The Weekly Grapevine

Tobaco in Australia

The announcement made during last year's Italian Grand Prix by Ferrari's management that they had agreed terms with Philip Morris International to not only extend their commercial partnership by five years, but also to increase its budgetary extent to record levels (even by Formula One's extravagant standards), simply shocked the Monza paddock.

Not only was the deal in breach of a September 11, 2001 agreement struck voluntarily between the four tobacco companies then in the sport (British American Tobacco, Japan Tobacco, Gallahers and said PMI) but also went against an earlier Formula One decree banning all cigarette sponsorships from 31 October 2006.

That decree was in line with a European Union plan to ban advertising of the addictive leaf from that date onwards, but the date was later advanced to 31 July 2005 and policed by the EU in rather half-hearted fashion from the following day. The change was interpreted by the FIA, the sport's controlling body, as being in breach of its own timing schedule, and all regulatory restrictions on tobacco sponsorship were subsequently removed from F1's books.

Still, sensible folk seemed not too worried: there existed the gentlemen's agreement, with the publicly stated adherence thereto by the purveyors of the dangerous substance suggesting that honour could exist in the most unlikely of places. Then, of course, PMI and Ferrari went their own way, bringing with it the very real possibility that the sporting body's podium procedure, traditionally celebrated under the FIA's blue/gold flag, will, for an appreciable time to come, be tainted by the red/white of PMI's anti-social substance.

Marbloro Ferrari © LAT

Seems somewhat strange that the FIA has no objection to tobacco logos being associated with its own, does it not?

At the time, this column suggested that Ferrari be charged with bringing the sport into disrepute, even if its cynical flaunting of almost universal health regulations remained within the letters of prevailing laws - which, as subsequent events during pre-season testing at Barcelona proved, may not always remain the case.

Incomprehensible at the time, and to this day, was the FIA's tacit approval of the controversial deal, given that, at the very point in time, the body was, for example, framing regulations restricting competition amongst tyre manufacturers and devising means of preventing teams, competing, after all, at the very pinnacle of an extremely technical sport, from employing electronic control units of their own design.

Although imposition of standardized ECUs seems to have been removed from the latest edition of the 2008-on sporting regulations, why could advertisers not be controlled in the same way? Particularly those peddling health-risks through what is, after all, a sport indisputably requiring an above-average level fitness from participants, and one with a proud history of demanding the highest medical standards at its venues?

As the FIA regularly states whenever Formula One's regulations come under critical scrutiny, it owns all rights to the World Championship (the commercial rights are merely 'leased out' out - to companies presently in the throes of take-over by venture capitalists CVC Partners), and, as such, the body is totally within its rights to regulate the sport as it sees fit, provided, of course, that such regulations comply with the laws of the country (ies) within which the FIA is based - presently France, which, rather ironically, imposes amongst the most draconian tobacco laws of all upon its citizens.

Would PMI - the last tobacco company still in the sport come this year's final race - dare allege that a total ban on tobacco sponsorships by the FIA, in its own championships, could be illegal and summon the sporting body to court in France? Hardly, yet it seems an implied fear...

And, thus, the announcement that Melbourne's Grand Prix was under future threat over a long-scheduled removal of the country's tobacco concession was greeted with amazement by F1's commercial fraternity. Here, after all, is a country which, via legislation passed on behalf of the State of Victoria, host of the country's F1 and MotoGP events, and the Rally Australia run in Western Australia, rather reluctantly permitted exemption from federal tobacco laws for the applicable Thursday-Sunday periods.

For Formula One, the concession effectively expires with Sunday's race, for federal Health Minister Tony Abbott loses his power to exempt international and cultural sporting events from the Tobacco Advertising Prohibition Act on 1 October this year. Given that only PMI's brand will grace Formula One next year, there surely exists no moral or commercial reason to negotiate further exemptions. At all.

Yet, just that (or, failing which, substantial compensation) has seemingly been demanded by Ecclestone from his chum, Australian Grand Prix promoter Ron Walker, who, forget not, regularly leaps to Bernard's aid over circuit matters - most recently when the GPWC solicited support from existing F1 circuits. In terms of a hosting contract entered into last year and expiring in 2010, the Melbourne event is said to be obliged to permit tobacco advertising, failing which compensation, said by Australian sources to be as high as US$20m, is due to the commercial rights' holder.

Assuming that to be the case, it is incomprehensible that a businessman of Walker's stature, and his political accomplices, would have entered into such a deal with Ecclestone, particularly given the sensitivity surrounding the issue and Australia's well-documented opposition to the 'weed'. However, in F1, strange things have long happened for even stranger reasons.

The federal government's sports ministry has, rather understandably, rejected suggestions that it will pick up the additional tabs, all of which would, in the first instance, accrue to companies controlled by Ecclestone. Last week the ministry disclosed that it had informed Victoria's Minister of Tourism of such decision in September last year, at the time stating that 'there are no programmes in the sports portfolio to support these events'.

Ron Walker © XPB/LAT

In the interim, Walker denied claims that the event is in danger, saying that "Melbourne has an "iron-clad" contract to host the race until 2010, in terms of a long-term contract with Mr Ecclestone. We have a contract that clearly conforms with the law of Australia and once the law is changed, we cannot, under the law, display cigarette advertising." Maybe so, but he did not deny that compensation was due should cigarette advertising be banned...

Curiously, he told Melbourne's the Age newspaper he had not even discussed the matter with his close friend Ecclestone, having taken fully seven days after the news first broke to come out and make any form of statement, and then one possibly in direct conflict (or not) with an interview given to the same publication by F1's commercial rights' controller - now beholden, forget not, to his CVC paymasters, and therefore unable to 'massage' deals for good friends with quite the same vigour as before.

Ecclestone's threats did not stop there, either: having been the first to publicly state that Melbourne was in danger of losing its event (in turn, has been backed up by correspondence between the ministry and Victoria's tourism department), Ecclestone said that Australia could lose its previously traditional season opening slot (this year forfeited due to the timing of the Commonwealth Games hosted by the 'Garden City') to a country with more Euro-friendly time zones.

The sport had enjoyed, he told the Age, "very, very good television ratings (for the Bahrain GP), whereas from Australia, we get lousy (early morning) television ratings in Europe."

So, Walker's denials notwithstanding, Melbourne's event - for the ten years past amongst the most popular of all with F1's personnel, not least due to its friendly environs and easygoing people, superb organization and a location far removed from a sleepy Europe shrugging off the effects of a winter fighting the onslaught of spring - seems under siege and faces various possibilities:

Should the latter come to pass, it would hardly be inappropriate to blame Ferrari and PMI's cigarette red/white brand for the death of one of the most popular events on the Grand Prix calendar.