Analysis: How VW's F1 vision helped kill Red Bull-Mercedes deal

A few months ago Red Bull believed an agreement to get Mercedes power units was all but done. So what stopped it from happening? Adam Cooper offers a detailed explanation of why the deal didn't happen.

Analysis: How VW's F1 vision helped kill Red Bull-Mercedes deal
(L to R): Niki Lauda, Mercedes Non-Executive Chairman with Dr Helmut Marko, Red Bull Motorsport Consultant
Toto Wolff
(L to R): Niki Lauda, Mercedes Non-Executive Chairman with Toto Wolff, Mercedes AMG F1 Shareholder and Executive Director
Christian Horner, Red Bull Racing Team Principal in the FIA Press Conference
Daniel Ricciardo, Red Bull Racing RB11
Red Bull Racing
Lewis Hamilton, Mercedes AMG F1 W06
Bernie Ecclestone,
Lewis Hamilton, Mercedes AMG F1 W06
Niki Lauda
Max Verstappen, Scuderia Toro Rosso STR10 and Daniel Ricciardo, Red Bull Racing RB11 battle for position
Bernie Ecclestone,
Niki Lauda, Mercedes Non-Executive Chairman
Daniil Kvyat, Red Bull Racing RB11
Daniil Kvyat, Red Bull Racing RB11
Renault F1 Sport truck. Formula One Testing, Day Two, Wednesday
Toto Wolff, Mercedes AMG F1 Shareholder and Dieter Zetsche, Mercedes CEO
Toto Wolff, Mercedes AMG F1 Shareholder and Executive Director with the fans
Renault F1 Sport logo
Red Bull Racing and Renault F1 Sport trucks. Formula One Testing, Day Two, Wednesday
Dietrich Mateschitz, Owner of Red Bull
Nico Rosberg, Mercedes AMG F1 W06 leads team mate Lewis Hamilton, Mercedes AMG F1 W06
2015 World Champions Mercedes
Lewis Hamilton, Mercedes AMG F1 W06
Christian Horner, Red Bull Racing Team Principal in the FIA Press Conference
Toto Wolff, Mercedes AMG F1 Shareholder and Executive Director with Cyril Abiteboul, Renault Sport F1 Managing Director
Toto Wolff, Mercedes AMG F1 Shareholder and Executive Director in the FIA Press Conference
Lewis Hamilton, Mercedes AMG F1 W06
Bernie Ecclestone,
Lewis Hamilton, Mercedes AMG F1 W06 and Sebastian Vettel, Ferrari SF15-T at the start of the race
Lewis Hamilton, Mercedes AMG F1 W06
(L to R): Christian Horner, Red Bull Racing Team Principal and Eric Boullier, McLaren Racing Director in the FIA Press Conference
Christian Horner, Red Bull Racing Team Principal in the FIA Press Conference
Bernie Ecclestone,
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During the middle of the season, it seemed that Red Bull's action plan was falling in to place. Unhappy with Renault, it moved to cut short its deal with the French car manufacturer to make the switch to Mercedes engines.

But in a matter of weeks, the talks collapsed as Mercedes elected not to proceed; leaving Red Bull to go look for other opportunities.

In Austin last weekend, Niki Lauda offered some new details about what was discussed between Red Bull and Mercedes regarding an engine supply.

It was a fascinating insight, but did he tell the whole story? For it seems that there are two conflicting opinions on how it all unfolded.

The Aston Martin option

It was around the time of the Austrian GP that, exasperated by Renault, Red Bull began to look for an alternative engine partner. So why not start with the best: Mercedes? Internal discussions began, and, at some stage, the possibility of the Aston Martin name becoming involved came up.

The company has commercial links with Mercedes, is working with Adrian Newey on a road car project, and its management was previously responsible for the Red Bull/Infiniti deal, which provided a sort of model for Aston sponsorship of Red Bull.

It seemed like a perfect fit.

However, there were a couple of problems. Firstly, why would Mercedes want to co-operate with one of its main rivals, a team that could potentially beat it given an identical power unit?

Secondly, Red Bull boss Dietrich Mateschitz and Mercedes have never had a good relationship, to put it mildly, and most F1 insiders thought that it could never happen. But then again, many thought Fernando Alonso would never go back to McLaren...

The possibility of a Red Bull/Mercedes marriage first reached the public domain at the British GP.

Lauda flatly denied that there were any discussions at the time, but has learned that on the Saturday of the SIlverstone weekend, Red Bull made a formal request, in a letter addressed to Lauda, for an engine supply.

It was only for RBR, and not Toro Rosso – the junior team was never part of any subsequent Mercedes discussions.

Lauda interested

Despite all that historical animosity, and despite the obvious risks inherent in supplying a rival, Lauda was actually interested.

He is, of course, a big pal of Helmut Marko – they have known each other since the 1960's – and they spend a lot of time together on race weekends. There was plenty of time for them to chat, but this had to go to another level.

Lauda agreed to talk to Red Bull in an official capacity, and it's understood that he was mandated by the board to do so, effectively representing CEO Dieter Zetsche.

Thus in early July, Lauda travelled to Salzburg to meet his countryman Mateschitz to discuss the proposed engine deal, along with associated marketing benefits to be drawn from a partnership.

Mercedes was intrigued by the possibility of linking its name to Red Bull and, in effect, appealing to younger customers, who might buy the A-Class.

"I went to see him in the early stages, which now is about three months ago," Lauda explained in Austin. "I went to see him because I know him very well. And I asked him the first question, can you get your negative thinking about Mercedes frozen, and start normal?

"He looked at me for quite a while, because for whatever reason, he doesn't like Mercedes. It's his own right, he can do that, and this is normal. But to have a proper relationship please bring your negative emotions down, otherwise, it will never work. Then he said 'OK, I will try to do that'.

"Then the other thing we discussed, if we would give an engine, we want to grow together. We give an engine because we want the Red Bull young kids driving A-classes. We would like to see a nice co-operation between the Red Bull mark, and Mercedes. And this is how we ended."

Mateschitz wanted an engine supply deal for five years, on the same basis of other customers such as Williams. The discussion even extended as to whether the engine could be badged as an Aston Martin, or Mercedes.

In part to move things along faster, Mateschitz also wanted to make any marketing deals independent of the engine situation, in much the way way that currently RBR has an engine contract with Renault, which is in effect underwritten by a separate sponsorship arrangement with Renault's sister company Infiniti. They are separate, but obviously related, contracts.

No handshake

As far as Mateschitz was concerned, he did the bones of a deal that day, and came to an agreement with Lauda. It was early days, but he believed this was really going to happen.

However, Lauda says that he didn't actually agree a deal.

"I never shook hands, it's completely wrong," Lauda explained last weekend. "And then he never came back, he himself, nobody. And then the discussions started not really ever officially, and the whole thing died away."

However, things did get a lot further than Lauda suggests, and there is much more to the story.

From the very beginning, Toto Wolff was not in favour of the deal – hardly surprising given that taking on Red Bull, with its ability to refine a chassis and aero package, would be a huge test for the works Mercedes team.

It could be argued that Wolff had another reason as well, given his personal stake in Williams. A strong RBR would not be good news for the Grove team.

However, he was in effect overruled, as initially the Stuttgart board liked the idea of linking up with Red Bull. There were obvious marketing benefits, and not just in the appeal to a younger customer.

One view is that taking on and beating a team as strong as Red Bull could only make Mercedes' own achievements look more impressive: dominating is not always good PR. And if the works team was beaten, at least the Mercedes engine would still win. Lauda could see the upsides.

There was one major stumbling block from the Mercedes point of view though. Wolff was loathe to have formal contractual discussions with Red Bull while the Milton Keynes team was still contracted to Renault for 2016.

Big manufacturers are wary of getting involved in controversy, and in this case it had commercial links with Renault to consider.

"We had a telephone conversation at the end of July with Bernie, Christian and myself," Wolff noted in Austin.

"Where we said from the Mercedes standpoint, after Niki met Dietrich Mateschitz, there are two points which are extremely important for us. One is we need to have a carte blanche from Renault. Renault is an industrial partner of Mercedes, we will never do something against Renault.

"Before Renault give us a go-ahead, we can't move, because it would breach of contract, so we wouldn't do that, and because there is a much bigger picture between Mercedes and Renault than F1. We have joint factories in Mexico."

Renault contract had to end

In other words, Mercedes wanted Red Bull to be contractually free of Renault before they would talk about a contract.

Christian Horner obviously understood the significance of that request. He knew that he had the possibility to terminate the 2016 contract, and over the Hungarian GP weekend, he set the wheels in motion to do just that, possibly more quickly than Wolff had anticipated.

At this stage it appeared, certainly to the Red Bull camp, that Mercedes was in the bag. Lauda was certainly keen: "I said let's do it, let's take the challenge."

Meanwhile, Wolff had to try to look for positives, given that it looked like the deal was going to progress with or without his support.

He thought that success for Red Bull would actually devalue the recent achievements of Mercedes. But he acknowledged that if Mercedes was beaten, there could be benefits in other areas.

"The other thing we said is if we supply Red Bull with an engine in F1 there is a possibility of diluting the messaging around our own success," said Wolff. "Because they could be very successful with our engine.

"That is fair and square, but in order to accept that we would need to know what kind of marketing activities we could deploy on a worldwide scale with each other.

"If we are being damaged on the F1 side, how much can we benefit on the global side. Can we do a colour scheme, can we do joint events, can we do joint platforms? Please come up with the person we can talk to."

Marketing appeal

It all seemed to be moving ahead. Any talk of an Aston Martin-badged engine was dropped very early on, as there was a much bigger picture here for Mercedes.

The marketing aspect was of such immediate interest to Stuttgart that its top executive in that field, board member Ola Kallenius, was ready to meet with Horner.

However, heading into F1's summer break, things lost momentum. Mateschitz was on holiday, and so too were key Mercedes people. For some reason, the Kallenius meeting didn't take place.

As noted earlier, Red Bull wanted to sort out the main deal first and leave marketing for later, so from their side that delay wasn't seen as major problem.

One thing that did happen during the break was that Wolff travelled to Sardinia to meet up with the then boss of VW/Audi, Martin Winterkorn. Their joint interest in the DTM formed part of the conversation, but it's understood that they also discussed F1. 

Indeed it's even been suggested that Wolff made some very positive noises about the sport and actively encouraged his rival's interest – after all, why not bring that DTM Mercedes v. Audi competition into F1?

Given that Red Bull had been trying for years to get VW/Audi on board, it was logical for Wolff to assume that, notwithstanding Red Bull's request for a five-year deal suggesting a long-term commitment, there was a risk that they might jump ship – having gleaned an awful lot of information about the workings of the Mercedes package.

Wolff had already been through a difficult experience with McLaren in 2014, albeit knowing well in advance that Honda was coming, and adjusting the flow of information accordingly.

The VW/Audi factor was one of the keys in what followed. Wolff is believed to have eventually convinced the Mercedes board that working with and giving its IP to a team that could morph into a works Audi project was not a sound business plan, and it trumped any marketing upsides. Suddenly, the board's enthusiasm began to wane.

Meanwhile, there was another interesting development as Wolff was fast-tracking discussions with Manor, which started after those with Red Bull. Handing what was the erstwhile Lotus supply to Manor would in effect make it that much harder for the Red Bull deal to progress.

It would allow Mercedes to say to Ecclestone: 'Look, we have four teams, we've done our bit for F1, we can't supply a fifth.'

When the summer break ended at Spa, the Red Bull deal still seemed to be game on, but things came to a head around the time of the Italian GP. The word in the paddock was that the deal was not going to happen after all. 

In fact, just before Monza, Lauda had given Red Bull the bad news.

Hamilton against it

Meanwhile, that weekend Lewis Hamilton made it clear to the press that he didn't think supplying Red Bull was a wise move. Was it a message to the board, and was he encouraged to send it?

In Monza, Ecclestone hosted a meeting between Mercedes CEO Dieter Zetsche, Lauda and Horner as they tried to sort things out. Zetsche underlined the concerns about VW/Audi.

When asked Zetsche in Italy about the prospects for a deal, he would only say: "I have not got an official request for the engine so there's no need for any official comment."

But Red Bull has always been adamant that such a request had been made as long ago as Silverstone. There are clearly different interpretations about what that letter to Lauda signified.

Even after Italy it seemed for a while that all was not lost for Red Bull, and Ecclestone was still keen to make it happen. But in the end they got a definitive 'Thanks but no thanks' message. Meanwhile, Manor's deal was formally confirmed on October 1.

"We really took some time to analyse the situation over the summer," Wolff said in Sochi. "We tried to understand what Red Bull's situation was, and expected or waited for some feedback, and finally when things didn't move we decided to pursue our current strategy by supplying Williams and the independent teams, and not pursue the Red Bull option.

"We didn't change our opinion. It got a bit confused at the beginning of the week with certain statements, but it didn't change. We have three customers teams plus us, and this is the structure that we want to work with."

Mercedes still gives off the impression that discussions didn't get very far, and yet Red Bull went to the lengths of terminating the Renault deal to accommodate a specific request from Wolff, and was then left stranded.

It is obvious why tensions between the parties have ramped up somewhat.

Some details of the saga remain a little hazy. Given that they were the only guys in the room at their July meeting, only Mateschitz and Lauda know what was discussed, and what was or wasn't agreed that day.

That contentious meeting is at the heart of the story, along with the confusion over how urgent was the need to pin down the marketing side. Mateschitz wanted to do an engine deal first and then talk about the other stuff, but for Mercedes it was a clear priority.

The fact that Red Bull didn't come back with firm proposals was a perfect excuse to can the whole thing.

Then there's the perceived threat from VW/Audi. It's somewhat ironic that as it all unfolded, the VW emissions scandal not only cost Winterkorn his job, but also put any thoughts of an Audi F1 programme on hold. The guys who might have sanctioned a Red Bull deal have gone.

The affair has not done Mercedes any favours with Ecclestone, who made huge efforts to get the deal completed. To be fair, he now claims to see both sides.

"I don't blame him [Toto]. If I was him the last thing I'd want is Red Bull with my engine," he said in Austin.

"In defence of Red Bull, or Christian Horner in particular, the reason they cancelled their agreement with Renault was so they could do the deal which they thought they'd done with Mercedes, because they believed [they had done it]."

But then he added mischievously about that Lauda/Mateschitz meeting: "In Niki's case when Niki left Dietrich it was just shaking hands just to say goodbye..."

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