Ferrari Mailing List: Mercedes F1

[Larry B (larrybard]

Mercedes Gets Back Into Formula One 
By BRAD SPURGEON

PARIS — Bucking a trend in the car manufacturer exodus from Formula One, 
Daimler announced Monday that it would buy a controlling interest in the 
reigning world champion Brawn team and race under the name Mercedes Grand Prix 
next season.

The German car manufacturer, which is buying the team in a joint deal with an 
Abu Dhabi investment company, also announced that it would sell back its 40 
percent ownership of the McLaren team to that team, ending a 10-year 
partnership. But it will continue to provide engines to McLaren, which it is 
has powered since 1995 and with which it has won four world titles with since 
1998.

Daimler said the company was buying 75.1 percent of the team with Aabar 
Investments, which is based in Abu Dhabi and is the largest shareholder in 
Daimler. Daimler will take 45.1 percent of the team, Aabar will take 30 
percent, and the remaining 24.9 percent will remain with the team’s current 
owners. 

Khadem al-Qubaisi, the chairman of Aabar, told Bloomberg News that Daimler and 
Aabar were paying about £110 million, or about $185 million, between them. Nick 
Fry, the Brawn chief executive officer, told Bloomberg in an e-mail that the 
fee was “far more modest” and partly linked to future performance.

The announcement was made on the 75th anniversary year of the introduction of 
the Silver Arrow Mercedes cars in Grand Prix racing. The Silver Arrows 
dominated racing between 1934 and 1939.

Honda Motor pulled out of Formula One in December, citing the financial crisis. 
In July, BMW announced it would quit the sport at the end of the year and sell 
its BMW Sauber team, then Toyota announced this month that it would withdraw 
effective immediately.

The car manufacturers that withdrew did so because they did not want to be 
perceived as wasting money on racing during a financial crisis. 

But the series has been striving, sometimes acrimoniously, over the past year 
to reduce the cost of running a team and to distribute more of the commercial 
rights to the teams. These include reduced costs on design, construction and 
running of the cars. 

Daimler cited these developments as its reason for increasing its involvement 
in the series.

“Due to the new Formula One environment, we will face the competition in future 
on the most important motor sports stage with our own Silver Arrow works team,” 
said Dieter Zetsche, chief executive of Daimler and head of Mercedes-Benz Cars. 
“Our new Silver Arrow Formula One team is a great sporting and technical 
challenge and we will tackle this with sporting spirit and full of enthusiasm.”

At the financial peak in the last decade, one team’s annual budget was said to 
have reached nearly $500 million to run two cars for a single season of 18 
races.

Daimler also cited the “significantly higher income” available to a Formula One 
team generated by the commercial rights as laid out in the new agreement among 
teams, the series promoter and the International Automobile Federation, the 
sport’s governing body.

The new Mercedes team will be built on the Brawn team, which won the 2009 
constructors’ and drivers’ title with Jenson Button driving. Brawn was formed 
in a management buyout of the Honda team last March. 

The team used Mercedes engines this year, so the deal will not involve a 
difficult transition to a new engine, and it could mean a continued domination 
next year.

Ross Brawn will continue to be the overall director. The Englishman, who was 
technical director of Ferrari during the Italian team’s domination in the early 
2000s, remains a shareholder.

This season, Formula One held its first race in Abu Dhabi, at the season-ender 
on Nov. 1, as part of a strategy of geographical diversification. Aabar cited 
its home race as one of the reasons for buying into the team.

“Bearing in mind the recent outstanding success of the Abu Dhabi G.P., which 
brought Formula One to the United Arab Emirates for the first time, it is 
especially exciting to realize that next year, our own cars will be in the 
field,” said Qubaisi, the chairman of Aabar. “It is a fantastic prospect, which 
makes me both pleased and proud for my country.”

In July, Aabar invested about $280 million to buy about a third of the Virgin 
Galactic space travel start-up company, which is controlled by Richard Branson 
and his Virgin Group, to help Abu Dhabi develop a space program to broaden its 
economy beyond the oil sector. Virgin Group was the principal sponsor of the 
Brawn team this year.

Mercedes did not return to Grand Prix racing after World War II until 1954, 
when it joined the Formula One championship with its Silver Arrows. By the 
following year, it again dominated, winning the title with Juan Manuel Fangio 
driving. But in June of that year a Mercedes sports car was involved in an 
accident at the Le Mans 24 Hour race in which more than 80 spectators were 
killed. 

Mercedes withdrew from all racing, finally returning to Formula One as an 
engine supplier to the Sauber team in the early 1990s, before joining up with 
McLaren in 1995.

In 1999, it purchased 40 percent of McLaren Group, which comprises not only the 
racing team but companies as disparate as a catering company, an electronics 
company and a sports car building company.

The McLaren Group also announced on Monday that it would spin off the McLaren 
Automotive sports car company, which had built road cars with Mercedes. It said 
it would start building its own high-performance sports cars in 2011.

The team has agreed to continue to use Mercedes engines to power its Formula 
One cars until up to 2015 or beyond. 

“This is a win-win situation, for both McLaren and Daimler,” said Ron Dennis, 
the executive chairman of McLaren Automotive and a founding shareholder of 
McLaren Group. “I’ve often stated that it’s my belief that, in order to survive 
and thrive in 21st century Formula One, a team must become much more than 
merely a team. 

“That being the case, in order to develop and sustain the revenue streams 
required to compete and win Grands Prix and world championships, companies that 
run Formula One teams must broaden the scope of their commercial activities.”

Mercedes Grand Prix has not yet announced who its drivers will be next season. 
Button visited the McLaren factory last week, however, fueling speculation that 
he might join that team next year to partner the 2008 drivers’ champion, Lewis 
Hamilton. 

It is also expected that Nico Rosberg, who was born in Germany and speaks 
fluent German — although he grew up in Monaco and is the son of the Finnish 
world champion Keke Rosberg — and has said that he will leave the Williams 
team, may join the newly formed Mercedes Grand Prix team.