Is Group Lotus’ F1 move the nightmare scenario?

So the bitter squabble over who should race as Lotus in Formula One has moved a step closer to what would seem its worst case scenario.

Confusion understandably reigns over the entire situation – one which comes across as simply Lotus versus Lotus, yet gets more complicated the deeper you delve and the clearer you try to make it. Even defining the two sides of the argument is tricky.

First you have Hingham-based Team Lotus, which competed as Lotus Racing in its first season this year thanks to Malaysian entrepreneur and team principal Tony Fernandes.

They have changed their name with agreement from governing body, the FIA, having bought the rights to Colin Chapman's Team Lotus outfit from David Hunt in September – an outfit that was shut down in 1994.

Then there is the Renault team; the 2005 and 2006 constructors' and drivers' champions, who had Robert Kubica and Vitaly Petrov behind the wheel last season.

In 2011, they will be sponsored by Hethel car manufacturer Group Lotus – who have also agreed to buy a 'major' stake in the team – and want to be known as Lotus Renault.

Completely separate teams, but both will be running with Renault engines, both plan to run in the Norfolk marque's evocative black and gold livery, and both – you imagine – will be called Lotus by your average F1 fan. And maybe most importantly, both are due in court next year arguing they should have sole use of the Lotus name in F1.

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That was the scenario everyone wanted to avoid: Two teams pressing ahead, reaching the F1 grid claiming to be a Lotus. A potential disaster for either side and incredibly damaging to the reputation of a brand and history held in the sort of esteem that would give even the likes of Ferrari a run for their money.

Group Lotus' unveiling of their black and gold intentions on Wednesday – a month after their rivals – came across as a declaration of war, and as such has brought the issue to an immediate head.

And maybe, with the realisation of how bad it could get, both sides will now come back from the brink. Maybe the nightmare scenario can still be avoided.

As yesterday's story developed, there was an impression that four black and gold cars racing at first grand prix of 2011, in Bahrain next March, will simply not happen.

Group Lotus chief executive Dany Bahar and, judging by his thoughts on Twitter, Team Lotus chief technical officer Mike Gascoyne have indicated those thoughts.

Team Lotus now appear to be considering a return to the green and yellow livery they used as Lotus Racing this year – an unfortunate end to the hopes of those who had submitted competition entries to design the team's proposed black and gold look. And while commentators are probably shuddering at the prospect of differentiating between Team Lotus and Lotus Renault next season, the latter will remain as Renault for many.

To change the name fully requires the agreement of all F1 teams – something they will never get from those in Hingham.

Without winning that vote, a full name change would see them lose millions of pounds in FIA funding that is based on their past performances, and they would effectively have to re-enter as a new team. Which begs the question: Why are Group Lotus shelling �100m to sponsor a team for seven years, when another constructor will have proper use of the name at the same time, on the same track? Maybe it is a case of holding out until the obstacle goes away. Given the likelihood of a 2011 mid-season court judgement, one side seems set for complete disarray and with a crippling bill for millions of pounds before they reach the end of the F1 calendar.

Fans of F1 will hope they get a say – and for those from Norfolk there will be a decision to make. Fernandes and Gascoyne both made a big play of bringing back the Lotus name to F1 last season.

Those sentiments won them a growing army of fans, as did the way they carried themselves last season in opening up the workings of a team to the public.

That good will is carrying them through the current battle. Internet comments, polls and forums generally offer support for the Hingham case – with Group Lotus often cast as the playground bullies.

As a F1 name that always had a soul, many feel Lotus deserves better than to be simply stuck on a rival team in something akin to Vodafone sponsoring McLaren.

FIA supremo Bernie Ecclestone apparently backs those sentiments – and that could be enough.

But maybe the best every racing fan – especially those of a Lotus disposition – can hope for, is that the situation has hit rock bottom.

Otherwise, no one will have the time nor inclination to sift through the muddied reputation of Norfolk's legendary F1 name.

• Answers to the fundamental questions over the Lotus issue

Who owns Team Lotus?

At present, Tony Fernandes. He bought the rights from David Hunt who had looked after them since the Formula One team failed financially in 1994. Fernandes is confident he will get confirmation of this in court, as Team Lotus was separated from the rest of the Lotus Group by founder, Colin Chapman, in the 1950s. However, Group Lotus is arguing only they should be allowed to use 'Lotus' in motorsport, and the fact Team Lotus has not raced for years makes those rights worthless.

What is the connection with Group Lotus?

Shared heritage, but little else it seems. In 1952, Colin Chapman set up Lotus Engineering and split off his Team Lotus operation in 1954. The remaining Lotus companies, including car manufacturer Lotus Cars, became Group Lotus in 1959, was bought by General Motors in 1986 and then by Proton in 1996. As for Team Lotus, it went into administration in 1994 and despite being purchased by David Hunt, he was unable to save its racing operation. So the name and founder are connections but, as companies, their histories appear to be quite separate.

Why do they both call themselves Lotus?

Chapman founded both, and the two companies enjoyed benefits from sharing the name. But now both sides have completely separate owners, continuing the cooperation is a major issue. Of course, other companies use 'Lotus' as a trademark – including a manufacturer of biscuits and one of sanitary equipment. This court battle is over who has the right to use the name in Formula One alone.

Who foots the bill?

Hethel's Group Lotus do not sell many cars, so it is understood chief executive Dany Bahar's plans are being backed by their Malaysian car-producing owners, Proton – who, in turn, are backed by Malaysia's state-run banks. So it could be argued the bill for all of Group Lotus' plans – rumoured to cost close to �500m – will end up at the feet of Malaysian tax payers. On the other side, Fernandes is one of three Malaysian shareholders at his Hingham F1 team, who are also trying to keep their sponsors sweet. Any court cases will ultimately come down to a hole in the team's racing budget.

What happens now?

The court case to decide who is in the right is not expected to be concluded until autumn 2011.

That means, as it stands, Formula One in 2011 will have a Hingham-based Team Lotus backed by Fernandes, running black and gold cars with Renault engines – and a Enstone-based Group Lotus-sponsored Renault team, commercially known as Lotus Renault running Renault engines and two black and gold cars.

If that sounds incredibly confusing, that is because it is – and not a situation that will appeal to many racing fans, or the powers that be at the sport's governing body, the FIA.

• Lotus time line:

1952: Colin Chapman set up Lotus Engineering and starts to build cars.

1954: Chapman splits off a separate entity, called Team Lotus, under which he enters motor racing.

1959: The other divisions – including Lotus Cars and Lotus Components – become Group Lotus.

1986: Group Lotus is bought by General Motors.

1994: Team Lotus enters administration and is bought by David Hunt, but he shuts it down after being unable to make the outfit financially viable.

1996: Group Lotus is bought by Malaysian car producer Proton who, rumour has it, believed they were also purchasing the Formula One team.

2010 – March: Air Asia founder Tony Fernandes enters a new team, Lotus Racing, into Formula One with a five-year licence to use the name granted by Proton.

September: Fernandes buys the Team Lotus rights off Hunt and plans to race under that name from 2011, prompting Proton to revoke the original licence. Both threaten legal action over use of the Lotus name in Formula One.

December: Group Lotus confirms it will sponsor the Renault F1 team next season.