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Unifying the circuits could be one of the best business moves in F1's history

NEWS STORY
26/06/2011

As Pitpass has revealed in a worldwide exclusive, 17 of F1's most prestigious circuits, including Monaco, Silverstone, Spa and Monza, have unified to take a stand against the FIA's Formula 1 Commission. Their representative Ron Walker, who runs the Australian Grand Prix, described it to Pitpass' business editor Christian Sylt as "the first showdown that the promoters have ever had with that commission," and although it focussed on the introduction of smaller engines to F1, the consequences stretch way beyond that.

Regardless of the outcome of the World Motor Sport Council's fax vote on Monday about the new engines, F1 has a new force to be reckoned with. It shifts the balance of power in the blink of an eye and it will be fascinating to see how this pans out. Pitpass doesn't expect that the circuits will leave F1 because it is hard to imagine the teams risking it rather than ensuring that the new engines stay at 18,000 revs. However, the unification of the circuits is here to stay and it comes at a useful time.

Over the past few months there has been a fair bit of talk about F1's rights holder Delta Topco being sold by its majority owner CVC. Many names have been mentioned as bidders but these details don't really matter in light of today's news about the circuits.

Many media outlets have claimed that a sale will not go through until the Concorde Agreement, the commercial contract at the heart of F1, is re-signed. The current draft expires at the end of next year and the teams are currently negotiating with Bernie Ecclestone about extending it. This is all very well and good but the circuits are not signatories to the Concorde Agreement. They each have separate agreements with the F1 Group and if F1 fails to remain the pinnacle of motorsport as a result of introducing the smaller engines they may try to use it as grounds for breaking their agreements.

Whatever next? Could the 17 circuits agree to leave F1 if they don't get a reduction of their race hosting fees (or in Monaco's case, its fee for arranging its own trackside advertising)? It is worth remembering that, according to Sylt's Formula Money trade guide, the circuits bring in around a third of the F1 Group's overall revenue yet get no share of the sport's profits. In contrast, the teams don't directly generate any significant revenue for the F1 Group yet receive 50% of its profits. We are not advocating reducing the teams' share but simply pointing out that the circuits may want some of it.

What if a company actually makes a bid for F1 (which would make a change given all the talk of phantom deals) once the new Concorde Agreement has been signed only to find that one day later the circuits demand a fee cut or they will switch to IndyCar? Losing Monaco, Silverstone, Monza and Spa could seriously dent F1's worth that's for sure, particularly if they join the only series capable of becoming a true rival to it.

Fortunately for F1, the circuits' representative Ron Walker, is one of Ecclestone's closest friends so this latest development ensures stability for the sport. There is no question that it would take a brave business to attempt a takeover of F1 without getting Ecclestone's agreement and it now seems that the circuits have finally got a voice as well.

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