As one ‘insider’ put it to me yesterday, “it’s messier than a pit full of sh*te.” The expression being a reference to the news that Caterham Sports Limited (CSL) has been placed into Administration.

CSL (formerly known as 1Malaysia Racing Team (UK) Ltd) was the facilitator of the Caterham team’s Formula One effort; it built the cars and provided the engineering and infrastructure support to 1Malaysia Racing Team Sdn Bhd (1MRT), the holder of the Formula One entry licence.

UPDATE: 22/10/2014Caterham F1 responds..

To many who follow the sport, news of the administration order hardly came as a surprise. Only a few weeks ago, bailiffs arrived at Caterham’s Leafield factory, seizing goods on behalf of creditors. At the time (just ahead of the Japanese Grand Prix at Suzuka), the team issued a statement condemning the “unfounded and unsubstantiated rumours concerning actions against 1MRT, the entrant and owner of Caterham F1”.

“An action was threatened against a supplier company to 1MRT” Caterham told us. “This company is not owned by 1MRT and it has no influence over the entry of Caterham F1 or the entrant.” The statement went on. “Contrary to uncontrolled rumours, all operations are currently in place at Leafield.”

In a world where the ‘spinning’ of stories is something we’ve grown to accept as both an on and off-track norm, I’m not going to blame 1MRT (known as Caterham) for defending its corner, even if, at times, the words used seem ever more farcical, such as this announcement yesterday..

“CSL going into administration does not affect the Formula 1 team in any way, as we are not part of it.”

To set the record straight, what Caterham F1 are trying to tell us is that they’ve already established a new company, Caterham Cf1 Grand Prix Limited (CCF1), to take-on the operational role, and it’s my understanding that around 200 staff have had their contracts transferred, leaving CSL without any employees. But Formula One is the most demanding of sports; it uses exceptional and advanced technologies, and requires millions spent simply to turn-up and take part.

Such demands were brought to light by stories during the last few days of Caterham’s Kamui Kobayashi, who admitted to being “seriously troubled” about the safety of his Caterham Formula 1 car during the Russian Grand Prix weekend.

According to the report on BBC Sport, the driver wrote on his private Facebook page of a suspension defect which was “repaired by wrapping it in carbon” because of there being no spare available.

Kobayashi went on to say “It’s checked all the time but, even so, being asked to race like this is too scary! I want to go home already. From here on there are still practices and the race to go. I’m seriously troubled. As a racing driver, should I drive? Should I safely decline? I drive again in 15 minutes..”

kobayashi_suspension_russianGPKobayashi posted this picture of the suspension on his Facebook page. Source: Kamui Kobayashi via BBC.

For the time being, it’s likely that the team will operate as best they can from a facility owned by Colin Kolles in Bavaria, but what intrigues me most is how the situation was ever allowed to become so toxic. Lest we forget, a little over 4 months ago both Caterham F1 and 1MRT were owned and controlled by Fernandes and his co-investors.

To set this out clearly:

1MRT was established in Malaysia by Tony Fernandes and Kamarudin Meranun in 2009, to acquire a Formula One entrant’s licence. Their programme would be managed by Mike Gascoyne who had been contracted by Litespeed F3 to spearhead their application to enter F1 using the redundant ‘Team Lotus’ name. When proposed budget cap rules for 2010 were discarded, Litespeed teamed-up with 1MRT to pursue the entry.

In 2010, the team entered Formula One as ‘Lotus Racing’. Gascoyne stated that they wanted to rival the debut of Brawn GP the previous year: They scored 0 points.

By September, Group Lotus and parent, Proton, withdrew the licence allowing Fernandes to use the naming right of Lotus.

For 2011, the team changed its name to ‘Team Lotus’. It acquired Renault engines and Red Bull technology, CEO Riad Asmat stating that he expected the team to be genuine midfield contenders. Back in the boardroom, Tony Fernandes announced that he had acquired the company ‘Lotus Ventures Limited’ from James Hunt’s brother, David. This, he believed, gave the right to continue using the Lotus name. They went to court, lost and scored 0 points.

In 2012, the name changed again. The previous year, Fernandes and ‘Din’ bought Caterham Cars Limited. For the new season, they would be renamed Caterham F1 Team. It was business as usual and 0 points were scored.

By 2013, Fernandes was clearly losing interest in F1 but was pushing ahead with a collaboration with Renault to build a new Caterham and Alpine sports car. The deal collapsed and Caterham F1 scored 0 points.

READ MORE: Caterham and Renault to split over Alpine joint venture project

At the start of 2014, Fernandes’ frustrations were made public. He issued an ultimatum to the staff at Leafield that unless things improved, he would quit: “My message to the 250 people here (at the factory) is we have to go for it this year. This is it – the final chance,” he said. “We’ve given you the best infrastructure, the best potential drivers, but it is now down to all of you to go and do it.” . . . “If we’re at the back I don’t think I’m going to carry on. Nothing is set in stone, but after five years with no points there is a limit to one’s patience, money and motivation so it’s an important year.”

At the end of June, Fernandes tweeted ‘F1 hasn’t worked but love Caterham Cars’. 1MRT was sold to a consortium of investors. Caterham still has 0 points.

“A company is only as good as its branding.” Tony Fernandes

Why do I mention all of this? Well very simply, during the past 5 years, Tony Fernandes spent somewhere (probably) between £300m – £400m on his F1 adventure. He’s endured the pain and the taunts of “pointless”, and the jibes about what was certainly the ugliest car F1 had seen for a very long time (the CT05).

So why would any astute businessman (one who was awarded the CBE in 2011) waste so much money, unless they planned on building something bigger and more worthwhile? In Fernandes’ case, it’s clear that he set-out intending to do great things with Lotus, and when that failed, he decided to build an automotive empire around Caterham.

READ MORE: Tony Fernandes calls ‘time out’ for Caterham

So here’s my point. Why, when all your eggs are in one very fragile basket, would you bail-out of a business half way through the year, leaving your brand exposed to the evident failings of others?

F1-has-not-worked-tony-fernandesMany observers are now baffled by this comment made by Fernandes earlier this year.

Put simply, F1 has strict and clear rules. One of these is that you can’t change the title of your team part-way through a season. So even if Fernandes has divorced himself and his shareholders / investors from Caterham F1, the name Caterham F1 must remain until the start of 2015.

It’s been clear that Caterham F1 has been struggling financially for quite some time. Forget about statements of past profit, these deserve to be filed back into the pit where I first started this article. The reality is that under Tony Fernandes, Caterham F1 was haemorrhaging cash and was amassing debts that weren’t being paid. By selling 1MRT and all of its subsidiaries (for a small fraction of the £400m he originally asked for), Fernandes might have thought that he was now clear of Formula One and could once again focus on his revenue generating businesses. Think again.

Fernandes used Formula One, rather like he uses the Premier League, to create interest in his investments. What he seems to have spectacularly forgotten is that media and public alike always pay far more attention when things go wrong.

With Caterham F1, the story has become ever more absurd and at the centre of every headline is the word ‘Caterham’. Not ‘consortium’, ‘Kolles’ or ‘Ravetto’. Very few people even know the true identity of the group that purchased the ailing squad from Fernandes. So the damage, and there’s much of it, is firmly at Caterham’s door.

When Tony Fernandes tells me that a company is only as good as its branding, I have to reply that branding is fundamentally about two values; (1) reputation (earned and perceived) and (2) engagement. Seeing reputable publications worldwide writing stories entitled “Caterham F1 carmaker goes into administration” (Financial Times) will cost Caterham Group and Fernandes dearly, even if he no longer owns the business in question.

So why Fernandes sold 1MRT in order to save a few million pounds is beyond me. He could (and should) have waited until the season was over, left with dignity, and allowed the Caterham F1 Team to be consigned to the annals of history as another well-meaning attempt at F1 glory which didn’t succeed.

Instead, he’s plunged a small car maker in Dartford (and its associates) to new depths as it struggles to compete in markets that know its name for all the wrong reasons.

Written By

Steve Hindle
Steve Hindle

Steve has lived his life with motor sport; from childhood years as a fan, to racing around the greatest tracks in Europe, first as a driver and later as a team principal. Today he's a familiar sight trackside and in the pit lane, notebook in one hand, camera in another, capturing moments and contributing to some of the leading titles in motor sport and automotive media.

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