DECEMBER 6, 2008

Red Bull and Formula 1

Reports of Red Bull pulling out of Formula 1 seems at best contrived by people trying to sell stories to gullible newspapers, or being led up the garden path by those with scaremongering agendas.

The stories come just a week after the Austrian drinks company bought back half of the shares in Scuderia Toro Rosso, presumably for not very much money, because Gerhard Berger did not want to sink his own personal money into the team.

Mateschitz had previously announced that his stake in the team was for sale, but it has been clear for some months that there are no buyers out there. Running two teams is relatively cost-effective given that they use the same cars.

The other key point which the reports seem to have missed is that people have not stopped buying Red Bull, which costs slightly less than the average car. The company will soon announce its 2008 sales and the prediction is that the company will hit 4bn cans sold this year. This would mean that the firm has revenues of $5.6bn. Red Bull does not announce its profits, but in recent years it is clear that the company has been spending in the region of $1bn a year on its marketing campaigns - and has been happy to do so. It has avoided sponsorship because it wants to retain a clear Red Bull message. Toro Rosso was looking for money - and failed to find any.

A big chunk of Red Bull's expenditure goes into Formula 1, but there are programmes going on in NASCAR, GP2, the World Rally Championship, DTM, Formula 3 and a myriad of other lesser motorsport programmes. Red Bull believes that the sport is a key element in its expansion programmes, notably in the developing markets in France, India, China, Japan, South Korea and Pakistan, all of which are getting more exposure to F1 these days.

Mateschitz may not want to own two teams and he may have cut back on daft programmes which gave Red Bull nothing at all, notably the paddock newspaper Red Bulletin, the Formula Una programme and endless Gatsby-style parties. A little housekeeping makes total sense, but pulling out of F1 after all the investment that has been made is illogical.