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
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