16 January 2011 Last updated at 11:28 ET

Lotus positioned for Formula 1 racing row

By Theo Leggett Business reporter, BBC News

The return of a once-great name to Formula 1 motor racing ought to be something to celebrate.

Instead, it's turning into an embarrassment, thanks to conflicting commercial interests.

Last year, a team called Lotus took to the starting grid for the first time in 16 years. Yet this season, two teams are laying claim to the name.

That's triggered a bitter row between one of Malaysia's leading businessmen and Group Lotus, the Malaysian-owned sportscar and engineering business based in Britain.

The original Team Lotus was the brainchild of the charismatic English engineer Colin Chapman, who also founded the Lotus car company.

In its heyday in the 1960s and the 1970s, the team won the World Drivers Championship six times, with legends such as Jim Clark and Mario Andretti at the wheel.

After Colin Chapman's sudden death in the 1980s, the team struggled, but still picked up victories in the hands of a young Ayrton Senna.

In 1994, after years of decline, the team finally closed its doors. And that, it seemed, was that.

But in 2009, a new team calling itself Lotus began racing in Formula 1.

Malaysian mishaps

However, the new Lotus team was a very different entity from its predecessor.

The squad was owned by a company called 1Malaysia F1 Team, a consortium of Malaysian interests assembled by the entrepreneur Tony Fernandes.

Best known as the founder of budget airline Air Asia, he was a charismatic leader for what was initially conceived as something close to a Malaysian national team.

In what was seen as a coup for the new squad shortly before the 2010 season, he obtained a licence from Group Lotus to race under the Lotus brand name.

It made sense. To use a name so redolent of sporting history guaranteed media attention for the team and its sponsors - and arguably benefited the sport as a whole.

Meanwhile, Lotus, owned since the mid-1990s by the Malaysian manufacturer Proton, seemed like a natural partner.

Yet after just one season, the relationship has collapsed.

Group Lotus has removed permission for 1Malaysia to use the Lotus name, citing "flagrant and persistent breaches of the licence by the team".

Instead, it is sponsoring and is in the process of buying a share of the Renault Formula 1 team, which will now be known as Lotus-Renault.

But Tony Fernandes hasn't admitted defeat either. He has bought the naming rights to the original Formula 1 team and plans to call his own squad Team Lotus.

These rights had been held since the mid 1990s by British businessman David Hunt, who bought them after the team collapsed.

Now, the affair is in the hands of the lawyers, while F1 fans could be forgiven for feeling a little bewildered. So what's gone wrong?

New management

Central to the whole affair has been Dany Bahar, the ambitious chief executive of Group Lotus. He joined the company in September 2009, after the original naming deal with 1Malaysia had been done.

He is overseeing a major expansion of the company's output, including the launch of five new car models over the next few years, and sees motorsport as an essential part of its strategy.

"In this industry, you have a choice," he says. "You can use conventional marketing methods, by investing in classical advertising channels like TV and print.

"Or - and this is what I prefer - you could invest in activities that reflect your products, in our case motor racing. This way, customers can experience the technologies that we develop in racing."

Formula 1 forms a key part of that strategy. But for Mr Bahar, the link with 1Malaysia was far from ideal.

"When I arrived with a new management team, we had our own ideas and plans and that's nobody's fault, not the shareholders' and not Mr Fernandes' fault," he says.

"We have a crystal clear vision of where we want to go in future."

Even so, the link-up could have survived, says Mr Bahar.

"I think with any business relationship, you start on good terms and if it turns out to be beneficial for both parties, you continue.

"If not, you just stop - it's like in a marriage. And this one turned out to be an unsuccessful relationship."

Branding 'disaster'

Mr Bahar insists that communications with Tony Fernandes have been professional and transparent all along, but there are signs this has not necessarily been the case.

Speaking to BBC Sport in December, the entrepreneur railed against what he called the "bully boy tactics" of the Lotus Formula 1 hierarchy. He also described the linkup with Renault as a "branding disaster".

A logical solution to the dispute might have seen Group Lotus take control of the 1Malaysia team, and Mr Bahar confirms that an offer was made.

"Absolutely, we did. We offered many things, but it doesn't always have to turn out positively. In this case, it didn't," he says.

Now the case is heading for the courts. Last year, 1Malaysia lodged a case in the British High Court seeking confirmation of its right to use the Team Lotus brand.

Mr Bahar insists the matter will not get that far.

"I don't think it will be a matter solved by English courts. I think it will be solved before that. But if we have to go the legal way, we will - and our shareholders will support that," he says.

But for the moment, the matter remains unresolved. And unless a solution is found soon, there remains the prospect of two Lotus teams taking to the track at the Bahrain Grand Prix in March.

That would arguably be confusing for spectators and do little for the image of the sport.

But as seasoned observers might point out, only in the intensely political, marketing-driven world of Formula 1 could the return of a historic brand become the subject of a legal brawl.