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Azerbaijan GP promoter seeking race fee reduction

NEWS STORY
25/05/2018

With its current contract due to expire after the 2020 race, Azerbaijan has an option to continue hosting a round of the Formula One World Championship until 2025.

However, Baku City Circuit Executive Director Arif Rahimov has admitted that unless the race hosting fee can be renegotiated the contract will not be renewed.

The original deal, which was done by Bernie Ecclestone, sees Azerbaijan paying some of the highest fees of all the events. While under the former F1 supremo's rein promoters knew little of what others were paying this has changed somewhat since Liberty Media bought the sport early last year.

Learning that the fees for his race are amongst the highest being paid of the 21 events on the 2018 calendar, Rahimov has admitted that he is looking for a sizeable reduction.

"We have a contract which is a binding contract for five years, for five races, starting in 2016," he said. "Neither of us can break it unless we agree to break it.

"We haven't triggered the break clause," he added. "We're negotiating on the second part of the contract. We all know we need to improve bits, so we're trying hard to make sure that it's good for us and good for F1.

"In general we want to be close to the average," he said of the hosting fee. "Now that it's public information I think everyone knows what the average is.

"You have a few outliers to remove from both ends, statistically speaking," he added, "but obviously we want to be close in that mid-range of flyaway races. We cannot just take the average of all the races, because European races pay less for a lot of reasons, starting from logistics and cost of operation etc. But we do definitely want to be there in the average of the flyaway races.

"That's not the only thing we're discussing with FOM," he revealed, "it's most of the other commercial terms in the contract too. They want to try a new approach, it's a bi-lateral effort to make it viable for all of us.

"We will try to get it sorted before the end of June, so I think we'll come to some agreement. Obviously I'm asking for an improvement which is eating into their profits, it's quite obvious."

Asked about speculation that Baku, which over the last couple of seasons has produced two of the more memorable races, might be dropped in favour of Miami, he said: "If Miami comes in it can come in and all the other races can stay there. It's up to 22 races anyways.

"I think it was just a rumour," he added, "I don't know how this rumour got spread, because it made no sense from the beginning. I guess they're going to release the draft calendar this month or next. We're going to be in this calendar, and I guess it's going to sort out most of the questions."

Following this year's switch to an April slot, he admitted that he was hoping to see the event return to its 'traditional' June slot.

"We want to move back to June. It takes us a while to set up the circuit, it takes us three or four months, and if we are in April we have to start in the winter, and you have adverse weather, rain and wind and everything that stops you working efficiently, so we definitely want to move it to June."

Rahimov's comments come as little surprise, for in recent years even the best funded promoters have realised that they were on a hiding to nothing, what with annual increments in terms of the hosting fees and FOM's demands in terms of revenue from hospitality, trackside advertising, merchandising and broadcasting.

While Azerbaijan hasn't triggered its break clause, Silverstone has, and as it stands next year's British Grand Prix will be the last.

Despite the insistence of Chase Carey and Sean Bratches that they want to see Silverstone remain on the calendar there has been no relenting in terms of the hosting fees. Then again, with other promoters carefully watching the situation, even the likes of Azerbaijan, FOM is not in a position to start making exceptions.

Then again, with Miami understood to be getting its race for free, F1 taking the hosting fee hit as it seeks to recoup the costs (and much more) in a revenue sharing deal with billionaire Stephen Ross, who owns the Miami Dolphins NFL team and Fanvision, the whole landscape in terms of race promotion could be on the verge of a seismic change.

Interesting times.

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1. Posted by ClarkwasGod, 25/05/2018 15:05

"Nothing to do with the Miami arrangement, of course. That race, if it ever happens, should be called "Can of Worms GP""

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