heat the butter in a saucepan over medium-high heat
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
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
reduce heat, and simmer until the vegetables are very soft and the pan juices have reduced by half, about 20 minutes
strain out and discard the vegetables from the sauce
return the sauce to a boil over medium-high heat, stir in 1/4 cup of Merlot wine, and reduce heat
simmer the sauce until it is reduced to 1/4 of its original volume, stirring occasionally, about 20minutes