For about a fourth of what my usual morning latte costs, Renault bought a 90 percent stake in the Lotus Formula One team for only £1. According to company documents obtained by the Telegraph, the deal was finalized right before Christmas and puts Renault back in charge of the team for the first time since 2009.
(I know what you’re thinking, and in my defense, I usually order a quadruple-shot latte. Keep that pumpkin spice garbage far away and get me extra caffeine.)
While that may sound like a fantastically good deal for a majority stake in a F1 team, au contraire. With that purchase comes a whole lot of merde for the team’s new/old French owners. Standard procedure in a case like this would be for Renault to absorb all of Lotus’ debt, and that’s a considerable sum.
Renault took a $176 million loss when they sold their stake to Genii in 2009. After the sale, the team racked up an additional $274 million in combined net losses.
Running a mid-pack F1 team is an absurdly costly affair, too. In the process of selling their stake to Renault, the Telegraph reports that Genii wrote off $146 million in loans made to keep the team running. Genii will keep a 10 percent stake in the team in the deal in hopes of making up some of that loss with profit in the near future.
While Lotus had very public run-ins with delayed shipments and court cases over the debt, cost-cutting efforts and sponsorship from Venezuelan outfit PDVSA cut net losses to $13 million. Genii chief executive Eric Lux told the Telegraph:
There has also been a dramatic fall in financing costs, as well as cost savings made as a result of the organizational restructure in February 2014.
Lux also confirmed that the team is also working with several different parties to try and secure a long-term title sponsorship. Combined with a promising sixth place season finish which should give Lotus a bigger share of F1’s commercial revenue, The Team Briefly Known As Lotus’ future is looking up.
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