Is F1 pricing itself out of business?

[sportsman]

More and more countries and tracks are questioning the value of the exorbitant fees charged by FOM to hold an F1 GP.
This is from an Australian MP not the local mayor.If things go on at this rate all F1 races on traditional tracks will be dropped and F1 GP's will move even further eastwards with Eastern nations only to glad to stump up the fees.

http://www.autosport.com/news/report.php/id/89594 A member of Australia's parliament has called for the country's F1 grand prix to be dropped once the current contract comes to an end.
Michael Danby, whose Melbourne Ports electorate includes the Albert Park circuit where the race is held, said locals are tired of the event, and that the rising costs are not justified anymore.
"The grand prix may have been a good deal in 1996, when it cost the government only $1.7 million; but,
with falling crowd numbers and taxpayers footing a $50 million-a-year bill, the government should cut its losses and walk away," he told parliament according to Reuters.

This from Barcelona.

http://www.autosport.com/news/report.php/id/89595 The future of the Spanish Grand Prix at Barcelona beyond the 2012 season will depend on economic factors, according to Catalunya's president Artur Mas.
"The continuity of the F1 race at this circuit is guaranteed this year and, probably, next year too," Mas was quoted as saying by El Pais newspaper.
"And I trust it can have continuity also in the future. But that will depend on how the economic situation develops and on the results we have over these two years.
"Everybody knows that we have restrictions on the budgets and that F1 is loss-making. But we also have to consider the economic impact that it has and how it promotes the country. It places Catalunya in the world," he added.

A 3 day GA ticket at Silverstone has gone up from £130 last year to £149 this year.

 

[Chad Stewarthill]

If things go on at this rate all F1 races on traditional tracks will be dropped and F1 GP's will move even further eastwards with Eastern nations only to glad to stump up the fees.

And at that point, Bernie (or his successor) would have a racing series that they might call F1, but which would have ceased to actually be F1 (in my eyes at least).

 

[FB]

Hence, I suppose, why Bernie has gone chasing races in parts of the world where they don't care too much about the cost of the race more the presitige of having a Grand Prix. Shame is we lose tracks like Spa & the A1 Ring and races in France, Germany & Australia (possibly), Portugal, UK (nearly) and the US as they have to be financially viable and not rely on government subsidies.

Perhaps Max's budget cap wasn't quite so wacky. If the teams demanded less Bernie could still make his vast profits and everyone carries on. Or perhaps both the teams and Bernie (CVC) should expect less? The joys of living in a capitalist economy...

 

[siffert_fan]

I am afraid that FB is 100% correct. The numbers quoted for Melbourne is truly alarming, if true. An over 30-fold increase in fees in 15 years is outlandish! No wonder traditional sites are walking (and in some cases running) away. If the Bahrain race is cancelled due to security reasons, that may be the wake-up call Bernie (curse him) needs about placing too much dependance upon "economically emerging" (but politically unstable and repressive) countries.

 

[fat jez]

I'm sure I posted a thread along these lines when the Silverstone contract was up for renewal, but I can't find it. At the time, I raised the point that the race fees were reaching levels that the ticket price was out of reach for many people. At some point, the ticket price has to reach a level that people will not pay it, such that ticket sales are poor and therefore the money going to the circuit does not cover their costs (although many races do have government subsidy for this reason).

Is there any need for Bernie/CVC to charge as much as he does for a race? His profit margin must be massive!

 

[Galahad]

It's boring to keep banging the same old drum, but this problem could be avoided, as could the budget cap, if the sport was owned by the teams themselves. Bernie acts in accordance with his bosses' wishes; F1 remains an attractive broadcastable product whether or not there is anyone in the grandstands.

They should never have backed down at Silverstone '09.

 

[fat jez]

sadly though, the people running the asylum have no interest in the lunatics inside (to paraphrase the well known saying).

Even if F1 is still a broadcastable product (which I don't doubt it is), it still needs circuits to be run on, which means paying Bernie's fees. If the circuits won't pay those, there won't be any races - hence more and more races in cash rich countries with no history in motor racing, or races in countries where the govt deems the investment worthy for an increase in tourism.

 

[Speshal]

Sad state of affairs really

 

[Grizzly]

Everyones skint, everyone is reducing costs, except those who consider themselves above cuts. The monopolies - banks and FOM etc. The appeasement cannot go on forever, sooner or later they will get the middle finger.

 

[Galahad]

By the end of this year CVC are scheduled to have finished paying off the debt they took on when they bought F1. There seem to be enough candidate venues for F1 to continue showing increasing revenues for the immediate future, then if things do take a downward turn in the future (and Bernie is nothing if not a negotiator, so don't hold your breath) then they can always sell up. But to whom?

 

[fat jez]

you can be sure that if CVC do sell up, the price they set will be based on the current market value of FOM, which in turn is based on the revenue they get for holding races. I can't see anybody paying that much and then reducing the race fees - they'll want a return on their money too

 

[sportsman]

But F1 can still be a very broadcastable product without the FIA and FOM.
I know many people who work in F1 and F1 related companies.Not team principals or engineers or anyone directly related to the actual on track activities.
The people I know are lawyers, marketing managers and accountants.
If the breakaway series had gone ahead and it could have done so easily as the programme for it to happen was well advanced.
Tracks had been contacted to negotiate race fees.Local national TV companies had been contacted with a view to them supplying cameras and selling their live feeds to other national TV companies.Tracks that do not meet the FIA's current safety standards for F1 could have been used and we would have seen the return of many classic tracks.
The big teams ie Ferrari, McLaren Red Bull would all have been there.
There were some contractual problems especially with the drivers huge salaries being a stumbling block.
It would have taken some time to iron out all the problems but it could have been done.
As it would have been more European based the TV income would not have been as great and sponsorship contracts would have had to be renogatied.
But it could have been done.
The FIA have no say in American racing series unless its their own FIA Formula One world championship.The US F1 GP is subject to the FIA ruling as its a race in their series.
The breakaway teams need not to have had any dealings with the FIA or FOM.

 

[Grizzly]

What it unfortunately wouldn't have been though, was "Formula 1"

 

[fat jez]

perhaps not so much a case of could have been done but should have been done?

Grizzly, it would have been F1 in all but name. Where it might have failed is if the national broadcasters of F1 in each country have a contract that forbids them from broadcasting a competing series.

 

[sportsman]

Formula One Group (FOG) have just lost lost a court case against ESP registering the name F1 Live.

http://www.crash.net/f1/news/166753/1/fog_loses_battle_over_f1_abbreviation_rights.html The Formula One Group failed this week in its bid to gain exclusive rights to the 'F1' abbreviation.

The General Court in Luxembourg, Europe's second-highest court, made its ruling after an appeal by Formula One Licensing, the commercial rights arm of the Formula One Group. It followed a decision by trademark agency OHIM back in 2007, which ruled in favour of Racing-Live, which had sought to register 'F1 LIVE' as a trademark.

 

[Grizzly]

Grizzly, it would have been F1 in all but name. Where it might have failed is if the national broadcasters of F1 in each country have a contract that forbids them from broadcasting a competing series.

yeah, but...... jus'saying.....

It would be the polar opposite of Lotus wouldn't it.....

 

[Grizzly]

Formula One Group (FOG) have just lost lost a court case against ESP registering the name F1 Live.

This refers to the term "F1" though doesn't it? i followed the close of this case. "Formula 1", "Formula One" etc ARE all restricted trademarks.

 

[sportsman]

Yes Grizzly they are.But the teams could have called their series F1 Formula which is not at registered trademark.
Like many of these cases it just a play on words.

 

[Speshal]

Formula 1st ?

 

[fat jez]

I'm surprised they got away with the F1 trademark. A google search on F1 returns hit after hit about motor sport. Unless F1 was being used in a completely different context (e.g. the F1 Cleaning Company, indicating the pinnacle of cleaning), then I'd associate it with motor racing.

F1 Live to me would suggest live coverage of motor racing in some form, whether it be live video feed, timings, news, etc.