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heat the butter in a saucepan over medium-high heat
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cook and stir the yellow and red onion, shallots, garlic, tomato, carrots, and mushrooms until the onions are translucent and the carrots have softened, 10 to 15 minutes
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pour in the beef broth and 1 cup of Merlot, and bring to a boil, scraping and dissolving any browned bits of flavor from the bottom of the pan
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reduce heat, and simmer until the vegetables are very soft and the pan juices have reduced by half, about 20 minutes
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strain out and discard the vegetables from the sauce
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return the sauce to a boil over medium-high heat, stir in 1/4 cup of Merlot wine, and reduce heat
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simmer the sauce until it is reduced to 1/4 of its original volume, stirring occasionally, about 20minutes