How Formula One guzzles money

 -  -  31


FORMULA ONE is burning more money than rubber and those running the races are getting tired of shelling out, writes GEOFF HARRIS:

The Brits are bucking at losing $8 million on a Formula One grand prix. Victoria’s been dropping 7.5 times that amount regularly for some years now, but the squealing hasn’t been too loud.

Certainly, any complaints from Melbourne fell on deaf ears when the diminutive but tyrannical Bernie Ecclestone ran F1.

There may have been quiet overtures to F1’s new controllers, America’s Liberty Media, in recent months – but don’t hold your breath for any news of progress, as in a reduction of Melbourne’s secret – as in confidential – GP fee.

Malaysia’s 19th F1 race in October will be its last.

It’s opted out of what is supposed to be the premier motorsport world championship, saying the “product” hasn’t generated the returns it wanted – especially since the quieter V6 hybrid cars were introduced in 2014, with turbochargers and recycled electric energy on top of the internal combustion engines.

The arrival of these V6s “was the beginning of the downward spiral of F1”, according to Malaysia’s GP boss Razlan Razali.

“Racing has become less exciting and that has had an impact on interest, both in terms of TV viewers and those coming to the track,” Razali says.

“They need to bring the excitement back.

“The new owners need to take back control of F1 and the racing.”

The British Racing Drivers’ Club signed a 17-year deal with Ecclestone in 2010 to keep the British GP at Silverstone, a circuit on an old airfield that on Sunday night will host its 51st world championship race – with Australia’s Daniel Ricciardo one of the frontrunners.

Unlike Melbourne, and some other venues around the world now, the race sanction fee the BRDC pays F1 is known.

It was £12 million in 2010. That’s about A$20 million.

The BRDC says the fee will be £17 million (A$28.4 million) this weekend.

That may be about half what Victoria pays, and a smaller fraction of the bundles handled over by newer events in Abu Dhabi and Azerbaijan.

The British GP, especially with Lewis Hamilton a triple world champion and going for a Silverstone hat-trick on Sunday, draws the biggest crowd in the world championship, with about 120,000 on race day.

Yet the BRDC says it lost £2.8 million (almost A$4.7 million) on its event in 2015 and £4.8 million (about A$8 million) last year.

It expects to lose “a similar amount” this weekend, although whether that’s similar to 2015, last year or the sum of the two is not clear.

“The event generates a lot of revenue,” says BRDC president John Grant.

“It’s a question of managing our costs, which we do extremely well.

“The reason the costs are higher than the revenue is the promoter’s fee – simple as that.

“It’s a crazy situation, where the top end of the sport is being subsidised by the grassroots, rather than the other way around.

“It’s not one we can carry on supporting.”

The BRDC has given Liberty Media notice, as it is free under its contract to do, that it wants out of its deal – due to run until 2026 – after the 2019 Silverstone race.

“We had to protect our position, even though it’s slightly awkward for everybody,” says Grant.

The BRDC doesn’t really want to lose the British GP, and nor does Liberty.

Along with the Italian and Monaco GPs, it’s been a fixture on the F1 calendar.

Unlike Melbourne’s Albert Park, with the cost of setting up and dismantling a temporary facility for a GP each year, Silverstone is a permanent circuit an hour or more’s drive north of London without those headaches.

 

There was a giant tease in London this week, with an F1 demonstration around Trafalgar Square and Whitehall – hinting at a possible street race in that metropolis, which technically is more permissible under a recent change of British law.

While Daniel Ricciardo naughtily veered from the official script for the demonstration with some “donuts” – spinning his Red Bull car in tight circles with the tyres smoking – Liberty was peeved at the BRDC’s “opt-out” announcement detracting from that downtown celebration.

Nico Rosberg and Lewis Hamilton during qualifying for the 2016 British Grand Prix. Pic Martin Lee (Creative Commons)

“Silverstone has chosen to posture and position … regretfully, to look for a short-term advantage to benefit their position,” Liberty chairman Chase Carey said.

Veteran F1 correspondent Joe Saward was at the London festivities and reports that lots of F1 promoters from around the world were there, with Australia one of three absentees he noticed.

Perhaps those that did front were there to form a queue behind the BRDC to ask for a reduction in their fees too.

F1’s hybrid cars now may be a lot more fuel-efficient, but the events they race in guzzle ever-increasing tons of money.

mm

Author: Geoff Harris

Motor racing – of all sorts – and Australian Football are the sporting passions, even obsessions, of GEOFF HARRIS, the journo known to family, friends and Sun News-Pictorial, Herald Sun and sportshounds.com.au colleagues as Harry.

Comments

comments

31 recommended
comments icon 0 comments
0 notes
215 views
bookmark icon

Leave a Reply