Follow the Money - The Red Bull Racing 2024 Driver Dilemma Part 2

Red Bull Racing has been at the center of the driver discussions this year. With rumors swirling all season long about a Checo and Daniel swap being IMMINENT, after nearly every race. So, let's break down the Visa CashApp RB (VCARB) side of the driver market.

‍

Before we get started, check out PART 1 to learn more about Red Bull Racing and Checo's contract!

‍

Last week, in Part 1, we discussed the reasons why I believe Checo was retained by Red Bull for the second part of the season. However, as I alluded, that's only half the story because many people are failing to look at a disadvantage behind owning two teams in Formula 1.

So this week we are looking at the reasons from a Visa CashApp RB point of view behind the lineup calls that were made.

What are the facts?

‍

1. MANY rumors have been circulating - all pointing to the same thing - Checo was going to lose his seat to either Daniel Ricciardo or Liam Lawson. This would leave Max Verstappen with a new teammate for the second half of the 2024 season.
   ‍
2. These rumors were put to bed on Monday, July 29th in an official statement to the Red Bull Racing team - Checo would keep his seat in 2024
   ‍
3. VCARB has retained Yuki Tsunoda as a driver for 2025, but the second seat (currently occupied by Daniel Ricciardo) is up for grabs for any driver in the Red Bull Racing Sphere - INCLUDING Liam Lawson.
   
   

‍

How does the Red Bull and Visa CashApp RB (VCARB) relationship work?

‍

You see despite the very deliberate portrayal of Red Bull and Visa CashApp RB as being two separate entities on the grid....

I mean they DO have different factories, team principals, etc...

The reality is that they belong to that same motorsport board and parent company that owns Red Bull Racing. Any impact on either team, Red Bull or VCARB, also has an impact on the company.

This includes driver moves.

‍

‍

The company has benefitted from the partnership between these two teams when it comes to driver line ups in the past. The drivers are all signed to the parent Red Bull 'stable', allowing movement between the teams (...well almost all of them because it seems Checo has a clause saying that he can’t be swapped to the VCARB team due to the amount of sponsorship he brings in…)

This has enabled them to make mid-season changes in the past to help them solve driver issues. Cough Cough Pierre Gasly

‍

‍

What is the difference in this relationship this season?

‍

This season, especially, there has been an issue for the VCARB team and Red Bull as a company in general with their sponsorship contracts. This has also played a part in the driver moves and let me explain how...

‍

What was the ORIGINAL Red Bull/ VCARB driver plan?

‍

‍

Last season saw the return of Daniel Ricciardo to the Red Bull family - originally as a test and reserve driver - and then after that successful Silverstone test, a return with the VCARB team (who were then, Alpha Tauri).

The team then announced their lineup in Japan last year, confirming Yuki and Daniel as their line up with Liam Lawson waiting in the wings.

The plan seemed so simple!

1. Daniel would perform at VCARB, putting pressure on Checo, and opening the way for a return to the main team if they needed it.
   ‍
2. Max would be happy to be reunited with Daniel.
   ‍
3. Yuki would get a teammate in Liam Lawson.
   ‍
4. Red Bull could show that the Academy Programme was working to get another driver on the grid (Liam Lawson). 

‍

What went wrong?

‍

Clearly, where we are now in the 2024 season, we can see that this plan went pear shaped...

This is a pretty simple answer in terms of performance: The pre-season performance gap between Yuki Tsunoda and Daniel Ricciardo that Red Bull expected did not materialize! A driver swap would've been seen as risky because there is no guarantee that Daniel would step up and perform better than Checo in the Red Bull car. It would still be a toss-up to secure the Red Bull Constructors Championship.

‍

What does the change look like monetarily?

‍

Dropping Checo

‍

‍

We cannot forget the money aspect that we discussed in depth in part one. Here's a refresher:

Dropping Checo would potentially cost you $30M in sponsorship alone, as we discussed last week. The gap in prize money between first and second in the Constructors Championship is around $10m. So when finalizing the math (remembering that they'd still win some money in 2nd place), you would still be as a business losing $20m. AND this is without the loss in sales and market of your actual products (Checo's likeness), to add on top of this figure.

‍

Daniel Ricciardo replacing Checo

‍

Now, let's assume we are promoting Daniel - who has, no doubt, a HUGE marketing profile on the Formula 1 grid - to both mitigate some of Checo's loss AND hopefully (maybe) secure the Constructors Championship.

That sounds great, right?

Wrong. You have NOW created a problem for Visa CashApp RB.

‍

Following Red Bull's Money Trail (again) - Visa CashApp edition

‍

Visa, CashApp, and other sponsors

You see... the team went through a huge rebrand at the start of the season.

Under the lights of Las Vegas, the covers came off the former Alpha Tauri, announcing the new name of Visa CashApp RB as not only title sponsors but also team name. This was no doubt, a very lucrative deal.

‍

‍

Then followed a flurry of new sponsors as the season kicked off from Tudor to Hugo Boss! All of these sponsors, no doubt, signed on the back of having a very marketable asset such as Daniel Riccardo.

‍

Why not Liam Lawson (right now)?

‍

‍

We can all acknowledge that on track, Liam Lawson can no doubt help deliver good results... but in terms of marketing, unfortunately, he's not Daniel Ricciardo (yet).

These deals have, no doubt, been signed with America in mind with the races in Las Vegas and COTA (Austin) still to come! There is no doubt that given the car launch location (Vegas) - we know what the sponsors are planning in terms of activations and target events. 

Imagine their uproar if the driver that they had essentially backed for those activations suddenly wasn't available for that and had been replaced by a rookie instead. Imagine the financial loss as well as those sponsors either invoke clauses or worse do not renew or break contracts with the team……

‍

What would the fallout be for Red Bull?

‍

Now, as Red Bull owns two teams... not just one...

IMAGINE a meeting in which you had to explain to investors how you wrote off potentially $30m in sponsorship a year, wrote off millions from VCARB, lost market share and profits from losing an asset in Checo in Key Markets (US and Mexico)... AND ON TOP OF ALL OF THAT, what if you still finish 2nd in the constructors!

So on top of ALL OF THAT monetary loss - add in an additional $10M loss of the prize money if the switch didn't work.

‍

Suddenly, as much as it pains me to say it as a fan, you can see that by following the money as a business owner protecting profits...

You keep the same lineup, potentially only risking losing the $10m in prize money. 

‍

What's next for Red Bull and VCARB?

‍

‍

Now I know that all of this may sound like a disappointing reason to continue with a driver lineup. As a fan - I absolutely agree with that sentiment. However, as we said last week, because we are in the Post- Dietrich Mateschitz Era it is a different world for Red Bull GMBH, the parent company. 

There is, of course, risk vs reward.

What if Checo ups his game knowing he is in the last chance saloon, and Red Bull lock out both championships again?

Well, Red Bull will say it was an inspired move to do so because ultimately it doesn't matter what performance is like on the way to the championship all that will be remembered is who won it.

‍

One thing is for certain, though, with five drivers, four seats, and three contracts confirmed - the Red Bull driver issues are more on hold than 'problem solved'.

‍

For all things F1 news and tech throughout the week, join the F1 Coffee Corner base on FanAmp and check out all of F1 Coffee Corner's social channels!