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Lotus chose to spend cash on car rather than pay Kimi Raikkonen

(CNN) — When it comes to deciding where the money goes, the Lotus Formula One team says its main priority is the car — not the star driver who sits in the cockpit.

Kimi Raikkonen said last week that he decided to leave it and rejoin Ferrari for the 2014 season because Lotus “haven’t got my salary.”

But the team, owned by Luxembourg-based investment group Genii Capital, has now responded by explaining that it prefers to focus its finances on developing the car, even if it means seeing their driving talent walk away.

Raikkonen has posted Lotus’ only victory this year, with himself and the team both fourth in the respective driver and constructor standings.

“Our suppliers and key people who develop the car were our priority — maybe not Kimi,” Lotus team principal Eric Boullier told the official F1 website.

“Kimi was in a similar position last year and it was all settled by the end of the year. And Genii had the plan to do the same this year.

 

“It is public knowledge by now that we’ve been late in paying him, and he got upset.

Read: F1 championship standings

“To manage the cash flow — and I don’t mean the money itself or the budget we have, which is guaranteed by Genii, or at least most of it as we don’t have the revenue stream to allow us to live independently from Genii — this cash flow is an issue if you have fixed costs and want to keep up the development level.

“You have to decide where you want to spend your money.”

Genii Capital took full control of the team — which has raced in F1 since 1981 under its previous guises Toleman, Benetton and Renault — from previous owner Renault in 2011.

Ownership by a private investment company, instead of car manufacturers such as Mercedes and Fiat, which owns Ferrari, or a global company such as Red Bull, can provide a more risky financial backdrop for an F1 team.

But Boullier says that Lotus’ alternative business model does not mean it is mired in a financial crisis, as the rumors circulating in the sport would suggest.

Read: Raikkonen returns to Ferrari

“Red Bull or Mercedes, those companies are sponsoring the teams,” said Boullier, whose driver management company Gravity also has connections to Genii. “Genii has a different strategy: they loan the money.

“It is part of the strategy that partners join the team and Genii will get back their investment

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“Seventy-five percent of the debt Lotus has comes from Genii. They could write it off tomorrow by saying this money is a sponsorship — and then our debt would be drastically reduced. Our normal debt is similar to most of the other teams.”

Genii’s strategy of choosing to bankroll the team before looking for sponsorship deals to recoup their investment is a gamble.

Having 2007 world champion Raikkonen on board would have inevitably helped attract sponsors, but now Boullier is looking at alternatives.

He says the team plans to emulate the business strategy of some of rivals, including Red Bull and McLaren, by looking for a title sponsor.

“It is no secret that for quite a while Genii have been looking for partners to make sure that we can bring more money to the team and have access to a bigger sponsor portfolio,” the Frenchman added.

“We need to secure sponsors, as this is the only way to step up.

“Formula One depends massively on the people — and to attract the best people to a team you need to have money, to be able to build something for the long term.

“Genii’s plan was to bring the team up within five years — which we are trying to do — but to move to the next step you need another five-year plan in place. And that is what we are working on.”

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