The Alpine Formula One team has new shareholders as of today. US-based Otro Capital purchased 24% of the team for just over $218 million on Monday December 18. They joined RedBird Capital Partners and Maximum Effort Investments as new shareholders along with Renault. While Renault is still the majority owner (52%), the three new investment groups now own 48% of the team.
This shows that F1 teams are now seen as worthwhile investments, which is a welcome contrast to just a few years ago. Investors can now expect to make a return on their investment give the new sustainable business model the sport has adopted. This will also ensure teams remain on the grid rather than disappearing suddenly as was the case up until a few years ago (remember Manor?). This is good for the sport.
So what does this mean for Renault? My thought is that they are looking to reduce if not eliminate their involvement in Formula One. It has happened before, similar to Honda’s over the years. The model is enter, struggle, achieve success, tire of spending vast sums to remain at the top, become less competitive, then leave. Currently, Renault is in the “become less competitive” phase. After all, they have gone from winning with multiple teams, including multiple World Champions Red Bull Racing, to only powering their own faltering factory effort. All after spending hundreds of millions of Euros.
Add in all the political intrigue, infighting, and recent chaos within the team; you have a mess that has failed to produce consistent results. As it turns out, losing Alonso then Piastri in 2022 was only the beginning of their most recent woes. Alpine F1 in 2023 has out-done Ferrari in fratricidal actions, which is a dubious achievement to be sure. Not that any of this is new, it’s just taking on a new level that is hampering the racing team’s performance on the track.
Renault may decide it’s all not worth it anymore. Maybe they will revert to being only an engine supplier once again. That model worked really well with Williams in particular and fairly with Benetton for a time. As a factory-owned team however, they have struggled save for their renaissance with Fernando Alonso in the early 2000s. One of their customer teams, Red Bull Racing, achieved tremendous success in the early 2010s almost despite Renault. In a word, Renault’s involvement in F1 has been…fraught.
So I think Renault is looking for an off-ramp of some sort. They could opt to completely exit F1 and spend their money elsewhere. It’s one of the risks inherent in having automakers own F1 teams, when the Board decides it isn’t worth the money and hassle anymore…they leave. Remaining as an engine supplier makes the most sense now but that is not a guarantee. Renault needs at least one additional team to make it worthwhile, one team just isn’t enough.
What happens in the future is anybody’s guess but the great news is that F1 teams are attracting outside investment. While that may entail name changes in the future, the underlying team infrastructure and heritage will remain. In the short-term at least, things look good on the team valuation front.
