When the #F1 dream leaves town

Formula 1 has grown enormously since the days it raced in predominantly European venues. A circuit must be awarded an FIA license to host an F1 race, and the criteria for acceptance are extensive and exacting.

Of course this is good for all as safety for the competitors and the quality of the facilities for the fans are high on the agenda. Yet the costs of delivering such a facility which in effect hosts 1 premier event per year are astronomical.

Sochi will come on board next year, and this is a circuit which snakes through the Winter Olympic Park which will hold the 2014 international event. Whilst the costs are shrouded in secrecy, estimates suggest that the final bill will be 260m euros – double that of the original estimate.

The most recent entrant to the F1 calendar is the impressive venue in Austin Texas. Privately funded predominantly by American billionaire Red McCombs, the construction costs have been reported somewhere between $350-450m – a rather broad financial spread it has to be agreed.

The Shanghai International Circuit came in at $450m and so the Korea project was a bargain at a mere $250m.

Street circuits of course are a lot less expensive to deliver in up-front capital expenditure, yet the project in New Jersey requires $100m to get the project off the ground. Much of this will relate to the setup costs required which will be a one off.

The problem with street circuits is the annual cost of setting up the track, the grandstands, the temporary paddock and then removing them. Ecclestone commented 2 years ago that Melbourne in the long run would have been better building a dedicated facility instead of the street venue of Albert Park.

“I suppose in reality it would have been the right thing to do. It would have been 10 years ago or whatever and it would have been built cheaper than it would be today”.

By the time the hosting fee is paid along with the circuit set-up and tear down costs, somewhere like Singapore is into the best part of $60m a year.

FOM and Ecclestone have been promoting F1 to new hosts for some time. The marketing department of FOM can be very persuasive; they have a team of highly paid lawyers who approach potential new F1 hosts, often national and regional governments because they have deep pockets and present to them a financial model which tells tales of unbridled economic wealth and treasures that will flow as a result of hosting an F1 race.

Billions, not millions of dollars are cited as the income that will be derived from the International prestige and tourism receipts over the life of an F1 contract.

Yet, the reality for South Korea will be a loss to the regional government of around $6-700m. The promise of vast swathes of international investment that would bring enormous economic benefit and regeneration to this neglected southern region of South Korea failed completely to materialise.

The cold hard reality is that local tax payers will be left with what must be the largest white elephant in the F1 history.

Valencia too bought into the dream. They signed a 7 year deal with Ecclestone to host an F1 weekend. The first race was held in 2008 and the last 2 years short of completing the contract in 2012.

The circuit was not universally loved by F1 fans and the circuit layout tended to deliver processional races. Valencia hoped to do a deal with Barcelona to alternate the Spanish GP as happens in Germany.

The Circuit de Catalunya was in financial trouble and negotiations began. The Mayor of Valencia Alberto Fabra hit out this week at his Catalunya counterpart Artur Mas, for reneging on plans to alternate with Valencia the Spanish GP. “We had talks with Mas, but he changed his criteria. First he agreed, and then he did not. I regret the change of position, as administrations should be loyal to their word and commitments,” Fabra commented on regional TV.

The bottom line was the cost to the tax payer was unjustifiable my the cities administrators as Fabra reveals, “I cannot say to an essential supplier ‘I cannot pay you because we have Formula One’.”

The concern of course was that Ecclestone would still enforce the hosting fee’s for the 2 years Valencia failed to fulfil the contract with FOM. This would have been 54m euro’s, yet Fabra assures his constituents he has a legal agreement with Ecclestone which releases them from this obligation. “The document is being finalised, but I can announce that we will not pay any financial penalty. What we have agreed is that we will not use any equipment in other circuits”.

Slightly deluded, Alberto concludes “In meetings with Ecclestone I explained how difficult it is right now for us to cover the budget, but I left the door open for the future should there be different economic conditions and a private sector collaboration.”

As it turned out, at the 11th hour, the Barcelona municipality delivered up sponsorship to fund the Catalunyan event. The name of the circuit has since been changed to the Circuit de Barcelona-Catalunya.

We’ve seen many things in F1, but the sight of Cathedrals of motor racing falling into decay just a few years from them taking their first breath of life – is something new. And as sure as eggs are eggs, there will be a number of these derelict wastelands appear over the coming years.

India will take a ‘sabbatical’ for 2014 and Korea’s life expectancy is now short. But the pictures from the once glamorous Valencia – “the Spanish Monaco” – are shocking for us all to see.

pictures courtesy of ’20minutos’

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16 responses to “When the #F1 dream leaves town

  1. To be blunt:
    The greedy and the naive get their come-uppance…
    And the tax-payer pays…!
    And Bernie Stalin is laughing all the way to the bank…!

  2. It seems weird to see the old barriers still up on those streets…

    The following quote from the Valencia Mayor is perplexing. I’m wondering if it might be a translation issue…

    “…we will not pay any financial penalty. What we have agreed is that we will not use any equipment in other circuits”.

    Why would Bernie / FOM care about Valencia leasing their materials / equipment out to another facility?

    • In Bernie’s world everything had to be new and shiny.
      In Bernie’s world nobody’s gonna make a profit unless he does.
      In Bernie’s world divide and conquer is the motto.

      Any other suggestions?

      • Fear of spiders is arachnophobia, fear of tight spaces is claustrophobia, fear of Bernie is…reason!

        Bernie doesn’t pick the wrong country for a circuit…you pick the wrong end of the stick!

        Bernie does not sleep…he waits!

        When Bernie plays Monopoly…it actually has an impact on the world economy!

  3. somebody should send these pictures to joe saward who constantly argues that local governments should pay for f1 facilities and hosting fees and claims f1 is a good deal. unfortunately i can’t, he banned me from his blog because when he claimed some silly season rumour was rubbish, i dared to remember him of the fact that he said the same thing about lewis, kimi and james allisons respective changes of teams.

    • I think the thruth is that it can be a good deal, but you have to make sure everything is ok. Austin looks good in all area’s: track, facilities, city, hotels, food and promotion.
      On the other end of the spectrum you’ll find Korea and Valencia – who lacked in more than one area. Topped of with a big economic crisis.

    • Seems like you have a bit of a grudge against Joe, Anijs….. that, coupled with the the persausive and commonly known facts that are stated above by Verstappen, seems to suggest that you are not thinking this through clearly and seeing the bigger picture

      Chill, baby… Chill

      • Ha Ha ditto – you don’t have to be rude – just try challenging his view – about anything. There is no actual ‘discussion’ on that site – it’s just the official Joe Saward Fan Club…
        IMHO, of course 😉

        • I dont go there for discussion, I go there for his lifetime of experience and knowledge, and the “other side” of being in the circus

          Discussion (or nerds, bitching amongst themselves, as my Mrs quite rightly calls it) on the internet, isnt what its cracked up to be by many posters, you know

      • I’m never rude. I don’t remember the actual story he rubbished, but it was something about amateurs jumping the gun on a silly season rumour. All I said was that, with all due respect, these amateurs so far got three stories right that he insisted couldn’t be true.

        The guy might have a lot of experience but he can’t handle criticism at all and you have to take his articles with a pinch of salt because despite all of his connections and experience he got three of the biggest stories of the last two years wrong (Lewis, Allison and Kimi), some of the stuff he writes is very clearly biased and he us or was involved with Caterham and was very reluctant to divulge that information. He can be entertaining, but so far despite being “amateur” and not attending every race in the last twenty years, the judge 13 has proven to be much more reliable that him

  4. I don’t know if Thejudge13 yearly Oscar (we need a better name than Oscar) awards are still being contemplated. But here are a few suggestions.
    Here are some of the nominations for future book of the year :-
    1/ Mark Webber. “Tell it like it is”.
    Mark Webber’s account of his life in F1, with his thoughts on the people and teams. We wont spoil it by giving too much away, but we love the section, 300 pages, “that bastard Vettel…”
    Published by Retribution. 350 pages.
    This replaces Mark’s previous book “Best swimming pools in Monaco”, which didn’t cause the splash that was expected.
    2/ Danilo Schoeneburg. “Vettel, my secret lovechild, why he is so perfect”
    More of the usual stuff about Vettel and how wonderful he is, even when he lies and breaks agreements and defies his team boss. Danilo makes an interesting argument about why Vettel should be made a saint.
    Published by Bollocks Press. 3000 pages.
    3/ Johnny Herbert. “Stating the bleeding obvious”
    This book shows why Johnny is the top man in the world reporting on F1. His knowledge is unsurpassed. It includes his comments, such as “ In order to get in front of him, he will need to overtake him” and when being told it had started to rain, he was asked how this would affect the track, his reply “Well, it makes it wet usually”.
    Published by Flogging a Dead Horse. 275 pages.
    4/ Christian Horner. “Hair styles of the pit lane”
    This book was originally 250 pages, but as Christian uses four words where one will do, it is now 1000 pages.
    Published by Flyaway. 1000 pages.
    This book replaces Horner’s parenting book, “How to deal with a petulant child”, which was withdrawn after the Malaysian Grand Prix.
    5/ Sebastian Vettel. “Small book of winning celebrations”
    This is a very small book, only two pages, however, there is a DVD included, which shows every celebration and you can listen to his radio messages. This is guaranteed to cure anyone, apart from Danilo Schoeneburg, of insomnia.
    Published by Crazyfrog Press. 2 pages.
    6/ Thejudge13. “Book of boobs”
    This book is co-written by the judge’s wife. It is a lavish book, full of illustrations, and must have taken a lot of research. There is even a pop-out section. It is the ideal bedside book for the single man.
    Published by SizeDDpress. 101 pages.

    • Ho Ho – Laugh a minute – well done Mike…

      How about:
      7/ ‘Gone With The Wind’ by cavalinorampante – the story of how Ferrari lost their way after Michael Schumacher, and how some people just cannot get over it…
      57-Varieties Pamphlet Press: 17pp.

      8/ ‘V for Vendetta’ by Mark Webber – another view of the intrigues of F1 from this popular author… Soon To Be A Major Motion Picture…!
      Vendetta Publications: 247pp.

      9/ ‘Cloudy With a Chance of Meatballs 3’ by SkyTV Weather Service – A Guide to Forecasting Typhoons, and other Climactic Crises…

      10/ ‘The Fast Lady’ by Lewisham Ilton – A longwinded review of a painfully short romance…
      Chihuahua Press: 378pp.

      11/ ‘Dogs of War’ – the long awaited sequel to the above…
      Chihuahua Press: 378pp.

      12/ ‘I Shat Myself Giggling’ by Danny Shoeburg – how one man overcomes his occasional shortages of tranquilisers after watching F1… thoughtfully provided on a roll of toilet tissue…
      Tranquilidad Press: One roll.

      On second thoughts these sound like film scripts… except the last one 😉

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