24/02/2011
NEWS STORY
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No wonder there are frantic talks to try and insert the Bahrain Grand Prix at the end of the season. According to a report in today's Telegraph by Pitpass' business editor Chris Sylt, F1 is expected to lose around $100m in revenue due to the cancellation of the race by the Crown Prince of Bahrain.
Some of the biggest losers will be F1's 12 teams since they are believed to have penalty clauses in their contracts with sponsors which would be triggered by missing a race. Data from F1's industry monitor Formula Money shows that the teams are expected to loose an estimated $40m from missing Bahrain with Ferrari set for the biggest fall at $11m. The Italian team receives more income from sponsorship than any of its rivals and so it stands to lose more from the race being given the red light.
The biggest-spending sponsor on the Grand Prix is Bahrain's national airline Gulf Air which pays an estimated $6m for naming rights to the race. Its fee comprises around half of the total income from trackside advertisers and it will leave a big hole in the pockets of CVC, the private equity firm which majority owns F1's rights-holder Formula One Administration (FOA).
FOA receives all the revenue from trackside advertising at most F1 circuits and it also gets the race hosting fees. Bahrain's royal family pays an estimated $34m annually but FOA's chief executive Bernie Ecclestone has confirmed he will waive the fee since the race will not be taking place. The country's rulers will still lose out on the revenue from ticket sales which totalled $14m last year. It may sound like a lot to lose but if the protests escalate it will be the last thing on their mind.
Remarkably the slogan of the Economic Development Board of Bahrain is 'Business Friendly Bahrain'. It will take the country a long time to recover anything close to that reputation.