Formula 1

What is wrong with Formula 1’s new venues?

With no new development apparent and a lack of funds, Korea will need more than a good track layout to save it’s existence in Formula 1 into the near future.

For a sport that’s existence is impacted largely by outside forces, the uninterrupted existence of the Formula 1 World Championship for over sixty years, since it’s creation in 1950, is as much a tribute to the organisation rather than the popularity of the sport. No more so than at present is this apparent as nations around the world queue up to obtain the right to host Formula 1 Grand Prix’s, often in parts of the world normally not associated with motorsport. In the last ten years Formula 1 has visited 9 new venues with a further 3 venues confirmed by 2014, more than in any period during the sports history. However, while these events should serve to vindicate the wide spread appeal of Formula 1, it has become a worrying trend to hear that many of these events continued existence is in question. With the cost of hosting a grand prix so high and as such, decisions seemingly reached after considerable research, why are recent events struggling to survive and who is to blame for this recent trend?

To outline the problem, here’s a quick run down on the status of the races that have debuted since the 2001 Formula 1 season. The Bahrain Grand Prix was not fully completed at the time of its first race in April of 2004 but had staged successful Grand Prix until it its cancellation in 2011 due to political unrest in the gulf state. While included in the 2012 calendar, the race remains in doubt following further unrest in recent months.

The Chinese Grand Prix is one of the success stories of the recently added circuits on the Formula 1 calendar and since its first race in September 2004 it has hosted successful Grand Prix. The race has had its problems with the former manager of the circuit being convicted of embezzlement in 2007 and declining crowds, however the race maintains the support of the government and is reportedly on the calendar until at least 2018.

The Istanbul Park circuit, debuting in August 2005 is no longer an event following its removal from the 2012 calendar. Despite being very popular with drivers, the tracks removal from the calendar had been suffering from poor attendance.

In 2007 and 2008 the Japanese Grand Prix was held at the Fuji Speedway. Owned by Toyota, the event would return to Suzuka for 2009 and never return due to cost reductions by the Japanese car maker. In it’s two years the event struggled with transportation problems and inclement weather which marred both races.

2008 proved to be the year of the street circuit with the debut of races around the America’s Cup marina in Valencia and under lights in the city of Singapore. The success of these circuits couldn’t be more contrasting with Valencia proving to be very hard for overtaking and the local government recently revealing their need to renegotiate their contract with Formula 1 which exists until 2014. Having attended the race in 2009, the event is an organisational nightmare but its location and the atmosphere surrounding the circuit is an awesome experience with beaches, restaurants and nightclubs close by.

Where Valencia is awesome, Singapore is a revelation and an absolute must for any Formula 1 fan. Having attended the race in 2009 and 2011 the unique atmosphere, organisation and location within the city, are a tribute to how a Formula 1 event can be effectively staged. The race is not cheap to run and even as early as its second year, Singapore was requesting marquee status from Formula 1 in a bid to reduce the costs of staging the event.

The inaugural Abu Dhabi Grand Prix concluded the 2009 Formula 1 season and has since evolved into one of the most spectacular venues on the F1 calendar. The track is hampered by a lack of overtaking opportunities and local support. When attending the 2010 showdown it was significant to note the empty seats in the grandstands. To the casual observer the event looks like it would run at a loss, but even in the oil-rich state one wonders for how long this will be tolerated.

2010 saw Formula 1 venture to South Korea and the newly constructed Korean International Circuit. While the track was conceived as the first stage in a larger development in the city of Yeongam (demonstrated in the Red Bull computer simulation of the track), it has become quickly apparent that this vision will be a long time in the making. Only after one year the original organisers were removed and the 5 year contract asked to be renegotiated due to lack of funds. Upon arrival at the circuit in 2011, journalists reported that very little had been done to the facilities, noting the presence of champagne corks on the podium and last years names painted on the garage floors. The organisers later revealed that the facility had only been used for a quarter of it’s first year of operation. While included in the 2012 calendar, the race’s existence is in serious jeopardy. With no likelihood of further development in the near future, the track remains in an area of South Korea devoid of little infrastructure to maintain the Formula 1 community beyond its current contract.

The debut of the Indian Grand Prix in 2011 brought an important new venue to Formula ,1 so much so that journalists failed to note the poor condition of the track and its facilities at the time of the race start. Such poor conditions were seen in the scaffolding used to house the starters box and the construction dust  in the pit lane. In an interview with the BBC prior to the race, Bernie Ecclestone described the event as a ‘prototype’ which will enable the organisers to fix things that don’t work in time for the 2013 event. The race circuit serves as the focal point for the Jaypee Sports City development which appears to be as ambitious as that in Korea. However, unlike Korea, the event appears to have the support of Formula 1 officials, keen to develop the sport in such an enormous market.

With a coloured history surrounding some of the recently introduced events on the calendar, it’s hard to understand why other nations would want to host a Formula 1 Grand Prix. However this has not deterred three new venues that will debut on the calendar in the next three years. These events include the United States Grand Prix in Austin, Texas in 2012, the American Grand Prix in New Jersey and the Russian Grand Prix in Sochi. However, controversy with the Austin event has seen construction of the Circuit of the Americas in Austin postponed and then recommenced following a disagreement between the event organiser Tavo Hellmund and the main investor in the facility, Red McCombs.

Admittedly that was not a quick run down but such is the extent of the problems faced by the new Formula 1 venues.

While many will attribute the work of Bernie Ecclestone in the early 1970s for the transformation of Formula 1 from an amateur pursuit into the multi-billion dollar event it is today, it is the effect that this influence has had on the race promoters that has shaped F1 in recent years. In the 50s and 60s race promoters would pay appearance fees to large teams, with additional prize money coming from the earnings of the event, the chance at which would attract smaller teams to enter. By combining the interests of all teams into the Formula One Constructors Association (FOCA), promoters were forced to pay the teams one large amount to host a Grand Prix which combined with the money raised from television rights, would go into a big pot that would be divided in accordance with a teams placing in that years World Championship, the up shot being that even the team in last place would earn more money than ever before. In addition to paying a larger appearance fee, Ecclestone gained control of the rights to the profits from all on-track sponsorship at the events as well as the rights to the corporate hospitality, now known as ‘The Paddock Club’. The strangle hold over this income stream from each event has reduced the promoters profits to event ticket sales, naming rights sponsors and other off-track promotional and sponsorship deals. Unlike the hosting of a cricket game however, motor racing is expensive to stage and that’s even when you have a purpose-built circuit. These issues have meant that it is virtually impossible for a Formula 1 event to be run at a profit based on the direct income raised from staging the event alone, forcing promoters to go cash in hand to local and federal governments to seek funding. The obvious question that arises from this is why?

The simple answer is that Formula 1 is one of the true global sports around the world and the hosting of a Formula 1 Grand Prix brings attention to the city and country in which the event is staged. In addition to this, the event attracts tourists from all around the world who, in the case of Australia, usually incorporate the event into a larger trip. The event also brings the attention of various major corporations to the host country which can have invaluable benefits on future investment in the economy. Finally, Formula 1 fans are usually from a more affluent background and not opposed to spending a lot more than your average tourist, thereby boosting the local economy of the host city. For these reasons, the existence of Formula 1 events, supported by local and federal government funding, are a constant source of public discussion and criticism by local citizens who   are unable to see the additional benefits derived from the hosting of a Formula 1 Grand Prix. It is this need for funding that has placed Valencia, Australia, Korea, United States, France, Britain, Germany and Spain under increasing pressure to justify the need for their events, something that never used to happen previously. But F1 needs events to ensure its global exposure and television rights are intact, so why are the events becoming so costly and how are new events avoiding this scrutiny?

The answer to this question is that the success of Formula 1 is its own worst enemy. Such is the success and global exposure of Formula 1 that nations seeking greater exposure around the world have looked to Formula 1 as an annual event which can not just help the local economy but lift the profile of a nation to the rest of the world. But how? You only need to look at the nations that Formula 1 has gone to of those mentioned above to understand why. Singapore, China, United Arab Emirates, India, Russia, and Bahrain all have three things in common, they aspire to be viewed alongside the super powers of the western world, their citizens have very little say in the determination of government and by 2014 they will all have a Formula 1 Grand Prix. In contrast, Turkey and South Korea are two new venues and both appear likely to have nothing in common with the 6 nations mentioned previously. Should there be a concern in this trend? As an ardent Formula 1 fan there is nothing better than seeing the growing support for the sport around the world. However, when the inclusion of a new country in the calendar is dictated more by the interests of a suspect government  than as a result of the demands of the local population, the purpose image of the sport becomes blurred and cheapened. It is this word ‘cheap’ that is certainly not associated with Formula 1. Unashamedly, it is the sports extravagance that has become a part of its appeal however, there is something slightly disturbing about nations constructing motor racing venues under the auspices of a need to feed the locals thirst for speed when the majority of locals only have a thirst for water. The problems faced by Bahrain only confirm the sort of countries that Formula 1 has exposed its image to for the lure of money. But if these countries governments are somewhat suspect, why would Formula 1 expose themselves to them, how much money are they paying to host a Formula 1 race?

The answer to this question is simple. Heaps. In fact, such is the annual fee being paid by these newly introduced nations that it has impacted on the amount of money required to be paid of other venues, further ensuring their unprofitability and greater reliance on government funding. It has been reported that new venues are paying a staggering 50 million US dollars a year to host a Formula 1 event with multi-year contracts containing percentage increases of this fee for each preceding year. In reference to the problems faced by race organisers above, it’s no surprise that Valencia, Singapore and Korea have all raised issues with the hosting fees. What is ever-increasingly apparent is that the contracts have breach clauses that are so financially crippling that promoters are better off staging the races than breaching the contract. However, a promoter that merely hosts an event so as to ensure a contract is not breached, is hardly going to provide paying spectators with an event worthy of the prestige that has taken over 60 years for Formula 1 to attain. What is almost assured is that Formula 1 will never return to South Korea ever again and the town of Yeongam will have a motor racing facility estimated to have cost around 77 million US dollars snaking through the landscape’s rise paddies. If Mr Ecclestone cares about the image of the sport he will reduce the annual hosting fee to give the event a chance. But if recent history is any guide however, Ecclestone simply won’t do it.

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Discussion

2 thoughts on “What is wrong with Formula 1’s new venues?

  1. New Jersey Governor Chris Christie announces that the New Jersey will host a street race in 2013. The proposed venue alongside the Hudson river will ensure that F1 will take place in the footsteps of the New York skyline.

    Posted by arrow7f1 | November 23, 2011, 11:31 pm

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  1. Pingback: Folding On The River: Can Formula 1 Really Afford to Bluff New Jersey? | RACEFANS - September 4, 2013

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