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For some time Pitpass has been telling its readers that all was not well with New Jersey's planned Grand Prix of America. The race was announced in October 2011 with great fanfare but no indication whatsoever was given about the source of the estimated £190m ($300m) needed to develop the track and cover the Formula One hosting fee for the 10 years of its contract.
In January we featured a piece about "Why New Jersey needs to show us the money" but we still haven't seen it. Yesterday, the race was moved back a year to 2014 and with clouds of uncertainty lingering over it F1's boss Bernie Ecclestone has taken matters into his own hands.
In May Ecclestone revealed that the organisers of the race were late paying him. Three months later Tom Cotter, the president of the race, unexpectedly resigned and last month Ecclestone revealed that the organisers' contract had been torn up after they failed to comply with its terms. The final blow came on Thursday when Ecclestone told Pitpass business editor Chris Sylt that the race "is not going to happen next year."
It is highly ironic that there has been any question about the backing behind the race because more than enough money-men seem to be involved. First there is its executive director, the businessman and sometime racer, Leo Hindery Jr. He is supported by staff from his private equity company Intermedia. Former NASCAR race promoter Humpy Wheeler and his son Trip are also involved. The prize that they are fighting for is certainly a valuable one.
The Grand Prix of America is planned to be held on a 3.2 mile street circuit which snakes alongside the Hudson River opposite Manhattan's historic skyline. Ecclestone has spent the best part of the past 40 years trying to host an F1 race in the New York City area so he isn't going to let the small matter of funding put the brakes on it.
"I might get the Red Bull man behind the New York race. It's a good market for them," he revealed to Pitpass adding that he is referring to Chalerm Yoovidhya (pictured), the billionaire Thai businessman who owns a 51% stake in the Austrian energy drinks company Red Bull.
Red Bull is a motorsport powerhouse and in addition to owning two F1 teams and a NASCAR outfit, is also part of a group which promotes the World Rally Championship and is title sponsor of two MotoGP races. The drinks company has already proven that it is interested in the promotional opportunities on offer through racing in New Jersey as its world champion Sebastian Vettel and former driver David Coulthard drove demonstration runs on the circuit earlier this year. It has more than enough resources to make the race a reality.
The latest financial data available for Red Bull shows that it sold a total of 4.2bn cans globally in 2010 helping turnover rise 16% to £3.05bn. A large portion of this is spent on marketing. Accounts for the UK arm, which markets and distributes the drink in Great Britain and Ireland, show that last year it spent £48m on marketing which came to 20% of its £236m turnover. In addition, 52 of its 181 UK employees were in marketing compared with just 15 in its finance department. According to F1's industry monitor Formula Money Red Bull spent an estimated £140m ($225m) on F1 alone last year. That is just the tip of the iceberg.
Last week Austria's Felix Baumgartner became the first skydiver to break the sound barrier after jumping 23 miles from a balloon as part of the Red Bull Stratos project which took seven years to get off the ground. More than eight million people watched the jump on YouTube, a record for the Google-owned site. It was also broadcast on more than 40 networks across 50 countries, while more than 3 million tweets were sent about the jump including those from people encouraged by Red Bull to send their questions in to Baumgartner's post-jump press conference.
The exposure was reportedly worth £10m in the UK and as much as £100m worldwide. To put that in context, a 30-second advertisement during the US Super Bowl, the most sought-after slot in television, costs £2.2m. Whilst the returns were sky-high, so were the costs.
Although Red Bull has not disclosed the cost of the Stratos project, Ecclestone says "it cost them half a billion. That is what it cost Red Bull over seven years. They had a few aborted missions. The helium cost them a fortune. I think the suit cost more than 200 million." He adds "if they spent that amount of money for somebody jumping out of a balloon [they can invest in the New Jersey race]."
Holding a Grand Prix in New Jersey is more than just a personal quest for Ecclestone. There is no precedent of a new F1 race being dropped from the calendar and returning in the future. Indeed, New Jersey has the dubious honour of being the only new race in well over two decades which has been dropped from the calendar. It couldn't come at a worse time.
The Grand Prix of America would literally bring F1 to the front door of New York with the skyscrapers of Wall Street looming large in the background. This wouldn't just give a boost to the teams in terms of attracting new sponsors, it could also affect the future ownership of the sport.
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