Renault says it will stay in Formula 1, announces deal with investment firm

Renault says it will stay in Formula 1

PARIS — Renault is staying in Formula One racing after agreeing Wednesday to sell a “large stake” in the team to a private investment firm to keep the cars on the grid in 2010.

The French carmaker had been weighing whether to pull out of F1 following a crash scandal that led to the departure of former team principal Flavio Briatore.

After the proposed sale to Luxembourg-based Genii Capital, Renault said in a statement that the two companies would operate the team together. The team will still race under the Renault name, using Renault engines.

Neither Renault nor Genii elaborated on the size of the stake to be sold, though reports said it could be as high as 80 percent.

“In 2010, the team will retain its name, its identity and the core ingredients that led to the successes achieved in 2005 and 2006,” Renault said. “The team will continue to be supplied with engines by its sister company in Viry-Chatillon.”

The companies said a letter of intent should be concluded next year.

Gerard Lopez, the businessman behind Genii Capital, said restrictions on spending in F1 had made it a more attractive investment for new owners.

“This is a period of opportunity for Formula One, not a period of uncertainty,” Lopez said. “Formula One has an extraordinary level of global awareness that can be used to develop new business-to-business opportunities in traditional and developing markets, and there are exciting new revenue streams to be explored.”

Genii said it intended to run the team on a restricted-budget model, similar to that of new team Virgin Racing.

Team managers went before Renault’s board four times as they sought to convince the directors not to pull the plug, said Jean-Francois Caubet, the team’s managing director.

“It was a difficult choice between stopping and continuing to race under our colors and our name. I think that, at the end of the day, the fact that we have been in Formula One for 35 years won the decision,” he said. “We were lucky not to get a negative response like the other three constructors.”

Renault’s reputation was recently damaged by the crash scandal, which caused it to lose sponsorship deals with insurance companies Mutua Madrilena and ING. There had been speculation that Renault would follow Honda, BMW and Toyota out of F1 because of the economic downturn.

The company would not say how large the racing team’s total budget will be in 2010. But the budget plan was drawn up well before the decision to sell a stake to Genii, “and the goal is to finance it completely,” Renault team president Bernard Rey said. “The team will have the means to perform.”

Renault said it will continue as engine supplier for Red Bull next season.

Robert Kubica of Poland, previously at BMW, is expected to race for Renault in 2010. But because of the uncertainties surrounding its future, the team was forced to put on hold its search for a second driver.

That recruitment effort is resuming, and Caubet said the team has a shortlist of about 10 drivers. The choice and the identity of the team principal who will manage the racing is expected to be announced early next year.

AP Sports Writer John Leicester in Paris contributed to this report.