NOVEMBER 5, 2010

Fernandes' Renault engine deal confirmed

Announcements from Renault and Lotus Racing in Brazil have confirmed Tony Fernandes' long-anticipated Renault engine supply deal for 2011.

The wording and the format of the announcements from both Lotus and Renault were interesting, however. Renault announced a two-year extension to its deal with Red Bull Racing as well as a deal with '1Malaysia Racing Team (UK) Ltd' for 2011 and beyond.

Recent speculation has suggested that the current Lotus Racing may have to be renamed for 2011 due to the ongoing dispute between the team and the Malaysian Proton-owned Group Lotus over the rights to use the Lotus name in F1. The Renault statement also refers to the team 'operating during the 2010 season as Lotus Racing.'

The Lotus Racing statement itself refers to the new deal as "a clear sign of the Anglo-Malaysian team's ambition to move up the grid as quickly as possible" - it does not actually state 'Lotus.'

The Hingham, Norfolk, UK-based Lotus Racing team has raced in its debut F1 season under licence from Group Lotus but this was revoked beyond the end of this season and led to Fernandes purchasing the rights to use Team Lotus in F1 from David Hunt, a deal announced in Singapore.

It is believed, however, that in return for the Renault engines, Fernandes may have had to sell on the Team Lotus rights to Group Lotus, which could facilitate a Group Lotus buy-in to Renault.

Renault sold a 75% stake to Luxembourg-based investment group Genii Capital at the end of 2009 and the speculation is that Group Lotus, now chaired by ex Red Bull and Ferrari man Dany Bahar, is interested in buying either part of the Genii equity or Renault's remaining 25% stake in Renault F1.

Genii may be interested in netting a quick return on its Renault investment or, alternatively, becoming involved in developing the Lotus brand - something which the company does - and hoping for a larger further down the road. It will be interesting to see whether there are further announcements in Abu Dhabi.

What Renault has said at the moment is that it will be supplying engines to three teams next year and, beginning at this weekend's Brazilian GP, will have more prominent identification on the Red Bulls, with logos on the noses of the RB6s and on the visors of both drivers.