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Over the past few months there has been an above average amount of business news about Formula One. Pretty much all of it, including several supposed exclusive stories, has been about the flotation of F1 - something which may never actually take place as it is currently on hold pending an up-turn in the world's stock markets. However, that doesn't mean to say that the brakes are also on other business news about F1 as shown by an article in today's Independent written by Pitpass' business editor Christian Sylt. The news in it is not gossip about something which may never come to pass, it is a revelation about a behind the scenes development which has already taken place and will forever change F1's political landscape. It has been long in the making.
Around a year ago Sylt broke the news that all of F1's circuits were threatening to pull out of the sport if the FIA went through with its plan to introduce environmentally friendly 1.6 litre four cylinder engines in 2014. The circuits were concerned that the new engines would sound so different to the current ones that they would drive spectators away. This would affect the race promoters more than anyone else.
The fees paid by the circuits to host F1 are the biggest source of revenue for its parent company Delta Topco and represent around a third of all the money it receives annually. However, in return, the circuits get no share of Delta Topco's profit, nor any share of its revenue from broadcasting, trackside advertising or corporate hospitality. A few circuits are allowed to sell their own trackside advertising and corporate hospitality and pay a fee to Delta Topco for doing so. So it is the race promoters who would carry all the losses if crowd numbers fall due to the cars' engine sound getting weaker.
Many commentators mocked the circuits' threat and said that they would never leave the sport. However Pitpass knew that they were deadly serious and were being steered by Ron Walker, the chairman of the Australian Grand Prix and one of the most savvy businessmen in F1 after his close friend, the sport's boss Bernie Ecclestone.
In an article entitled 'Analysis: The rise of the circuits' we explained in detail that the circuits hold a trump card which is one of the strongest in F1. It has often been said that if the teams ever really left F1 en masse, Ecclestone could fill their place by moving up outfits from the GP2 series which is owned by Delta Topco. This kind of feeder series could provide a ready supply of replacement teams if F1's management was prepared to let them in. As we wrote in our analysis a year ago, it would be much harder to replace the circuits if they left F1 en masse.
The reason for this is that, according to the following document, there aren't enough F1 standard Grade 1 homologated circuits available to host the sport if all of the current tracks pulled out. In fact, F1 would be restricted to running at Dubai, Fuji, Imola, Magny Cours, Mugello, Paul Ricard and the Red Bull Ring. No disrespect to any of these circuits but the line-up sounds more suited to GT racing than F1.
It may be no coincidence that just hours after the circuits threatened to pull out of F1 the FIA agreed to increase the specification of the 2014 engines to a six cylinder single turbo. The victory emboldened the circuits and after a year of negotiations they agreed to formally unite and have formed the Formula One Promoters Association (FOPA) as Sylt's article reveals.
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