08/03/2010
NEWS STORY
F1 has been on a roll recently when it comes to its calendar. First South Korea was added to this year's roster; then Pitpass revealed that a Grand Prix through the streets of Rome was on the horizon; next Silverstone's place was guaranteed until 2026 and Canada too made a dramatic return for 2010.
How will all these races fit on the calendar given that the teams' agreement with F1 boss Bernie Ecclestone prevents there from being more than being more than 17 Grands Prix? Many commentators expected further races to get the chop in order to fit in the new ones but according to a report by Pitpass' business editor Chris Sylt in today's Express this is far from the case.
Over lunch in his new regular haunt of the first floor Armani café on London's Brompton Road, Ecclestone confirmed to Sylt that when it comes to adding races to the calendar he "can't go beyond 17." However, this hasn't stopped him and he adds that "Rome is due to come in in 2013...we will have 20 races and the teams will be happy with it."
F1 has never before had as many as 20 races on its calendar and this is down to the increased cost of travelling to more Grands Prix as well as the longer period of time team staff would have to spend away from home. However, one key to getting the teams to agree to it was the appointment of McLaren team principal Martin Whitmarsh as chairman of the Formula One Teams Association (FOTA) in January. Ecclestone says that "you've got very sensible guys now like Martin Whitmarsh in charge of everything and he will understand because he is a business person."
This move could have a huge impact on the business which Ecclestone runs. The race hosting fees for Canada and South Korea come to around £40m annually with Rome likely to pull in another £26m making up for the fact that the Italian GP at Monza only pays a tiny sum. In addition to this £66m there will be trackside advertising revenues of around £30m and corporate hospitality revenues of nearly £20m since F1 averages a haul estimated at £6.5m per race. In total, the addition of Canada, South Korea and Rome will bring extra annual revenue to F1 of around £116m.
It is a welcome boost for Ecclestone since F1 has been hit by falling interest in corporate hospitality and a loss of trackside advertising revenue with the departure of sponsors such as Dutch bank ING. The sport has annual turnover of around £860m but this needs to accelerate for F1's owners, finance firm CVC, to grow their profits.
F1 coincidentally pays £116m in interest annually on the £1.8bn debt which CVC secured from Royal Bank of Scotland and Lehman Brothers to buy the sport in 2006. With race hosting fees comprising around a third of F1's turnover the most logical way to increase revenue is to expand the calendar however this has not been possible without the teams' being in agreement.
More races means more money for F1 and so the good news for fans is that beloved Grands Prix are not likely to come under more threat from Ecclestone. Both Germany and Turkey were believed to be at risk but he has quashed these rumours.
"The Germans have no problem," says Ecclestone, adding that he will not scrap the Turkish Grand Prix despite just 36,000 spectators attending the three days of the race last year. Ecclestone's business runs the Turkish round and in December he reportedly asked the government to double the promotion fee he receives. However, he says that the race is here to stay and eventually the crowds will come. "It's an enormous market in Turkey. Eventually they will get themselves sorted out."
However, as has happened with the car manufacturers' departure from F1, practical concerns can often decide the fate of an involvement with F1 and if the race promoters don't make money then they may have no choice but to pull out even if Ecclestone wants them to stay. His response to this is simple: "if the promoters did their job properly they would make profits." It is something the Englishman knows a lot about.