30/04/2009
NEWS STORY
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Over the past year it has been tough to avoid reports about F1 circuits which are at risk. Donington teetered on the brink soon after it was handed the British Grand Prix contract. The German GP announced huge losses. China had to rely on fancy arrangements of grandstand seats to make the most of the lack of spectators. And Canada and France simply bit the bullet. It's no surprise that the circuits are in trouble. The cause is an average hosting fee of £16m ($23.7m) but F1 boss Bernie Ecclestone has come up with a solution, courtesy of Robin Hood, take from the rich and give to the poor.
F1's biggest cost is paying the teams 50% of the sport's annual profit - a total of around £336m ($500m). The teams provide Ecclestone's company with no direct revenue but, in contrast, the circuits bring in around £270m ($400m) annually. They receive no revenue from F1 and are forced to foot the hosting fee from ticket sales alone. Ecclestone has finally realised they need a helping hand.
Writing in the Financial Times, Pitpass' business editor Chris Sylt reveals that Ecclestone plans to cut in half the amount that the teams are getting from F1 by returning to a deal which he had with them before 2006. His reasoning being that some teams have refused to sign a new Concorde Agreement committing them to F1.
"They want to be paid in the same manner as if they had agreed to be committed for five years but they don't want to be committed. So I am saying now, and they will probably get a letter saying, let's revert back to the deal we had before," says Ecclestone.
The previous Concorde expired at the end of 2007 and entitled the teams to 47% of the revenue from the sale of television rights which equated to approximately a quarter of the sport's profits. Although several of the teams have refused to sign the new contract, Ecclestone paid them at the higher rate anyway.
"They shouldn't get the prize money," he says, adding "we are now running more of a cash on delivery service. You sign the contract and we will pay you in full." Ecclestone explains that the teams want the option of leaving included in the latest draft of the Concorde, so he says "we should revert back to the deal we originally had, 47% of the television rights, and they can go where they like."
He adds "we should be paying a lot less to the teams and charging the circuits a lot less."
If the teams don't sign a new Concorde, and their payment is cut, Ecclestone says he would not rule out acquiring more race tracks for his portfolio which already includes Turkey's Istanbul Park Circuit.
His ultimate aim is to introduce to F1 companies from emerging markets which are exporting globally but do not have worldwide brand presence. "We can put their brand on the front pages," he says.