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DATE News (chronologically)
04/20/06
f1
Renault will commit to a lower-cost F1  Renault’s new F1 president Alain Dassas says that the world champion team is ready to commit to Formula 1’s long-term future, so long as the costs of competing are reduced.

“We have already signed up for 2008, which means we want to continue,” he said.

“Formula 1 is a passion for a majority of Renault's employees, and the sport is known around the world.

“But we are realistic as well: before committing to the future, every company needs not only good product – which we have – but also sensible cost control.

“By June, we should know the new economic equation. If we have achieved the savings we want, then we will be able to make a detailed commitment for the future.”

“At the moment, Renault pays 60% of the team's costs, and 40% are covered by sponsorship and television rights money,” said Dassas.

“We can make savings in these direct costs while maintaining our sponsorship levels and improving the central distribution of revenue from television rights.”

“The engine definitions and private testing are the two areas where we can most obviously make significant savings,” he said.

“The future technical regulations must impose stricter limits on all the competitors, and allow us to reduce our spending in order to find the improved financial equilibrium we want.

“All of the teams, including Ferrari, wish to reduce the cost of their Formula 1 programs," he added.

“The correct balance must be found: we want to keep the quality of the show we offer, but stop the technological ‘arms race' we see at the moment.”

An interview with the new Renault F1 Team President Alain Dassas.

Mr. Dassas, what is your Formula One background?
"I have always followed Formula One with great interest. In 2000, I negotiated Renault's purchase of the Benetton team, that was how I first met Flavio Briatore. Since then, I have been directly or indirectly involved with the commercial negotiations with Bernie Ecclestone."

What will your role involve, as President of the Renault F1 Team?
"As you know, Flavio manages the team and the racing activities with great skill and success. My role is to work on the financial and economic aspects, in order to provide the visibility required to invest in the medium and long term. I will also try and see how our performance in F1 can be better leveraged by the Renault group."

What are the financial perspectives for the future?
"All of the teams, including Ferrari, wish to reduce the cost of their Formula One programs. The correct balance must be found: we want to keep the quality of the show we offer, but stop the technological ‘arms race' we see at the moment."

So how can costs be reduced?
"At the moment, Renault pays 60% of the team's costs, and 40% are covered by sponsorship and television rights money. We can make savings in these direct costs while maintaining our sponsorship levels and improving the central distribution of revenue from television rights. The engine definitions and private testing are the two areas where we can most obviously make significant savings.
The future technical regulations must impose stricter limits on all the competitors, and allow us to reduce our spending in order to find the improved financial equilibrium we want."

What is Renault's role in enabling those cost reductions?
"Renault is negotiating from a good position. The average cost of the big teams' Formula One programs, is between 350 and 380 million euros, and the highest investments are over 500 million euros. Within that group, Renault ranks fifth or sixth in terms of expenditure. We are well below the average spend, but we are winning. That has given other teams food for thought."

Even so, doubt remains over Renault's long-term commitment to Formula One…
"We have already signed up for 2008, which means we want to continue. Formula One is a passion for a majority of Renault's employees, and the sport is known around the world. But we are realistic as well: before committing to the future, every company needs not only good product – which we have – but also sensible cost control. By June, we should know the new economic equation. If we have achieved the savings we want, then we will be able to make a detailed commitment for the future."

Does that mean Carlos Ghosn has fixed a deadline?
"Carlos Ghosn is ready to pursue our Formula One program. He simply wants to exploit our F1 success in acceptable economic conditions."

So what benefit does Formula One bring to Renault?
"Formula One is an image-builder, particularly in terms of quality, reliability and technology. It is very difficult to correlate a direct impact on sales, but we know that Formula One builds brand awareness in markets where the brand is weak, and enhances our image where it is strong. It is also an important source of internal pride and motivation. Within the company, we have formed a cross-functional team to maximize the exploitation of our success, from marketing to merchandising, to our public road show demonstrations, all the way to the product plan."

What are the challenges for the team between now and 2007?
"For 2007, we must put a number of key factors in place. Firstly, our driver line-up and finding a replacement for Fernando Alonso. Secondly, the renewal of Flavio Briatore's contract. This is a key factor, and we will do everything to ensure Flavio stays. And finally, we must enter a new phase in terms of our sponsorship. The financial, logistical and electronic sectors are all potential avenues to develop, as tobacco involvement is phased out of the sport." Press Release Renault

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