter, after much bluster and protracted negotiations with Ecclestone as well as potential suitors. This delay would prove costly.
Through 2015 Renault sized up three teams, according to managing director Cyril Abiteboul. One of these is known to be Toro Rosso, under a deal briefly on the table as Red Bull and Renault tried to settle their differences amicably, and the other was Sauber. Its former operation at Enstone emerged as the preferred option, even if it was heavily indebted and a shadow of its former self.
“When we were putting together the plan, looking at whether we were able to respond positively to the conditions set by Renault’s management, we looked in detail at a number of teams,” says Abiteboul. “We benchmarked three possible teams. We looked at the pros and cons of each one. So when we walked into Enstone we were completely familiar with the strengths and weaknesses of the place.
“We also benchmarked the top teams and have a good relationship with Mercedes. We were able to exchange some figures and had a sense at the time of what was necessary to compete at the level of a top team.”
The Mercedes comparison is instructive. It bought the downsized Brawn team at the end of 2009 on the understanding F1 was about to enter a budget-capped, resource-restricted future. That never happened, forcing Mercedes to double down on its investment or be a bit-part player. The strategy eventually worked, but took three seasons and cost Ross Brawn his job as Toto Wolff and Niki Lauda assumed control and the Mercedes board grew impatient.
Carlos Ghosn spent much of 2015 living up to his reputation as a dealmaker, playing hardball with Genii and Ecclestone. Key sticking points included the future of the Red Bull engine supply and the length of Renault’s commitment to F1. Since F1 itself was up for sale, Ecclestone needed a big name tied in beyond the end of the current Concorde Agreement, and didn’t want one of the sport’s big hitters left without an engine deal.
“The payback as an engine supplier proved to be limited,” said Renault’s statement announcing the deal in late 2015. “The return on investment necessitated by the new engine regulations and the return in terms of image were low.”
BILLION-DOLLAR BABY
F1 team budgets are tricky for outsiders to pin down accurately – while Renault Sport Racing is a limited company which files publicly available accounts to Companies House in the UK, those figures won’t reflect Renault’s overall spend since they don’t include Viry. But the published accounts reveal Renault in effect paid a nominal sum of £1 to reacquire its old team, along with debts equivalent to around Us$140million, which had to be settled.
In subsequent seasons its operating budget has been in the region of Us$170million (2016), Us$195million (2017) and Us$180million (2018). This season it expects to spend Us$190million. Factoring in investment in new facilities at Viry and Enstone, this brings the spend so far – not all from Renault coffers, since sponsor income and prize money are also in the mix – into the region of a billion dollars. But to what end? The team is already struggling to fulfil its goal of returning to championship-contending form within five years.
Had the Lotus acquisition been tied up in summer 2015, Renault could have gone into ’16 with a new car. Instead the deal didn’t get over the line until late December, tying the team into
a season with the old car in a new coat of paint, hastily adapted to accommodate the Renault power unit, the first of many bumps in the road.
While Enstone had a functional windtunnel, many other facilities critical to supporting an effective aero research programme – such as rapid-prototyping machines to make experimental parts for the windtunnel models – were absent. Licences for the CFD software had expired. The composite manufacturing facilities had also been run down – Lotus had long since become a team that outsourced such business rather than paying for inventory and staff ‘inhouse’. The accounts reveal 464 staff on the payroll, half that of teams at the front of the grid.
It all added up to an organisation lacking the resources to understand what its car’s problems were, and slow to respond once it did. Merging it with another organisation – Viry – which was struggling to cope with different challenges of its own would be a phenomenal management task. Renault hired the experienced and well-respected Frédéric Vasseur to oversee the Enstone end, but he and Abiteboul failed to see eye-to-eye on all matters and by the end of 2016 Vasseur quit in frustration, feeling he had insufficient power to see his vision through.
Car and engine performance improved through 2017 and ’18, but both continued to fall short of expectations. On the engine side, Viry has had particular difficulty mastering the critical MGU-H element of the hybrid system, and reliability continues to be patchy – especially when trying to emulate the kind of high-power qualifying modes Mercedes and Ferrari now employ to such good effect.
Last season Renault finished fourth in the constructors’ championship but was lucky to do so, and the gap to the leading three teams in terms of laptime remained huge. One of this season’s goals is to be fourth on merit, but the resurgent performance of Mclaren – Renault’s customer team – makes this a moving target.
Rebuilding Enstone has taken longer than would have been ideal, not just in terms of pouring concrete and installing new cuttingedge manufacturing facilities but also the recruitment of the right people. F1 teams guard their intellectual property, and personnel typically observe long periods of gardening leave. Headcount is now over 700 and is expected to reach 800 by the end of 2019. The technical side is now overseen by Marcin Budkowski, himself recruited from the FIA, a hiring that was not without controversy.
But the team is still relying on contractors and freelancers to fulfil certain design functions, there have been difficulties in integrating the new staff, and the word from inside is that the organisation can be a little chaotic. The surprise hiring of Daniel Ricciardo for 2019 – on a £20m+ per year salary that has required cutbacks to be made elsewhere – doesn’t contradict that narrative. Ditto the revelation the team has removed many elements of a major upgrade package introduced at the French GP.
At root, Renault’s problem is it has restarted from a position of weakness and the system militates against it catching up. The likes of Mercedes have invested heavily at the right time, securing competitive advantage off the track as well as on it. Renault has a seat on the Strategy Group by dint of finishing fourth last season, but has nothing like the political clout of Mercedes, nor its preferential share of the prize fund.
“What we underestimated was the ruthless non-stop increase of what people are spending to win,” concedes Abiteboul. “We aimed to be about 15% less than Mercedes in terms of resources, and that’s the case – but of the Mercedes of 2015. If I look at the Mercedes of today, we’re nowhere near 15% down on them. We’re more like 30-40% down on them.
“It’s not inflation. They’re spending more and more year after year to maintain and increase their dominance. And they’re doing that because they have the capacity on the back of the commercial agreements that are in place with F1. It’s fair to say that we’ve been a bit naive.”
Sisyphus was punished by Zeus for twice cheating death, in doing so meddling in the natural order of the world laid out by the gods themselves. For as long as the three grandee teams of the hybrid era continue to hold a disproportionate influence over the rules and commercial structure of Formula 1, Renault is likely to continue its toil: hauling itself towards the summit as the seasons pass, only to fall back again before getting there. An unsustainable existence if ever there was one…
WHAT WE UNDERESTIMATED WAS THE RUTHLESS NON-STOP INCREASE OF WHAT PEOPLE ARE SPENDING TO WIN WE AIMED TO BE ABOUT 15% LESS THAN MERCEDES IN TERMS OF RESOURCES. WE’RE NOWHERE NEAR 15% DOWN ON THEM. WE’RE MORE LIKE 30-40% DOWN ON THEM ABITEBOUL” CYRIL