BUSINESS NEWS
Balancing the calendar
Like so many elements of Formula 1, the calendar is in a state of considerable flux at the moment.
New commercial rights holders Liberty Media entered the sport last year saying they wanted to retain the famous historic races and open F1 up to new markets. It’s still too early to say whether they are going to achieve their aim.
Part of the reason for that is the complex financial equation involved in holding a grand prix. This year there are 21 on the calendar – a record equalling the 2016 season. The number has gone up from 20 last year because of the return of the French GP for the first time since 2008.
The deal was struck by Bernie Ecclestone before his departure – just as the decision by the Malaysian government to end their 20-year tenure as hosts was influenced by the sport’s octogenarian impresario helpfully pointing out that they had been over-paying for the pleasure of having an F1 race.
France represents one possible model whereby ‘historic’ races can make themselves financially viable. The race will be funded by an arrangement in which a consortium of regional bodies pay about half the annual €30m cost, with ticket sales and partnerships covering the rest.
The grand prix has been championed by Christian Estrosi, the mayor of Nice and a former racing driver, who made his case on the theoretical economic benefits of the grand prix. The initial economic impact of returning a grand prix to Le Castellet in the south of France is calculated at €38m, with the overall economic benefit to the region said to be €65m. If those sorts of calculations are accurate, the appeal of a grand prix is clear.
It’s a model that might work for other races in western democracies, which cannot justify using public money to fund the entire race fee. Something similar could work for the proposed race in Miami in 2020, whereas if the muchtalked-about race in Vietnam comes to fruition, that would more likely be government-funded.
But it remains to be seen whether organisers of other historic races will be able to follow the French GP path.
Liberty have made it clear they see events such as the British and German Grands Prix as intrinsic to a successful F1, but the futures of both are in doubt.
Germany’s contract runs out this year. Liberty want to renew it, but face the same problem as Ecclestone before them: Hockenheim say they cannot afford to hold the race every year on the fees demanded of them, while the Nürburgring, with which Hockenheim used to share the event, have no money to hold one at all.
Then there is the UK. Silverstone’s contract runs out in 2019 after the British Racing Drivers’ Club exercised their option to end it. They said it was becoming unaffordable.
Liberty have said they’re determined to hold a British GP but the fee Silverstone was paying was far less than most races – it will be £18.6m in 2019. That’s £7m less than France are paying. So the question remains: how can Liberty and Silverstone come up with a deal?
ECCLESTONE POINTED OUT THAT MALAYSIA HAD BEEN OVERPAYING FOR THE PLEASURE OF HAVING A FORMULA 1 RACE