Is Branson regretting not getting in bed with Brawn in '09?

[308mate]

As the title suggests really.

He's in it now but he hesitated last year and backed away from a team that went on to take the title.

Is there more to it than that or was that a rare failure to recognise an opportunity? And if Jenson's start to last season wasnt good enough for him, what's sold him on this season?

[groomi]

But red wouldn't have worked on the Mercedes cars - well, unless both Schumacher and Rosberg started being referred to as the Red Barons...

[Mazda Baiter]

Much more to it. The Merc deal would have been on the cards since Honda announced it's withdrawal. With Merc checking out the team, Brawn/Fry would have been told to hold up on any long term deals as Merc would end up being the major sponsor/title holder of the team. Branson wanted in, but was happy to be in on a race by race basis with a winning team. Bernie knew that Branson wanted in, knew that Manor might be interested, knew that Wirth was interested, knew about the proposed budget cuts and last but by no means least, he knew about the FIAsco looming of the new intake of teams.

Branson could be guaranteed a place, a team for less than a title sponsorship of a top team...and he would own the team.

As it stands, they are (by a tenth) the fastest of the new teams. I think Branson will be ok with his new venture.

[rubystone]

Mazda Baiter said:

Much more to it. The Merc deal would have been on the cards since Honda announced it's withdrawal. With Merc checking out the team, Brawn/Fry would have been told to hold up on any long term deals as Merc would end up being the major sponsor/title holder of the team. Branson wanted in, but was happy to be in on a race by race basis with a winning team. Bernie knew that Branson wanted in, knew that Manor might be interested, knew that Wirth was interested, knew about the proposed budget cuts and last but by no means least, he knew about the FIAsco looming of the new intake of teams.

Branson could be guaranteed a place, a team for less than a title sponsorship of a top team...and he would own the team.

As it stands, they are (by a tenth) the fastest of the new teams. I think Branson will be ok with his new venture.

So here's what really happened. Brawn needed an engine. Whitmarsh brokered the Mercedes deal. Ross B didn't actually need sponsorship - he had Honda's money. The Branson exposure suited him from a PR perspective, more than the money. Branson's Modus Operandi is to "franchise" the Virgin name for ventures in which Virgin owns slightly less than a majority stake, with a business plan in place along the lines of a VC to sell down his stake to the other partners. Branson/Virgin never majoratively own the business. Ergo, it was never on the cards for a Brawn/Virgin deal.

I have no doubt that once Brawn had a chance, he would have nudged Zetsche and reminded him how for 30% less than Daimler was pushing McLaren's way, he could have his own team and do it his way. But someone close to McLaren tells me that Mercedes didn't supply engines to Brawn to in any way check the team out with a view to buying them!

Final point - why the heck would Brawn/Fry be told to "hold up" long term sponsor deals? Did Mercedes ever refuse McLaren's acquisition of new sponsors? Of course not! Every dime brought in by a sponsor reduces the funding required by Mercedes!

Branson's biggest issue is that Manor will never deliver him the success he requires over his 3 year plan. So he has to be relying on a trade sale for his exit strategy.

[Mazda Baiter]

rubystone said:

Final point - why the heck would Brawn/Fry be told to "hold up" long term sponsor deals? Did Mercedes ever refuse McLaren's acquisition of new sponsors? Of course not! Every dime brought in by a sponsor reduces the funding required by Mercedes!

Except that Merc didn't own McLaren. They had a stake, but didn't own it outright.

They may have their own agenda as to what they want the car to look like. Hell, maybe Haug didn't want to have to hang around Branson any longer than he had to before.

[flemke]

rubystone said:

Mazda Baiter said:

Much more to it. The Merc deal would have been on the cards since Honda announced it's withdrawal. With Merc checking out the team, Brawn/Fry would have been told to hold up on any long term deals as Merc would end up being the major sponsor/title holder of the team. Branson wanted in, but was happy to be in on a race by race basis with a winning team. Bernie knew that Branson wanted in, knew that Manor might be interested, knew that Wirth was interested, knew about the proposed budget cuts and last but by no means least, he knew about the FIAsco looming of the new intake of teams.

Branson could be guaranteed a place, a team for less than a title sponsorship of a top team...and he would own the team.

As it stands, they are (by a tenth) the fastest of the new teams. I think Branson will be ok with his new venture.

So here's what really happened. Brawn needed an engine. Whitmarsh brokered the Mercedes deal. Ross B didn't actually need sponsorship - he had Honda's money. The Branson exposure suited him from a PR perspective, more than the money. Branson's Modus Operandi is to "franchise" the Virgin name for ventures in which Virgin owns slightly less than a majority stake, with a business plan in place along the lines of a VC to sell down his stake to the other partners. Branson/Virgin never majoratively own the business. Ergo, it was never on the cards for a Brawn/Virgin deal.

I have no doubt that once Brawn had a chance, he would have nudged Zetsche and reminded him how for 30% less than Daimler was pushing McLaren's way, he could have his own team and do it his way. But someone close to McLaren tells me that Mercedes didn't supply engines to Brawn to in any way check the team out with a view to buying them!

Final point - why the heck would Brawn/Fry be told to "hold up" long term sponsor deals? Did Mercedes ever refuse McLaren's acquisition of new sponsors? Of course not! Every dime brought in by a sponsor reduces the funding required by Mercedes!

Branson's biggest issue is that Manor will never deliver him the success he requires over his 3 year plan. So he has to be relying on a trade sale for his exit strategy.

I don't know anything more than anyone else, or perhaps less, but I would have thought this scenario plausible:

- When Honda announced their pull-out in early December, there appeared to be a real chance that the team would cease to exist altogether. From that point, Brawn and Fry would have been scrambling around like wild in the hope of securing new funding. The conversation with Virgin may well have been initiated then, in the 2-3 months before the new team's survival was assured. The precise details have not been disclosed, but obviously there was a period when the total funding available was thought to be insufficient to maintain the team. Virgin's, or anyone's, money would have been welcomed with open arms.
- Even if Brawn eventually did not need more money for '09, it was always going to do so for '10. Even for '09, more is always better than no more.
- Virgin drags its feet, wanting to see how the team will do and also being aware that there may be some developing friction between the FIA and FOTA. It is lulled into a false sense of security, and believes it has the whip hand.
- It would be entirely consistent, AIUI, with the Virgin business model to demand an equity position in Brawn. I would expect them to have sought it. It would not have had to be a majority stake: as you say, Virgin typically get less than half the equity.
- Time creeps forward, the good news (from the Virgin perspective) being that the Brawns are the class of the field, and the bad news being that a FOTA departure from F1 looks increasingly likely. With no other serious competition for the Brawn sponsorship, there was no need to rush a long-term commitment - so they let Brawn twist in the wind a bit.
- Unknown to Virgin, however, Mercedes had begun to sniff around. Mercedes was only going to care about buying a huge chunk of the equity, so equity suddenly became the thing that Brawn and Fry were not going to sell to Virgin at (almost) any price.
- One has the feeling that, at this point, it strangely became more difficult for Branson to reach Nick Fry and St Ross on the phone. IINM, a similar thing happened to Jenson Button a few months later.

[coetzeeh]

The answer is quite a simple one.

Early '09 Virgin were able to get their name on the Brawn car for very little money, and the amount was agreed race by race. This was at a time when Virgin were negotiating a possible long term sposorship - but as the Brawn continued to wrack up victories, the price increased. What started off as a £15m annual asking price for a main sponsorship ended up at £40m.

For much less Virgin now have their own F1 team and presence, as opposed to being a sponsor on a team that is no longer at the front - some would say the Merc (Brawn) glory days are goine.

Branson was right to go a different route.

[Holst]

coetzeeh said:

The answer is quite a simple one.

Early '09 Virgin were able to get their name on the Brawn car for very little money, and the amount was agreed race by race. This was at a time when Virgin were negotiating a possible long term sposorship - but as the Brawn continued to wrack up victories, the price increased. What started off as a £15m annual asking price for a main sponsorship ended up at £40m.

For much less Virgin now have their own F1 team and presence, as opposed to being a sponsor on a team that is no longer at the front - some would say the Merc (Brawn) glory days are goine.

Branson was right to go a different route.

I Bransons desire to be more involved with the team might have been a factor as well.

If he had gone in as the main sponsor of brawn then this would have been enough, but to just be a sponsor on the Mercedes might not have given him the involvement he wanted. Running his own team might however prove to be more hands on (and more expensive) than he expected.

[rubystone]

Mazda Baiter said:

Except that Merc didn't own McLaren. They had a stake, but didn't own it outright.

They may have their own agenda as to what they want the car to look like. Hell, maybe Haug didn't want to have to hang around Branson any longer than he had to before.

And there's the rub. Mercedes wanted to take a controlling stake several years ago but Dennis and Ojjeh sold a chunk to a ME investor (I can't recall the name)...which really was the turning point in the relationship.

My understanding is that Brawn agreed a fee of US$250k per race for Virgin's sponsorship. As I said before, Virgin's model is to ageee an exit strategy before signing the deal....that may even have been why the Brawn/Virgin deal was never on the cards; Brawn was always looking for a way to secure the future of the team. I do know that there were enough funds to allow the team to compete in 2009, but the fact that they only built 3 tubs shows how they had to husband their resources.

[jbudgie]

I just think that perhaps Ross wasn't his type.

[pw75]

I dunno, its gonna be interesting for sure now. Branson is never one to (knowingly) back a lemon, so he will at least want to finish top of the new teams this year. How long has he said he is committed into it for......?

[Alfie Noakes]

Sorry if this has already been thrown into the mix but:

Before Monza 2008 it was speculated that Torro Rosso were up for sale. At Monza there was a very brief glimpse of Richard Branson talking to someone in a red shirt during the pit lane walkabout on the TV.

Vettel won the race and the talk of TR being for sale died away.

I don't think Brawn was the first shot a Virgin coming into F1

Edited by Alfie Noakes on Tuesday 16th March 13:48

[hairyben]

Mazda Baiter said:

Much more to it. The Merc deal would have been on the cards since Honda announced it's withdrawal. With Merc checking out the team, Brawn/Fry would have been told to hold up on any long term deals as Merc would end up being the major sponsor/title holder of the team. Branson wanted in, but was happy to be in on a race by race basis with a winning team. Bernie knew that Branson wanted in, knew that Manor might be interested, knew that Wirth was interested, knew about the proposed budget cuts and last but by no means least, he knew about the FIAsco looming of the new intake of teams.

Branson could be guaranteed a place, a team for less than a title sponsorship of a top team...and he would own the team.

As it stands, they are (by a tenth) the fastest of the new teams. I think Branson will be ok with his new venture.

Yeah that^

The merc deals been in the wings from early on. Brawns not stupid, there's no other explanation for the apparent blasé attitude about acquiring any long term sponsors, yes there was honda money for the time being but there's no such thing as a team deciding they don't need any more money in F1.

As for merc, it's been no secret for a while they have aspirations that go beyond being a mere sponser to mclaren. Team merced Deutschland is no accident.

[groomi]

Gaz. said:

rubystone said:

Branson's biggest issue is that Manor will never deliver him the success he requires over his 3 year plan. So he has to be relying on a trade sale for his exit strategy.

I wouldn't write them off completely, RedBull turned the old Jaguar team around in four seasons.

Indeed. And Jaguar turned the race winning Stewart team around in just one season...

[rubystone]

hairyben said:

The merc deals been in the wings from early on. Brawns not stupid, there's no other explanation for the apparent blasé attitude about acquiring any long term sponsors, yes there was honda money for the time being but there's no such thing as a team deciding they don't need any more money in F1.

As I said, Whitmarsh brokered a deal for Brawn to use Mercedes engines at a very late stage. So late that the Brawn ran with a compromised engine/gearbox layout for the whole of last season. With the new teams coming into F1, do you really think that Brawn would have risked turning away sponsors? The fact is that the team couldn't find any serious sponsors. Who'd sponsor a team that had just the year before given birth to a barely breathing runt? Ross Brawn did his calculations, established what budget he needed and told Honda that they would have to stump that up in order for him to take the runt on. Branson saw a chance to get his stickers on a car at a decent cost, fixed that cost on a per-race basis and gained some great coverage to boot. There's nothing more to that story, honestly

[hairyben]

rubystone said:

hairyben said:

The merc deals been in the wings from early on. Brawns not stupid, there's no other explanation for the apparent blasé attitude about acquiring any long term sponsors, yes there was honda money for the time being but there's no such thing as a team deciding they don't need any more money in F1.

As I said, Whitmarsh brokered a deal for Brawn to use Mercedes engines at a very late stage. So late that the Brawn ran with a compromised engine/gearbox layout for the whole of last season. With the new teams coming into F1, do you really think that Brawn would have risked turning away sponsors? The fact is that the team couldn't find any serious sponsors. Who'd sponsor a team that had just the year before given birth to a barely breathing runt? Ross Brawn did his calculations, established what budget he needed and told Honda that they would have to stump that up in order for him to take the runt on. Branson saw a chance to get his stickers on a car at a decent cost, fixed that cost on a per-race basis and gained some great coverage to boot. There's nothing more to that story, honestly

Brawn caught Bransons eye during pre-season testing at barcelona, even granted most other potential sponsers aren't as sharp as branson I think once a few race wins were under the belt there'd have been sponsorship opportunities-a-plenty, yet the car was still looking a lot plainer than it could/should have. Utter complacency about your future funding is for me, the only explanation.