The Weekly Grapevine

The GPCOA

Formula One's opening round for the past ten years, the Australian Grand Prix in Melbourne, was a great scene-setter; the ideal place for the sport to decamp after a five-month long European winter, and bleak days enlivened only by the speculation surrounding non-stop testing programmes.

Albert Park, situated virtually slap-bang centre between Melbourne's skyscrapers and Port Phillip Bay, deservedly attracted great crowds, who, in addition to seeing Formula One's opening race - seldom a procession due to the nature of the high-speed street circuit made up of the public park's better access roads - enjoyed a real feast of 'Down Under' motor racing.

Events for Formula Fords and other single seater categories, Australian Porsche series races, celebrity cups, stunts and the biggest daddy of them all - Australian Supercars - ensured that the crowd entertainment factor was up there with the best.

Factor in generally good weather, despite Melbourne being known as the 'city of four seasons in a single day' through the climatic effects of the place's proximity to various ocean currents, and the Australian Grand Prix deservedly attracted massive crowds. In fact, upwards of 300,000 over the four days (yes, even Thursday offered attractions) were not unusual.

Spectators on the hillside of the Malaysian Grand Prix © LAT

Compare that with this year, where the two openers battled to make half that - combined.

This year, Bahrain organizers failed to provide accurate figures - strange, considering the detail of 2005's published figure (77,257) - stating only that attendance was 'over 77,000'. Given that students and others were supplied with an estimated 7,500 complementary passes, and that just 32,500 race-day tickets were actually sold, it is clear that the race, underwritten by the island state's ruling family, the Al Khalifas, required them to dip rather deeply into their pockets.

The ticket breakdown makes for interesting reading, particularly as race day was, in Bahrain, the western equivalent of Monday, with Saturday being 'Sunday'. Hold the British Grand Prix on a working Monday, with qualifying the day before, and chances are pretty strong race-day crowds would not break 30,000, while qualifying would be a total sell-out.

Not so in Bahrain, where, assuming the promoters' numbers were accurate, 52% of the weekend's punters graced Sakhir's sands on Sunday, with 30% thought to attend qualifying, and the rest being Friday (another working day) visitors.

Malaysia, like Bahrain a predominantly Muslim state, did better, but not by much. No final figures were available by Sunday night, but, based on previous years, estimates have it that around 50,000 spectators attended the race, split approximately 70% in the stands, and the balance on hot and humid terraces. Given that Sepang openly targeted 120,000 race-day visitors, with some seats costing as little as seven US dollars, the weekend was hardly a roaring fiscal success.

Any wonder the circuit's owner, Malaysia's airports authority, is desperately attempting to offload the facility? That may be easier said than done, for thought to be included in the hosting contract are clauses requiring that the existing owners guarantee Grands Prix for the duration of the deal (believed to run to 2010) and that Bernie Ecclestone has right of veto over any change of ownership.

Ticket prices, along with attendances, have tumbled. Where, during Sepang's first two years as Grand Prix host (1999/2000), a Platinum ticket in, say, Turn 1, came in at $450 USD, this year they ran at two-thirds that - despite annual escalation clauses, said to run at 10% per annum, inserted by Ecclestone in hosting contracts.

Merchandising stands in both venues were far fewer and farther apart than in previous years. True, the quantity of outlets in Malaysia was double that of Bahrain, where business was well down on a year ago. New ranges were thin on the ground, but the more bullish stand operators maintained this was mainly due to the extraordinary number of driver, team ownership and livery changes over the winter, and that the situation should improve by the time Formula One returns to Europe at the end of April.

Memorabilia sales at circuits are directly related to spectator attendance, and it stands to reason that, with fewer fans visiting these venues than in past years, merchandising sales would be hit proportionately. Then, for the first time since 2000, Ferrari and/or Michael Schumacher fans have little reason to purchase the latest in red riding hood gear, and, this factor, too, will have hit sales.

Melbourne, which annually erects a tented, award-winning 'shopping mall', should provide pointers to the merchandising potential of the season ahead, but, advanced tickets sales for Albert park's race appear to be down on previous years, certainly in the main grandstand.

Billboard in Bahrain advertising Grand Prix tickets © LAT

Within the last fortnight, a source purchased a block of three-day tickets at $320 USD each, and was given a wide choice on the main stand opposite the pits, traditionally one of the first to sell out. Could this be an omen for F1's future, or just a temporary situation as Melbourne fights off the hiccups of having been relegated to third on the calendar due to a clash with the Commonwealth Games?

So worried, though, are circuit owners about price increases and dwindling numbers, that they are said to be considering setting up the Grand Prix Circuits Owners' Association to provide a forum at which to discuss common operating problems. While all hosting contracts include confidentiality clauses - explaining why no accurate hosting fees are available; and why fees are said to vary by as much as 400% - they cannot be prohibited from discussing general matters with each other.

Certainly, should such a forum come to pass, charter members will no doubt include Hockenheim (which has just appointed a well-respected sports consultant as manager to extricate the German circuit from the financial mire in which it presently finds itself), and Spa-Francorchamps, which has seen its most recent promoter bankrupted to the tune of $22m USD.

Also said to be in trouble is the Nurburgring, Shanghai is grappling with crippling losses, while Silverstone's future was thrown into disarray by a recent member vote of no-confidence in the board of the British Racing Drivers' Club, owner of the circuit, over land lease proposals - said to be vital to the continued hosting of the British Grand Prix.

Formula One's new owner (assuming the FIA grants its go-ahead for the deal), Alpha Prema, has an immediate need to sort the 2008-2012 Concorde Agreement, but, based upon the foregoing, relations with circuits - after all, these are the commercial rights holder's primary customers - are surely in need of some rather urgent attention, too?

Another step into the future

That CVC Partners, now majority owners of Formula One via Alpha Prema - a vehicle jointly owned by the venture capitalists, Bernie Ecclestone and others in undisclosed proportions - have agreed to disinvest from Dorna, its MotoGP-owning subsidiary, in order to gain approval from European Union regulators for the acquisition of Formula One, speaks volumes about the profit projections for F1.

After all, the two-wheeled category is said to be highly profitable, having been proactively managed in recent times. Of course, gaining EU approval was just the first step in the process, albeit the most daunting. Now comes the easy part: receiving the FIA's blessing for the deal, as prescribed by the sport's controlling body when originally granting Ecclestone's family-owned entities, SLEC Holdings and Bambino Trust, the commercial rights to the sport.

SLEC was, of course, carved up among a trio of banks after its acquisition bankrupted no less than two German companies, with a the financial institutions then inheriting 75% of the company. FIA approval for the deal is expected to be the work of a moment when its World Motorsport Council meets on 24 March, for the sale of the sport's commercial rights to CVC is far from a hostile deal, so what pleases Bernie should amply please FIA President Max Mosley, who is not thought likely to veto the deal.

Will all this, though, result in peace? Possibly, yes, but not definitely - despite this column's belief (somewhat erroneous, as it turned out) a week ago that peace could be brokered during the Malaysian Grand Prix weekend. True, Ecclestone was seen talking to all and sundry, and the general atmosphere was conciliatory, but for peace to break out the teams need to see eye-to-eye with Mosley once the financial details are sorted.

That is far from a given in view of the fact that the president has, of late, been far from malleable in the divergent areas, to wit his entry deadline (for the 2008 championship) of 31 March, and his insistence upon 'dumbing down' the sport by way of, for example, regulatory ECUs and engine specifications 'frozen' for three years.

Bernie Ecclestone and Ron Dennis at the Malaysian Grand Prix © LAT

First off, though, Alpha Prema needs to get the five 'rebel' teams - Renault, McLaren-Mercedes, Toyota, Honda and BMW-Sauber - on its side as a means forward. Should it succeed therein, and the incentives given to team's (60% of F1's total revenues, as opposed to the 75% of the lesser income of a second series the GPMA intends distributing to competing teams) prove strong enough, peace could be brokered by end-March. Is 60% enough? Well, thus far teams have received 23%...

That achieved, persuading the GPMA teams to comply with the entry deadline could be easier to achieve: with Alpha Prema, and thus Ecclestone, batting for all 11 teams presently entered, plus parties intending to enter the 2008-2012 championship (said to be, at present, three operations), the FIA could possibly be persuaded to be less rigid in certain areas, providing further incentive for them to enter.

Insistence upon standardized ECUs and frozen engine specifications, though, seems set to scupper any FIA/GPMA deal, with the irony, particularly with regards to the latter requirement, being that such inclusion, whilst aimed at reducing engine development costs to ensure cheaper power units for independents, is widely thought to do them potentially more harm than good.

Should, for example, an independent team find itself saddled with an uncompetitive unit, it will be unable to extricate itself from this uncompetitive situation without switching engine suppliers (if available), thus jeopardizing its own situation and the uncompetitive engine supplier's future, which could be, say, privately-owned Cosworth. Exit, then, said engine company - heaping greater pressures, and thus costs, on those remaining in the sport...

Then, how could Formula One hope to attract incoming or replacement engine suppliers if such restrictions are placed upon them. Renault and BMW each took a year to reach semi-competitiveness after re-entering the sport - and, that, without such development restrictions - whilst Honda has yet to win a race despite intensive development.

Imagine, then, the handicap facing an engine supplier wishing to (re) enter the sport, yet unable to, due to some strange regulations, develop its engines for a three-year period.

All in, it seems a strange way of attracting what Formula One needs right now: a plentiful supply of affordable engines. And, worse, insistence upon such regulations could well scupper peace just when it seems near enough to be smelt.