Folding On The River: Can Formula 1 Really Afford to Bluff New Jersey?

Formula 1 in the forefront of Manhatten. Even stationery, an F1 car has never looked so exciting.

Behind the world-wide televised, champagne highs of the Formula 1 World Championship, exists a world that very few can find and even fewer still are invited. For many years now Formula 1 has traded on the appeal of excess, something that emerged unintentionally at first, but has been traded on by its owners ever since. This however is a world that functions amidst the less aesthetically pleasing, here every dollar is counted even if its source is ignored, and while entertainment is at its core, there is never a camera in sight. At any Formula 1 circuit a camera would be welcomed, after all, this room resembles no more salubrious surrounds than that found behind a podium’s placard. But it’s at this table where the appearance and character of Formula 1 has been transformed, here the honesty of Formula 1 will not enhance the sports image or immerse the fan in a way that will increase ticket sales. Here, much like the grid itself, the last ten years have seen the player’s, nationalities, and motives change. At stake, the right to host a round of the Formula 1 World Championship, and in a way that Formula 1 only can, the buy in has never been higher. Over the last ten years these new high rollers have ruled the table, placing bets the regulars dare not match even if they question the quality of their opponents cards. But now a new player has emerged. A Formula 1 race on the streets of New Jersey in the forefront of New York City, surely the greatest hand ever brought to the table. The question is, can the city with the greatest hand win the pot, or will Formula 1’s obsession with easy money see it squander it’s greatest chance at ensuring future success?

What’s Wrong With the Way The Game Is Played?

Malaysia was the only new country that Formula 1 visited in the 1990s. The race has remained on the calendar since its first race in 1999.

You don’t have to go too far back in history to find a time when a new venue in Formula 1 was a genuine novelty, back when new venues didn’t require teams to acquire immunisation. In the 80s Formula 1 had 14 new venues in 3 new countries, in the 90s it was 7 venues in 1 new country, but in 00s it was 7 venues in 5 new countries, and by 2014 the current decade will already have 5 venues in 3 new countries.  While the expansion of Formula 1 from about 16 races to the potential of being over 20 may be viewed as proof of the growing popularity of Formula 1 around the world, this is unfortunately not the case. After all, if Formula 1 was so popular in India and Korea, why are their races both poorly attended and already under threat of being removed within three years? The only reason I didn’t include Abu Dhabi and Bahrain is because they are not under threat of being removed, at least from the owners of Formula 1 any way. Is the poor success of these events because Formula 1 is not understood by the local population? Is it because people are unable to relate to Formula 1? Or is it because the popularity of other sports prevent Formula 1 from obtaining any firm grip on the market? The answer to these questions is an overwhelming “NO!!”

In late 2011 I posted an article entitled ‘What is Wrong with Formula 1’s New Venues’ which outlined the problems that have been faced by the newer venues on the Formula 1 calendar and the contractual arrangements made by Bernie Ecclestone which have limited the revenue streams normally open to race promoters. One of the messages that emerges from the article is that it is one thing to market Formula 1 as a sport of excess, it is another to manage it that way as well. In an article published on Autosport+ on 9 August 2013, entitled ‘The Ongoing Mess that is the Formula 1 Calendar’ Dieter Rencken also referred to the growing reliance Formula 1 now has on local governments funding the staging of grand prix, and the undeniable fact that democratic countries were the first to seek an escape from their hosting contracts when the effects of the global financial crisis began to bite.

Few would argue that of all the recent additions to the Formula 1 calendar, none have been as spectacular a success as the Singapore Grand Prix.

One point my article also noted was the success of the two additions to the Formula 1 calendar in 2008, the Singapore Grand Prix and European Grand Prix in Valencia. Now while the Valencia street circuit produced some very uneventful races, there is no denying that the 2012 edition was one of the best races of the last ten years and on the shortlist for the Racefans top 21 greatest grand prix of all time.    For all it’s organisational failures, for which I had the pleasure of experiencing in 2009, there was something undeniable about Valencia and that was that even if the race wasn’t great, it was still a spectacular event, and a brilliant television advertisement for both the sport of Formula 1 and the host city. Singapore and Valencia worked because they are a part of the host city, they put the sport in the face of the locals who are inevitably inconvenienced by road closures but will almost certainly be intrigued by the amount of attention and interest such an event brings from around the world. Should any of the locals find themselves near to the circuit when the Formula 1 cars are on track new fans to the sport will emerge. What is clear is that Formula 1 is at it’s greatest when it immerses itself on a street circuit and it is here that Formula 1 finds itself presented with the opportunity to stage a race on one of the greatest pieces of road imaginable amidst an affluent, English-speaking, global city, that has little exposure to world-class motorsport.

The New Jersey Hand Is Revealed

On 25 October 2011 New Jersey Governor Chris Christie addressed an outdoor press conference to announce that an agreement had been signed for the staging of a Formula 1 race on the streets of Weehawken and West New Jersey along the shores of the Hudson river and in the forefront of the Manhatten skyline. The reaction to the event was instant, a staggeringly spectacular venue amidst an audience that McLaren chief Martin Whitmarsh has conceded does not need Formula 1, but that Formula 1 needs. Short of having an American competing in the series, the timing was also seen as perfect given the struggles of the Indycar series in recent years.

In May 2012 the official plans for the circuit layout were published by Tilke, giving further legitimacy to the event being staged. Red Bull Racing showed their enthusiasm for the event by holding two media events, the first with Sebastian Vettel in Infiniti cars on the proposed circuit together with an appearance on The Late Show with David Letterman, while the second saw David Coulthard take the 2011 championship winning RB7 to the proposed circuit as well as completing a run along the Lincoln tunnel which connects New Jersey and New York. The images of these events alone are breathtaking, but despite all the positive indications that the event was going to take place, such is the scepticism that exists over the manner in which Ecclestone does business with host contracts, that doubts remained over how or why a city like New Jersey would fund an event that under the terms required by Ecclestone, would struggle to make a direct profit?

Problems Faced By The Promoter

The man behind the event. Leo Hindery has brought the New Jersey race to people’s attention, whether any of these have agreed pay for it is yet to be revealed.

In October 2012 after continued uncertainty over details concerning the race, came the news that surprised few but greatly disappointed many. Formula 1 would not be going to New Jersey in 2013 but would instead be postponed until 2014. The reasons began to reveal the dilemma faced by race organisers. From its original inception Leo Hindery Jnr. had indicated that the event would not seek government finance. In an interview with ESPN around the time of the events announcement in October 2011 Hindery spoke of the sanctioning fee stating ‘We are paying for the privilege, and it is a privilege. Our sanctioning fees, god I wish we could negotiate them, but we’re not allowed to.’ At this years Canadian Grand Prix Hindery was quoted as saying that ‘We didn’t have the capital investment to make it this year… we worked hard but we couldn’t do it… The fault for not having the race this June was mine. We weren’t ready and now we are and we’re thrilled.’

In May Chris Pook, former chief executive of ChampCar and a known friend of Bernie Ecclestone, was hired to organise the event alongside Hindery. Soon after, a 15-year deal was announced for the Grand Prix of America to be held in New Jersey. As recently as June of this year in an article in the Wall Street Journal, Hindery was declaring that the race was definitely on. But in late June of this year uncertainty grew once again when it was revealed that UBS had been brought in to try and raise $100 million to ensure the race became a reality, whether this money is needed as a guarantee or so as to purchase pavement is not known. But the announcements from the organisers have not been the only ominous sign for the staging of the event.

Formula 1’s Play

Bernie Ecclestone’s business tactics have change little over the years, but are Formula 1’s interests best served by tactics in this case?

In late July, in response to the announcement by Bernie Ecclestone that a deal to host the Austrian Grand Prix in 2014 had been signed, Mercedes F1 Chairman Niki Lauda expressed doubts that the New Jersey race would take place in light of the increasingly minimal dates available on the calendar. This calendar dilemma has emerged largely from the unprecedented decision by the FIA to prevent any other FIA sanctioned event from being held on the weekend of the Le Mans 24 Hours as if in some way to suggest that the decision by spectators not to remain in attendance for the entire 24-hour duration of the event was attributable to their need to watch other forms of motorsport. On 24 August Ecclestone, in an interview with CNN appeared to have given up hope on the event stating, ‘It’s not on the cards for next year… They haven’t got any money. It’s like Donington all over again – it is such a muddle and a mess that it is not worth doing.’ Only days later in an interview with Speed.com journalist Adam Cooper, Ecclestone was willing to acknowledge that the New Jersey promoters still had a contract to host the race and ‘If they comply with the contract, we want to be there.’ Ecclestone perhaps realising that unlike Donington there is no plan B with New Jersey or the fact that after being publicly open of his intention to bring Formula 1 to a venue near New York City for some 40 years, and with the completion of said deal within reach, Ecclestone had decided the priority was not to do everything possible to make the event happen but instead turn the screws through the media by criticising the organisers of the event and enter into discussions with other possible venues to take its place. Such tactics were not lost on Adam Cooper nor expert Formula 1 journalist Joe Saward in a recent post on his blog, a must read for any Formula 1 fan.

As for the circuit itself, the most recent video on YouTube of the proposed circuit is this, filmed in January of this year by Adrian Belinne. While there appears to be little changed in the condition of the road surface, the proposed pit complex is nearing completion, a positive sight in an otherwise uninspiring demonstration of circuit progress. Work on the road has been seen as a necessity and only once this commences can any thought on the presence of Formula 1 gain genuine traction. Nevertheless, the presence of a car park structure, purpose-built for the requirements of Formula 1 will surely not stand as Formula 1’s lasting impression on the Palisades landscape, and while it did in Las Vegas at least there was a race to accompany it.

Opinion

As for my opinion, I would like to see Bernie Ecclestone champion investment by Formula 1 into Formula 1, for an event that shows genuine promise for the future support and current branding of the sport. For years Formula 1 fans have had to put up with negative media coverage criticising the enormous fees requested by Ecclestone, and the reluctance of promoters and governments to continue paying at the possible expense of some of the greatest venues on the calendar. It should be remembered that Monaco does not need to pay an annual fee to host its race, why doesn’t F1 make a similar gesture to a street race in New York? Ecclestone says that Formula 1 has put up $10 million to help the organisers to which I simply say is not good enough. If Formula 1 is serious about growing the sport in the United States, accept the errors of its ways in the past, why doesn’t it waive the fee? For years Ecclestone has justified his fee to, let’s face it, the ‘hangers on’ of Formula 1 venues, on the grounds that a Formula 1 event provides financial benefit beyond revenue from the event itself. It’s about time Ecclestone and the owners of Formula 1 buy into their own sales pitch with New Jersey before the house loses big time.

What are your thoughts on the ongoing drama surrounding Formula 1 in New Jersey? Do you think it’s worth Formula 1 making a direct loss from the event in order to get Formula 1 onto the big stage? Do you think the event will go ahead? All constructive comments welcomed.