The Weekly Grapevine

A Tale of Two Circuits

Two Grand Prix circuits, situated at opposite ends of the earth, and with little in common but for the fact that they host their countries' Grands Prix and share the same language, yet they are in the news this week, both for the same and different reasons.

The first to make headlines was Melbourne's Albert Park circuit, which first hosted a race in 1996 after snatching the rights off Adelaide via some pretty deft political and financial manoeuvring. Prime mover behind the switch was Ronald Walker AC OBE, local businessman, former lord mayor of Australia's 'second' city and (now) a good friend of Bernie Ecclestone.

From the 'off' Melbourne has done everything according to the book, even if it has 'taken' the State of Victoria and its capital city's tax payers for millions in the process - which, surely, must have gained the Australian Grand Prix Corporation a Bernard Point or two.

The Albert Park circuit © LAT

Events have been slickly organised, the place consistently looks spick and span despite the odd drought, and, as traditional opener - the only blot on the race's copy book is that a few years ago it forewent that slot in favour of the clashing Commonwealth Games - it certainly pulled in punters and television ratings.

The venue even persuaded local boy Paul Stoddart to drop his threats of litigation against the circuit and the sport's controlling body, the FIA, in 2004 by appealing to his patriotism, which should count for something in the corridors of power.

In fact, cumulative attendances over race weekends for many years hit well over 300,000, about ten times Bahrain's number, and for many years many a soul in countries west of Australia (90 percent of the world) willingly got up at some unearthly hour to watch qualifying sessions and the races on television.

After all, what could be better for European folk than to escape winter than by flying south to top up with sunrays whilst taking in a Grand Prix in glorious weather, even if Melbourne's hotel prices shot up by 300 percent and ticket prices started rivalling Monaco's? All of which, of course, resulted in more BP's for RJ Walker, Esq ...

Ditto the willingness of armchair racers to put up with slight discomfort: with only launches and test reports to amuse them for five months, sliding out of bed two hours earlier on a mid-March Saturday and Sunday was a small price to pay to see some full-on action on one of the most spectacular circuits on the trail, one which inevitably threw up drama of sorts, even if tainted by tragedy in 2001.

Over the last few years, though, numbers - both live and television - have dropped. Simultaneously new venues, paying ever-increasing hosting fees as they strive to convince the world of their respectability, have joined the calendar much to Ecclestone's glee, and the smug satisfaction of co-owners of the sport's commercial rights, CVC Partners.

Last-named borrowed astronomical sums from the Royal Bank of Scotland to acquire said shares, and are now paying the price in the wake of the sub-prime interest crisis. Thus, any increase in hosting and broadcasting fees is absolutely crucial to the venture capitalist company's ability to service the loan.

Co-incidentally the value of the United States dollar dropped drastically - further eating into CVC's real F1 revenues - whilst this year a new deal between teams and the commercial rights' holder, which effectively doubles the monies paid to teams, kicks in, placing further pressure on CVC's ability to satisfy RBS.

So, now the screws are being turned on what has become one of the most popular events on the calendar. By the time its present contract runs out in 2010 it will have delivered a decade-and-a-half's continuous service; one of the most established despite there being 18 races on this year's schedule.

Bernie Ecclestone and Ron Walker © XPB/LAT

In recent years, only Spain, Monaco, Canada, France, Britain, Hungary, Italy and Brazil have amassed more stable records, although the future of the first-named as a Grand Prix host was last week placed under threat, whilst Canada and France have in recent years been left off provisional calendars, only to receive last-minute reprieves.

Thus, despite Melbourne's event being only 15 years young, only grandees Monaco, Silverstone, Monza and Interlagos, plus Hungary eclipse it.

Yet it is threatened with removal unless it a) meets demands for astronomically higher hosting fees, and b) stages races at night in order to cater for those who are no longer prepared to slide out of bed in order to watch increasingly processional proceedings.

Already the local tourism ministry has rejected the latter demand, and quite right, too: during Grand Prix weekend, the scream of cars on the circuit in the suburbs can be heard throughout virtually the entire city. Why should those non-F1 burghers of Melbourne, already a collective $AUS40m (£18.5m) poorer due to the subsidies required to stage the race, suffer these nightly intrusions?

Ecclestone's response when his demands are rejected is usually to up hosting fees, but here he has already played that card - and met a brick wall. Thus, further increases are likely to be met with short shrift by the very folk who funded the Commonwealth Games in the secure knowledge they were not servicing a debt run up by a bunch of venture capitalists.

The tragedy, for Melbourne (and other established venues), is that Formula One Management can flash about a raft of alternatives - even if some are pie-in-the-sky venues dreamt up by publicity-seeking politicians in banana republics - all of whom are falling over themselves to be parted with mega-bucks, and so have very little bargaining power. The laws of supply and demand were never more vivid ...

Should, though, Melbourne elect to pay the fees, plus any premium to keep their day-time slot, ticket and hotel prices are sure to shoot up even more dramatically than they have of late, meaning that once again the fans of the sport will pay up to keep those who 'own' the sport liquid.

Surely it would simply be better for the sport, for all in Melbourne and for television sets across the world that the qualifying and racing on offer is of such quality that people willingly forgo a few hours' sleep rather than place demands on a city which has more than pulled its weight to date by threatening to move F1 to some hellhole?

Silverstone twice made the news this week: the first time when its owner, the prestigious British Racing Drivers' Club - which counts amongst its members a certain Bernard Charles Ecclestone - announced that its Joint Silverstone Circuit Development Brief had been adopted and endorsed by the councils of South Northamptonshire and Aylesbury Vale respectively.

Silverstone © XPB/LAT

This 'Vision for the Circuit' sets out the principles of sustainable development which will maximise social and economic benefits for the local and regional area, and is aimed at facilitating the erection of a new pit and paddock complex for the circuit along with a manufacturer test centre, business park, extreme sport and leisure complex, two hotels, a university campus, and a Welcome Centre.

Unwritten, although obliquely referred to, in the BRDC's media release circulated earlier this week is the club's hope of retaining the British Grand Prix for the foreseeable future, something the circuit has reason to feel confident about, for, along with Monaco and Italy, Britain, as an original grandee, enjoys 'protected' status, and no other venue in the country is capable of hosting a race without much to-do.

All seemed well and good, meritorious even, for Silverstone has hosted Grands Prix, both championship and non-championship, since the late forties.

In fact, it hosted the first-ever Formula One world championship Grand Prix in 1950 and is, thus, a worthy venue of the sport's fixture lists, although a nagging question did rear its head: 'Why would the circuit want to?'

And then, almost as in answer, BCE put, as he has done all too often in the past, his boot straight into his home circuit, the very venue upon which he raced F3 in the fifties, and scene of his attempt at qualifying for the 1957 British Grand Prix.

In effect he told the circuit - via the media, though - that meeting all his demands for upgrading (which were, though, not unjustified) was certainly no guarantee that the contract would be extended beyond its present 2009 date.

So although council approval solves one problem for Silverstone, the other - agreeing suitable terms with FOM/CVC - remains, and, by all accounts, the pressure on the BRDC is constantly being ratcheted.

Can a club, even a wealthy one listing many rich and good amongst its members, afford to pay the hosting fees an oil-rich state or tiger economy can easily shell out, fees said by some to average upwards of $30m (£15.2m) per race in a five-year contract? Of course not, certainly if its committee members wish to retain their liberty.

Should the British government, then, subsidise the race as Ecclestone has continuously demanded - citing 2012 Olympic funding as precedent?

Construction on the Silverstone pitlane © XPB/LAT

Has he, astute man that he is, not noticed the difference between the Olympic Games and Formula One Management - that one is a statutory worldwide sporting body governing all athletic and aquatic endeavours and operating as such for the good of its sports; the other beginning as a family trust which gradually morphed into a subsidiary of a debt-carrying venture capitalist company with an intriguing tax-paying record?

Why should the British government - or any other, for that matter - pump millions into what is, ultimately, a pursuit run for questionable gain, with British citizens seeing little or no direct or even indirect benefit?

The FIA has, after all been paid for the rights - albeit under terms which will for the next century be questioned - so this statutory body is hardly losing out by the British government's refusal to play ball.

And will CVC's demands level out after expiration of five-year contracts? On the basis of existing evidence, one is minded to say 'no', particularly if the dollar continues its southward journey, as seems likely.

Already Tony George and family decided enough was enough for the Indianapolis Motor Speedway, and refused to renew - cooing noises are now being made by both parties, with little discernable effect - and the province of Baden-Wurttemberg, too, refused to sign a five-year extension, eventually settling for a time-share deal with the Nurburgring.

And when Japan, which indirectly supports four teams and supplies all the sport's tyres, enters into a similar arrangement from 2009-onwards a trend can be seen to be emerging, although whether Silverstone and, say, France could ever co-exist on such a basis is highly debatable.

Thus Silverstone, should, it seems, place its upgrade plans on ice and suggest that its BRDC membership gather before giant TV screens in its rather stylish clubhouse every fortnight to watch F1 doing its thing on featureless circuits carved through some or other isolated outcrop.

Failing which, they may not have a clubhouse from which to watch national racing for much longer ...