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Race promoters call on F1 for help

NEWS STORY
04/04/2020

While much has been written about the financial difficulties the teams, and indeed F1 itself, may face the longer the coronavirus pandemic continues, other than news of cancellations or postponements, little thought has been given to the race promoters.

For most circuits, the Grand Prix is the annual blue riband event, the highlight of the calendar, in some cases perhaps the only race weekend of the year, and while some receive far more government support than others, and some none at all, all rely on ticket sales to help balance the books. Indeed, with F1 taking the trackside advertising and hospitality revenue, even at the best of times race promoters face slim pickings.

While Chase Carey talks of a 15 - 18 race schedule, teams talk of extending the season into 2021, two-day weekends, reverse track layouts and events behind closed doors, what about the race promoters.

"They have to be willing to accept lower fees if they want their promoters to be healthy," one race organiser tells the Independent.

He goes on to explain that promoters are in a Catch-22 situation, as they need to order - and pay for - equipment in advance, and at the best of times most have limited funding available.

Normally, advance ticket sales aid cash-flow, but with the current uncertainty over when or even if races will take place and whether fans can travel to attend them, the situation is worrying.

"We reserve hundreds of buses which have to be booked 90 days before the race and have cancellation fees," says the organiser. "We have another contract for the traffic because we hire hundreds of police officers over the race weekend and there are cancellation penalties for that too.

"Then there's the setting up of all the temporary grandstands and hospitality tents which are ordered and negotiated six to eight months before the race and are set up sixty to ninety days ahead of it. Once the race is six weeks away we are spending more than a million euros a week to prepare.

"We usually sell most of our tickets now," he adds. "Most of the sales are to out of town visitors and they don't usually make last minute plans. Around 80% of them book more than four months ahead. So the key selling time for us is now."

With the schedule 'up in the air', Azerbaijan organiser, Arif Rahimov says that tickets to some events may have to be on sale "for shorter periods of time.

"I know, for instance, that some promoters start next race sales immediately after their event," he adds. "This means that they would have missed three to six months of sales during the period of uncertainty."

"Ticket sales are down, not only down but have stopped all together for all motorsport events worldwide," adds Ariane Frank-Meulenbelt, managing director of officially-licensed F1 ticket agency GPTicketshop. "Understandably people have other things to worry about than F1 or MotoGP and also no one knows when and where we will start racing again and how soon free travel will return.

"This, in combination with an economic shutdown worldwide, is not an ideal scenario for ticket sales. Nonetheless we remain optimistic that once the pandemic slows down or is over we will return to normal sales figures, whether this will be latter half of 2020 or only in 2021 remains to be seen."

The uncertainty over future races isn't the only issue worrying promoters, for the cancellation and postponement of previous events has a knock-on effect.

"One of the things that the later races can benefit from is excitement and awareness in the early part of the season," says another organise. "We rely on people getting excited about it when they see it on TV.

"Australia does a lot of good for us," he admits. "Once the season starts to get going people start paying attention but if you don't have the season no one will be paying attention.

"If the season doesn't kick off until July the interest just won't be the same. All those races leading up are complementary to our race."

Across the season, race hosting fees average around 22.8m and are the second biggest source of revenue for the sport, however, organizers warn that Liberty may have to accept lower fees if the season it to get underway.

"F1 is attracting lower ticket sales so they should take a lesser fee," says one organiser. "If our revenue is down from last year, we would like F1 to absorb the amount we are down by. They should just adjust the fee by that amount and if it goes up they can have more."

"It is blindingly obvious," adds another. "People need to make arrangements to go to a race, ask for days off, book hotels if visiting from another country, etc. I think cancelling this year altogether will be the only way much as I would regret it."

Were the season to get underway in July, as feared, or even August, in order to fit in 18 races there would need to be races almost every weekend.

However, that is assuming that the 18 countries get the all-clear, not to mention the UK, Italy and Switzerland, which is where the teams are based.

Looking at Melbourne, for example, where just one case of the coronavirus led to McLaren withdrawing and the race being subsequently pulled, other promoters are highly unlikely to take the same risk. At a time the UK, Italy and Switzerland have in excess of 120,000 cases of coronavirus, it is increasingly likely that even starting the season in August is overly optimistic.

It may be "better off not having the event," admits one promoter. "Cancel it far in advance so that I don't spend money on people and set up and then find out that it is cancelled. That's the worst case scenario.

"An Australia type incident for us would cause bankruptcy because we will have spent millions already," he adds. "The ticket refunds are what would kill us.

"We take money from fans and go out and start buying grandstands with it because you have got to build the spectators their seats. If the race gets cancelled all of a sudden, the grandstands are sitting there and you have got to give refunds so you are screwed."

In Azerbaijan, Rahimov admits that he has "an agreement with F1 that we will only confirm our date in the calendar once the threat of another cancellation is past.

"Moreover, we would need at least a 10 to 12 week lead time to be able to prepare for the race," he adds.

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1. Posted by alvarezh3, 05/04/2020 15:17

"@Motorsport-fan

We might be getting ahead of ourselves! Just read an article about a drug called "Ivermectin" which has been tested in lab cell cultures by scientists from Australia that kills COVID-19 in 48 hours!

The drug is an anti-parasitic drug used on humans, but unfortunately until they do clinical tests they don't know what amount is needed to be effective on humans without causing secondary harms.

According to the article I read, the result of the study was conducted by the Monarch University and published in "Antiviral Research", a peer-reviewed medical journal published by "Elsevier" in case anyone is interested in more information.

Have a good day"

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2. Posted by Motorsport-fan, 05/04/2020 14:47

"@alvarezh3

I guess we are probably looking at a European season?, perhaps using some tracks twice, as I said where there is a will, there is a way. "

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3. Posted by alvarezh3, 05/04/2020 14:03

"@Motorsport-fan

https://www.pitpass.com/66819/Ecclestone-repeats-call-for-2020-season-to-be-scrapped

"That's the only thing you could do safely for everybody so nobody starts making silly arrangements which may not be able to happen," he added.

"which may not be able to happen" could mean: Are the travel restrictions lifted on that specific country where the race will take place at the stated race date? How can FOM find out in advance when those countries don't know it themselves?

Not all the team's supply arrive on the 747s, some are shipped by sea weeks in advance, like the fuel. I am not sure, but I believe the tires arrive by sea also.

Let's say that by late September Vietnam is clear and will be ready to host a GP by end of November, everything gets shipped and will be ready for use on the pre determined race date. All of a sudden the week before the race a couple of Vietnamese in Saigon test positive for the virus (what epidemiologist call the "second wave"), and the authorities close the country again. Is FOM going to take a chance on that happening which is a possible scenario? Australia all over again! And that same situation could pop up in any other country. That is precisely what Ecclestone is talking about.

There are just too many unknowns and too many things must be programmed in advance. Hotel rooms and air transportation for the crews for example. I don't know if Bahrain still brings marshals from Australia to supplement their home crews which are not too experienced, if they do that, it has to be arranged in advance. Not to mention that Vietnam has to bring them in from somewhere also.

So yes, your technical solution could be achieved, what is difficult to predict are the disrupting unknowns that could reappear at any moment without prior warning."

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4. Posted by Motorsport-fan, 05/04/2020 11:12

"Following on from my previous post, it would seem for this season, the sensible option would be to run the races just for TV, no specatators and only having F1 teams and personel at the circuit (no F2 ect). You would then need 8 or 9 circuits where this could be done running double headers at each circuit, so 2 x free practice and qualifying on Friday, warm up Saturday morning and 1st race Saturday afternoon. On Sunday morning you could have another qualifying session for the race Sunday afternoon. This would allow for a 16 -18 race championship, Liberty either hiring the circuits or the circuits getting renumerated from the TV money or advertising, just need to sort which circuits? where there is a will, there is a way. "

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5. Posted by alvarezh3, 05/04/2020 9:15

"FOM applies supply side economics: "We will offer a 15-18 race schedule". The not so dumb promoters apply to themselves demand side economics: Who will come to my show?

A basic cost vs. revenue calculation will let each one of the promoters know if they are willing to have a race or not. If FOM throws their contracts on their faces in trying to force them to run their event, they will go to court and dully allege cancellation do to "force majeure". So even if FOM wins a few of the cases it will take years to do so, meanwhile, where is FOM going to find a source of income from a paying alternate (and F1 approved) venue to race on while these court cases are being tried?

Some promoters can afford to declare bankruptcy as they are paper companies with rented office space plus a few owned desks and computers. Others are not so lucky, like the British Racing Drivers Club that promotes the British GP and owns the racetrack. So while some promoters could be in a relative loose-loose situation and others like Bahrain don't mind to have a race without spectators, others will not be willing to risk a penny and prefer to permanently dissolve their companies.

Even if in 6 months the pandemic is so controlled that airports, sporting venues, hotels and restaurants all over the world are open for business, how many human beings have the extra free cash to spend to attend a racing event while living on a worldwide economic recession, or even, depression? That's the million dollar question.

FOM offering an event that people want but at a time when a percentage of the promoters and consumers can't afford it.

Just like the rest of the world's non essential services and products providers are going to suffer, hard times will arrive to the F1 community, especially to the small and the independent non-factory teams.

The situation in a few months for now points to that most likely there will not be enough people to have the free cash needed to attend a race when they are 3, 4 ....6 months behind in rent, credit card and/or loan payments and that a few of the non attendees will have their behind the paywall tv service disconnected for a while.

FOM must ultimately accept that F1 cars are not needed when the world does not even have enough respirators just to breath..... and stay alive!"

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6. Posted by ZJAY, 05/04/2020 4:33

"Start the season in Melbourne 2021. Cut everyone’s losses. "

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7. Posted by Motorsport-fan, 04/04/2020 10:41

"Also you would have to take into account the number of people who will not travel even if restrictions are lifted, it is just not going to go back to "normal" in the near future, difficult decisions indeed."

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