Mercedes put faith in Brawn, Silver Arrows on the grid next year

The legendary Silver Arrows works Mercedes Benz F1 team will return to Formula 1 racing next year for the first time in 55 years.

Mercedes Benz is buying 75.1% of the Brawn team. Mercedes CEO Dr Dieter Zetsche and Mercedes motorsport chief Norbert Haug announced this morning that the team will be rebranded as the Mercedes team from next season onwards and the colour scheme will change to the Silver Arrows livery.

The move allows Mercedes to have its own brand to the fore, rather than subservient to the McLaren brand, for a fraction of the cost of what they have spent in the past on F1, thanks to the resource restriction agreement and greater commercial revenues.

The move is a massive vote of confidence in Ross Brawn personally. Mercedes might have expected to win more during its time with McLaren and the fact that they didn't is largely due to Brawn's management of the Ferrari technical team and of Michael Schumacher.

Brawn had nothing left to prove after winning the championship this year with his own team, but here Mercedes are investing in him and he has committed to stay with the team for an undisclosed period, in addition to retaining a shareholding. By rough estimates, presuming that he held a majority stake in Brawn GP, he must have personally made around £30 million this year from taking on the team from Honda for £1 and then reselling it nine months later.

McLaren’s Ron Dennis responded with a statement saying that the deal was a “win-win” for both companies and that his team would continue to be called Vodafone McLaren Mercedes and would retain its silver and red livery. Mercedes will continue to supply engines to McLaren until 2015.

Dr Zetsche said that the reason for the move away from McLaren was that the two companies were not aligned on road car projects, with McLaren pushing forwards with a new sportscar, the MP4/12C which is a direct competitor to Mercedes supercar programme. He refused to be drawn on what effect the spy scandal of 2007 and this years lying scandal had on their decision.

Although this move has been foreshadowed for some time, the execution is subtly different from what has been rumoured. First the Abu Dhabi investment company Aabar is taking a 30% shareholding in the team, with Mercedes taking 45.1% and Brawn directors keeping the remaining 24.9%. It had been speculated that Aabar would hold the entire 75% until the end of 2011 when the contract with McLaren was due to expire. By giving away certain rights, McLaren and Mercedes have arrived at a compromise which works for both parties and allows Mercedes brand to be at the forefront of its

Dr Zetsche said, “Our relationship with McLaren was affected in recent years by the fact that the other shareholders were interested in building up a new automotive company building sports cars and supersports cars. That was not in the interests of Daimler and Mercedes Benz and because of this lack of alignment we were discussing to withdraw and McLaren group agreed to purchase 40% shares from Daimler within the next three years.”

“We can now rearrange our F1 activities with the consequence that we will reduce our F1 budget to about a quarter of what it used to be. We want to accomplish that in the next two years. The reason for that is the resource restrictions agreement between the teams and the FIA, greater revenues from the commercial rights and greater revenues from partnerships and sponsorships as the Silver Arrows works team. We are acquiring 75% of a team which has been very well funded to begin with.”

Mercedes is very cannily taking over a team which is perfectly suited to the F1 business model of the future, which has been built up with BAT's massive investment in the 1990s and Honda’s money in the 2000s. Literally billions have been spent on this team and Mercedes is picking it up for a fraction of what it would have cost if they had decided to 'do a Toyota' and build their own team up from scratch.

Logistically it makes perfect sense too, Mercedes Benz High Performance Engines facility is based in Northampton, 20 miles away down the A43 from Brawn’s Brackley base. They are either side of the M1 motorway.

As for drivers, Jenson Button and his management have made a big play of wanting to be ‘valued’ but they may have got their timing and tactics wrong. They have tried to back Brawn into a corner. But I cannot help but feel that Button should have taken the deal on offer and signed a contract this Autumn and just got on with it. Brawn’s team is clearly the place to be and to risk losing everything for the sake of a few million quid when you have fought for your whole career to be in the right car, seems counterintuitive.

Button will have known about this takeover for some time and Mercedes will have been involved in the background of the decision making process. Where they are in the negotiation reflects how they value him. The deal is still on the table for Button and I get the impression that Brawn would still like him to drive alongside Nico Rosberg. Some commentators see it that Mercedes has pushed Button out and that he is going to McLaren as a result. I'll post on this in more depth later.

Four drivers are in play here; Button. Rosberg, Raikkonen and Heidfeld. There are three seats available. Although Rosberg is the German driver sitting in the Mercedes car for the next few years, there is no doubt in my mind whatsoever that Sebastian Vettel is the driver Mercedes want long term and he will become available in 2012. You have to wonder about Mercedes’ plans for Lewis Hamilton too. His contract with McLaren is for five years from 2008, but I can imagine that Mercedes and Hamilton would be factoring each other into their plans for the future.

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