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Race promoters join forces for 1.6bn insurance deal

NEWS STORY
04/02/2019

Last week's statement from the Formula One Promoters Association, which consists of 16 of the 21 races that form the 2019 F1 calendar, made clear that money is one of several issues that concern its members.

Other than ever increasing hosting fees, the movement of the sport behind the paywall that is Pay-TV, lack of initiatives and engagement from Formula One Management and concern over the revenue share deal offered to Miami (but nobody else), the bottom line is money, for in almost all cases the promoters only receive what they take in ticket sales, and as a result those events like Britain and Brazil which receive no government funding are particularly hard hit.

With an eye on cutting costs, an issue they insist Liberty should be addressing, the 16 promoters that are members of FOPA are arranging a joint insurance cover of 1.6bn, though the other 5 events running races in 2021 will have the opportunity to join the insurance deal if they want.

The move was agreed at last Monday's meeting of FOPA, a meeting which is understood to have left F1 boss, Chase Carey, "livid".

With cost-cutting high on the FOPA agenda, one of those attending the meeting told the Evening Standard that they "discussed the positive measure of trying to find insurance cover for all the races together because at the moment the 21 races have to contract insurance cover individually and it costs a fortune. It's the same cover so one single broker in London could do it and should do it."

"It's very easy to get the insurance," they add. "It's a logical thing. We just never did it because nobody thought of it.

"We will go to a London insurance broker and say that it's standard insurance for 21 races, tell us how much the policy will cost. Each of us pays his part and that's the end of the story.

"It's a money saving idea which is what we discussed. It would be a very good contract and I'm sure we will be getting very good offers. It's very simple because these contracts have been in place for the last 40 years. We are going to talk to the brokers now."

Usually, Formula One Management takes out annual insurance policies which cover all the races, while its contracts also require each individual race organiser to arrange their own third party liability insurance covering personal injury and property damage during the Grand Prix weekend as well as the set-up and take-down periods.

The beneficiaries of these policies include the teams, drivers, F1 itself and the FIA.

"Typically, these policies are at a level that we stipulate (often between US$75 million to US$100 million) having regard to the maximum amount available under local law or in local market conditions," F1 company documents reveal, adding that "the race promoter also indemnifies us... against any action brought by a third party... as a result of the death, injury, loss or damage to such third party as a result of the driving or using of a car belonging to the FIA or any competitor that is not the result of the negligence of any of these persons."

Thankfully, following the total overhaul of the sport's approach to safety in the aftermath of Ayrton Senna's death in 1994, in recent years fatalities in F1 have been rare. Since then, other than Jules Bianchi's death following his accident during the 2014 Japanese Grand Prix, the three other deaths involved marshals, one at the 2000 Italian Grand Prix, another a few months later at the 2001 season opener in Melbourne, and another in Canada in 2013.

However, insurance claims can also involve compensation for damaged cars, Haas having sought remuneration after a loose drain cover caused 500,000 of damage to Romain Grosjean's car during the 2017 Malaysia Grand Prix.

"I can report that we settled," revealed team boss Guenther Steiner last year. "Their insurance was good to deal with."

Given the financial pressure that the majority of promoters are clearly under, one might have expected Liberty would have come up with this idea to ease the burden. Instead, the promoters are having to do it themselves.

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1. Posted by TokyoAussie, 05/02/2019 3:19

"This is my pet horse, which I regularly flog. So the teams discovered that joint action might work to cut insurance costs. With a tad more imaginative thinking, they might even discover that joint action might act to cut hosting fees. Just sayin' (repeatedly)."

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2. Posted by Editor, 04/02/2019 23:42

"@ Insane Reindeer

Neither the British or Brazilian events receive any form of state funding.

It's thought that this is the case with the Japanese GP also.

As for Chris Sylt being a "sometimes contributor", though his name might not appear, he still contributes on a very regular basis."

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3. Posted by Insane Reindeer, 04/02/2019 19:21

"@Tony Soprano I am going to ignore your comment about the FIA and your claim of it's ""self-appointed" authority to regulate motorsports" as a particularity lame attempt at trolling.

However, what I am interested in the race promoters who you claim do not receive government funding. I was under the impression that Silverstone was the only race on the calendar last year that didn't receive any government funding. Hence their rather simple decesion to jack it in. The organisers of the British GP don't, as far as I can tell, own any other entity that makes any money from the British Grand Prix. Where to I get my information from? Here is a quote from sometimes Pitpass.com contributor, Chris Sylt, writing for Forbes.com in 2017:

"The exact costs and returns are of course well known by the current and former race promoters and sometimes snippets sneak into the public domain. All but the British Grand Prix get government funding so some of the promoters have to lodge official filings which confirm key details of their finances."

https://www.forbes.com/sites/csylt/2017/03/13/the-1-billion-cost-of-hosting-an-f1-race/#7ef6df2c4f79

As such I would be interested to read what other F1 races, on the calendar for this year, are run without any government backing of any sort. I have spent some time searching the internet and I have not had much luck. "

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4. Posted by Tony Soprano, 04/02/2019 18:11

"It amazes me that F1 promoters, especially those that receive no governmental support, bother to remain involved with F1 at all. I know of no business model that says losing money year after year with no prospect of breaking even much less seeing a profit, making makes any sense. Motorsports are not like soccer or tennis or any number of "stick-and-ball" sports that have a myriad of world-class venues to host major events. We all know that, in motorsports, there are only so many FIA Grade 1 circuits around the world. If the promoters simply told Liberty Media to go find someone else to fleece, someone else willing to lose a small fortune every year so Liberty Media can make a couple of billion, the financial structure of F1 would change. If Spa and Silverstone and Monza stand their ground, where is Liberty Media going to take its roadshow and find fans? Vietnam? I think not. This nonsense of charging promoters huge sanctioning fees with no chance of breaking even will kill the Golden Goose. Liberty Media claims it cares about the fans and wants F1 to be more "fan-friendly" with lame entertainment zones, online apps that don't work, etc. should think about how long it can expect fans (especially younger fans) to pay through the nose for what's become a lousy show. The promoters and teams are the ones who bring value to F1 - NOT Liberty Media. The teams should say NO to a new Concorde Agreement and sit down with the FOPA to find a way to start a new series that makes financial sense for the teams, promoters and fans. The FIA (I've always doubted its "self-appointed" authority to regulate motorsports) and Liberty Media have no authority to prevent the creation of a new series. If they think otherwise, we will see what the European Commission of Competition thinks. But at least those who really care about the sport, as opposed to the opportunists at Liberty Media just looking to make another buck, will guide the sport. "

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