Why Red Bull Owns a Racing Team

Almost all Formula 1 teams are owned by car?

manufacturers. Except: Red Bull. But why is that?

Ferrari, Mercedes, McClaren. They?

all make cars as a business model.??

It makes sense for these brands to build?

a reputation through high-end motorsport??

in order to sell more sports cars?

to fanatics around the world.

But Red Bull is not selling cars. They are?

selling a very sweet drink. Why on earth??

did they end up in Formula 1, where running a?

team requires A LOT of resources and expertise?

Welcome to Athletic Interest. In this video, we?

will explore the crazy story of Red Bull Racing,??

whether F1 pays off for them and why we might?

soon be able to buy a Red Bull sports car.?

In early September 1970, the world?

of Formula 1 was rocked by a terrible??

tragedy. The paddock had just travelled?

to Monza, when championship leader Jochen??

Rindt was killed when his Lotus crashed?

on the approach to the parabolica corner.

As the first Austrian to win a?

world championship, Jochen Rindt??

ignited a passion for motorsport in his home?

country that still burns bright to this day.

For one Austrian motorsport fan?

the impact and legacy of Jochen??

Rindt is more obvious than?

most: Dietrich Mateschitz.

In the summer of 82 Dietrich?

Mateschitz’s life would change forever.??

He started his business trip to Thailand?

as a jet lagged marketing executive,??

but after a few sips of a local energy drink, he?

knew he had found the next big thing in beverages.

Obsessed with the drink that cured his jet lag,?

Mateschitz entered into a partnership with the??

manufacturer Chaleo Yoovidhya and started?

selling Red Bull in his native Austria.

From very early on Mateschitz was keen to align?

Red Bull’s brand image with the superior physical??

and mental attributes found?

in extreme sport athletes.

Inspired by Jochen Rindt, Mateschitz?

approached Austrian F1 driver Gerhard Berger??

and signed the Ferrari driver as Red?

Bull’s first sponsored athlete in 1989.

This would mark the beginning of Red?

Bull’s association with Formula 1.??

Links with Berger also helped to create one of the?

most important friendships in Formula 1 history…??

Enter Dr. Helmut Marko, former?

driver and manager of Berger.

Marko and Mateschitz were keen to leave a legacy?

in Formula 1 just like their fallen hero Jochen??

Rindt. While Marko was working hard to develop?

young drivers through his junior programme,??

Mateschitz became the main sponsor and?

majority owner of the Sauber F1 team.??

But he was soon growing frustrated with?

just being a sponsor and passive investor.

In the 2001 season, Sauber decided to promote?

young driver Kimi Raikkonen over Red Bull’s??

preferred candidate Enrique Benoldi.?

Mateschitz did not take this snub well.??

He rarely gives any interviews, but is likely?

to have said something along the lines of:

“Screw it, if I am going to have real?

control I need to create my own F1 team!”?

In November 2004 the perfect?

opportunity presented itself,??

when the Jaguar F1 team was up for?

sale for the grand total of 1 dollar.

Mateschitz snapped up the struggling team,?

hired his friend Marko as an advisor,??

rebranded it as Red Bull Racing and?

pumped hundreds of millions into the team.

They quickly challenged the?

status quo of Formula 1,??

hiring promising young team manager Christian?

Horner who earned the team’s first podium in 2006.

Red Bull celebrated their success in style?

(Video of Horner jumping in pool) and the??

team’s party atmosphere led to huge?

popularity among fans and the media.

While this attention undoubtedly boosted Red?

Bull’s image as the drink of extreme sports,??

the true goal of the company?

was to win championships.

This is where Helmut Marko?

came in. While Materschitz??

was investing in infrastructure and?

positioning Red Bull as a disruptor,??

Marko was quietly developing young drivers?

capable of getting the most out of their cars.??

One such promising talent was Sebastian Vettel,?

a German driver that had risen through the ranks??

of the junior team before graduating?

to Red Bull’s sister team Toro Rosso.

In 2009, Marko and Mateschitz put?

Vettel in the main Red Bull seat??

and this partnership soon came?

to dominate the sport. Vettel??

and Red Bull went on to win their respective?

championships for four consecutive seasons.

2014 saw rule changes and the emergence of?

Mercedes and Lewis Hamilton as the dominant forces??

in Formula 1. Red Bull have not won a championship?

since, at least that was the case when uploading??

this video. But Max Verstappen has helped the?

team bring the fight back to Mercedes in a??

thrilling 2021 campaign. And might have won it,?

you will call it out in the comments below ;-).

Red Bull’s goal in F1 was simple. Create a?

winning team in an extreme sport and allow??

the success and high octane lifestyle to infuse?

into the brand image, ultimately boosting sales.

So, has this massive investment been worth it?

Technically, Red Bull is losing?

a lot of money through Formula 1.

According to a report in 2018, they invested more?

than 2 (2.3) billion dollars in their first 14??

years in the sport. It is estimated that Red Bull?

contributes around 35% of the race team’s income??

every year, (+- 160 million) but after?

you factor in the high costs of the sport,??

the team only makes around 10?

million dollars in profits.

But Mateschitz did not start Red Bull?

racing to make a profit in Formula One,??

he just wanted to boost the?

sales of his energy drink.??

When you look at the investment from this?

perspective, he is getting a great deal.

Experts estimated that the level of brand?

exposure enjoyed by Red Bull between 2009 and??

14 would cost 320M dollars per year.?

So – in theory Red Bull were getting??

this exposure for half the amount (at?

around 160 million dollars a year).

To be fair, these figures are?

always simplifying things a bit.?

But it is certain that while Red?

Bull have invested a lot of money,??

they have created a marketing machine that?

gives them access to a valuable market.

So, Red Bull racing is nothing more than?

the marketing strategy of a motorsport??

obsessed energy drink billionaire… well, recent?

developments paint a far more interesting picture.

Honda, the current engine supplier of?

Red Bull, announced their intention to??

stop all involvement with Formula 1. This?

was bad news for Red Bull as fractious??

relationships with Renault and Mercedes meant?

that there was no obvious engine replacement.

In another surprising move, Mateschitz?

announced Red Bull’s intention to invest??

hundreds of millions to take over Honda’s engine?

facilities and start building their own engines.

This is a complete break from their current?

Formula 1 model. The original plan was to??

pump money into the team, disrupt the status quo?

and build brand equity with the sports fanbase.??

But there is no obvious marketing?

benefit to engine production.??

They already have one of the best cars?

on the grid and they risk damaging their??

brand if the new engines drop from the?

performance levels maintained by Honda.

What on earth is Materschitz thinking? Well,?

beyond the fact that they would lose money through??

reduced brand exposure if they dropped out of F1,?

there appears to be a new plan in development.

He no longer sees Red Bull simply as a?

beverage brand, but wants to develop his??

sports teams into independent business models.?

In fact, it looks as if Materschitz wants to??

transform Red Bull racing from a marketing?

machine into a lucrative technology company.

Early signs of this shift were clear when Red?

Bull employed their Formula 1 expertise in a??

joint project with Aston Martin to create?

the Valkyrie, a 1,000 horsepower road car.

In a 2021 interview with F1, Christian?

Horner, Red Bull Racing boss,??

suggested that the future could?

see even more Red Bull road cars.

“Having learnt all those lessons with Valkyrie,?

it would be a great shame not to put them to use.”

Now that they have added engine manufacturing?

to their impressive selection of skills,??

Red Bull could be perfectly suited to take up even?

more complex, and lucrative, engineering projects.

Materschitz’s “Screw it, I?

will do it myself” attitude??

has come to define Red Bull’s?

relationship with Formula 1.??

The initial decision to dump Sauber was?

vital in establishing Red Bull as one of??

the most popular and successful brands, not just?

in motorsport, but of any industry on the planet.

The decision to become an engine?

supplier is yet another example of the??

“Screw it” philosophy. While this decision?

is unlikely to pay off in can sales,??

it will help transform the brand from?

a marketing machine to a cutting edge??

technology and sports company…watch?

out Elon! Dietrich is coming for you!

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