F1 to cost $60 million for Azerbaijan in 2019


February 1, Fineko/abc.az. On Tuesday, a meeting of the F1 Race Promoters Association was held in London, bringing together the organizers of 16 out of the 21 championship races (FOPA does not include the promoters of the Grand Prix of Russia, Monaco, Bahrain, Abu Dhabi and Japan).

According to newspaper Kommersant, at the meeting the parties reiterated their concern about the actions of the owner of the series - American company Liberty Media, the behavior of which was previously called by FOPA head Stuart Pringle as loosing cannons. He also warned that if nothing changes, they will have to hold the F1 races on second-rate racetracks.

"We’re concerned about the direction in which F1 is developing, and therefore we had to declare our common position. Now I have a feeling that we could be heard," Mr. Pringle said at the end of the FOPA meeting.

The essence of FOPA's claims to Liberty Media is, as usual, in money. The organizers of the races would like to revise the terms of promotional contracts, according to which they pay annually for the right to organize the stages. After all, the amounts they often have to transfer to Liberty Media make the stages economically impractical.

The exact cost of promotional contracts has not been disclosed. And there is no single tariff scale: the price varies greatly from stage to stage. For example, for the right to host the Italian Grand Prix, its promoters will pay $24 million in 2019, but the race in Azerbaijan will cost about $60 million. At the same time, each next stage, according to the rules introduced under Bernie Ecclestone (he led F1 until 2017), is 5-10% more expensive than the previous one. As for Russia, according to unofficial data, the race in Sochi costs about $45 million a year. This is much higher than the average, which, again according to unofficial data, is $30.7 million, but the Russian side has no claims to Liberty Media. Deputy CEO of Russia’s Rosgonki Sergey Vorobyov named the FOPA approach as unconstructive and noted that all issues can be solved with the owners of the series in working order.

However, the organizers of the other stages are not so peaceful and are ready not to extend the agreement with Liberty Media. But in 2019 contracts for the Grand Prix of Italy, Spain, Mexico, Germany and the UK expire. Their organizers agree to continue cooperation only on the condition of a significant reduction in the cost of promotional contracts. In particular, the organizers of the Italian stage would like to pay no more than $15 million per year, provided that the practice of annual appreciation of the contract is canceled.

The FOPA participants also advocate a transparent and non-discriminatory approach to pricing. The latter requirement sounds especially actual in the light of reports that Liberty Media plans to hold one of the stages in Miami (it is expected that the street race in the resort city will be the North American analogue of the Monaco Grand Prix), but it is ready not to take fees from its organizers. Instead of the mandatory payment, a scheme is proposed that provides for distribution of income from the race between Liberty Media and local organizers.

It should be noted that Liberty Media has difficulty not only in relationships with promoters. Negotiations with the teams on a new agreement "on consent" (expires in 2020) are also ongoing no easily. This agreement regulates the main aspects of the World Cup. One of the key disagreements concerns the cost ceiling, on which Liberty Media insists on. It is planned to start with $185 million in 2020, and then, by 2022, to lower this level to $135 million.

The participants are not against such a restriction, but on the condition that the ceiling will not be rigid and for example, salaries of riders, top managers, the cost of engines and other questions will not fall under its action. But this approach actually deprives the Liberty Media’s initiative of sense. However, the top teams — for example, Ferrari - insist on their own, threatening even to leave the championship.