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Mercedes now fully in control of its Formula 1 team

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Mercedes now fully in control of its Formula 1 team
Feb 28, 2011, 1:31 PM

Mercedes has announced today that parent company Daimler and its partner Aabar has bought the final 24.

Mercedes has announced today that parent company Daimler and its partner Aabar has bought the final 24.9% stake in the team, which had remained in the hands of Ross Brawn, Nick Fry and the management team.

That management team, which saved the Brackley outfit from closure in 2009, operated as Brawn GP that year and then sold a controlling interest in the team to Mercedes, will remain on board but without holding equity.

This is a very logical step for all parties. For team principal Ross Brawn this is the completion of a process which has made him a very significant amount of money in the last 24 months. As technical director of Ferrari for 10 years and then team principal of Honda for two years his salary will have been in the multiple millions of pounds a year. But this Honda to Brawn to Mercedes transaction is likely to have netted him in excess of £50 million, even if the valuation of the team was significantly less than the €265 million Williams is valued at in its current flotation document.

Dr Dieter Zetsche, CEO of Daimler AG, said that this move by Daimler shows how serious they are about succeeding in F1, despite the fact that most other manufacturers in the last two years have gone in the opposite direction; either pulling out completely like Honda, Toyota and BMW or scaling down to having merely a presence as a supplier, in the case of Renault. Incidentally there is another interesting announcement due in the next 24 hours regarding a Renault backed deal for Red Bull with Infiniti - the Renault/Nissan luxury brand. There are various theories at large about the nature of the tie-up, but all will become clear shortly.

Daimler will hold 60% of the stock with Aabar the rest. With Mubadala having been requested to sell its stake in Ferrari back to the company at the end of last year, Aabar's stake in Mercedes represents the main interest of Abu Dhabi's sovereign wealth funds in Formula 1 teams.

Operationally the team will still operate out of Brackley with engines coming from Brixworth, near Northampton. Brawn remains as team principal in charge of all technical operations, but will no longer sit on the board, which will have three Daimler representatives and two from Aabar.

Brawn reports to Norbert Haug as head of Mercedes motorsport, who in turn reports to Zetsche. But I checked with Mercedes and on all decisions on the technical side Brawn has final say. He had spread himself a bit thin last season, trying to cover too many areas and so recently hired former Renault man Bob Bell as technical director to take a lot of the load off him. This should result in a stronger management structure.

Zetsche said: "The acquisition of a majority stake holding in our Silver Arrows team sends a clear signal that we intend to achieve technical and sporting success on world motorsport's biggest and most important stage - and to do so in cost-effective conditions," he said.

For all the complaints from union leaders in Germany about the company splashing the cash at a time of global cutbacks, withougt doubt the attraction to Mercedes is that they are going racing at a time when the Resource Restriction Agreement means that costs are under control and a well run, well sponsored team such as Mercedes, can even run at a profit. Mercedes has some of the strongest partners in the sport, so sponsor revenue is high.

They also have a solid customer base for engines, which is a profit centre.

As for Ross Brawn, he made the point that he plans to stick around for a few years yet, "Daimler and Aabar's acquisition of the remaining 24.9 per cent stake in Mercedes-Benz Grand Prix will be a further step in the consolidation and strengthening of our team for the future, " he said. "I remain fully committed to our team for the long-term, along with the management team and all of our employees. We all look forward to the challenge of making our team successful, and proudly representing Mercedes-Benz and the racing tradition of the Silver Arrows."

Mercedes has had a tricky start to its second iteration in F1 (the first was in the 1950s). Last season the car suffered from lack of investment, resource and focus during the design phase of 2009, while this year's car has not been very quick in testing. There are some cooling issues on the car, but it would be a mistake to judge them before we see the full package at Melbourne as they always planned to test a fairly basic car and then bring an update kit before the first race with refinements, especially in aerodynamics.

That said they will be coming from quite a long way behind when they bolt on the update pack next week for the final test in Barcelona. The cancellation of the Bahrain test and race will have bought them an extra week, but it will also have given the competition an opportunity to refine their cars too. Based on what we've seen so far, Mercedes has a good 7/10ths of a second a lap to make up to its rivals, possibly more.
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