153 replies to this topic

[Mastah]

Korean Grand Prix organisers are seeking the help of Bernie Ecclestone to allow them to renegotiate their race contract terms in a bid to keep the event on the calendar.

Amid question marks about the future of the Yeongam GP, race promoter Won-Hwa Park has admitted that the event faces financial difficulties because of the huge hosting fee that had been agreed before he arrived in his current role.

With a fresh mandate from the South Jeolla provincial government to try and reduce costs, Mr. Park has said that the key factor going forwards is in trying to bring down the outgoings - which includes the race hosting fee.

According to local media, the cost for the race this year stands at £52 million - which includes a £35 million fee for hosting and television rights. The current deal with Formula One Management, which runs until 2016, includes a 10 per cent escalator for hosting rights over its duration.

With income from tickets estimated to be around £16 million, the venue is currently loss making unless financial support can be got from the national government.

Despite widespread speculation last weekend that the financial situation could mean Korea elects to drop its event off the calendar as early as next year, Park is determined to do what he can to keep the race going.

In an exclusive interview with AUTOSPORT explaining the future of the Korean GP, Park said: "We are trying hard, but we need the co-operation of Mr. Bernie Ecclestone. We certainly want to continue with this event because it is a big event, even though we have losses.

"We want to give this region momentum by holding this event to help boost its economy and to boost the image, and to change our farming background in this region."

When asked what the situation would be if Ecclestone was unwilling to change the terms of the original deal, Park said: "It is too early for me to say at the moment."

He added: "He knows perfectly well our current situation, and I hope he is more co-operative."

Speaking about the focus of his efforts since he took over, Park said: "My main focus has been on reducing the costs as much as possible.

"This is the core issue. Some local people in this region are against the race because of a big financial loss in hosting the race and organising this event.

"Those citizens, who have a background as farmers and are normally poor, want to have the funds distributed for other purposes rather than be used for this so-far unpopular event.

"At the same time, I must increase the awareness of motor sport so that people and citizens understand what we are doing. This would be an indirect way to convince the national government. Motor racing is not known here as much as it is in other developed countries."

http://www.autosport...rt.php/id/95498

Over 50 millions for hosting race in 2015? 35 millions of losses already this year? That's just ridiculous. And only after second GP Koreans realised how out of touch the deal they signed was and now they want to renegotiate contract...

I think this highlights how wrong current business model of F1 is. When majority of races generates losses and only few of them are profitable (Great Britain, Monaco, Italy, Singapore, Brazil?) you know something is just seriously wrong. We have Australia, Malaysia, China, Turkey, Valencia, both German rounds, Hungary, Belgium and Korea (Spain, Canada, Japan, India, Abu Dhabi probably too) some of them popular, some not, but all of them only generate losses. Sooner or later Bernie and his friends will run out of countries willing to pay these absurdly high fees for hosting races, while current hosts are already struggling, what then?

[H2H]

No wonder that such costs have been breaking the back of many a good old racetrack. Bernie certainly knows how to squeeze out people...

[King Six]

I've always said F1 is a bubble, they want to go on their unsustainable merry go round then go for it, but it'll burst in the end. How is it that F1 is supposedly cheaper and most cost effective than ever, and continuously pushing for more cuts yet the hosting just keeps spiralling out of control. F1 and promoters are either sacrificing alot in order to service Bernie's debts or they're all just taking the promoters and fans for a ride and laughing on their way to the banks!

F1 should break away from Bernie, and still be F1 too. It needs to happen. The FIA need to step in. The teams need to stay united, but I think they'll just wait for the bubble to burst and the **** to hit the fan before anything real happens.

[goldenboy]

Renogotiate? Bernie?

Good luck with that!

[ivand911]

I don't mind Turkey to come back instead of Korea GP.

[Clatter]

I've always said F1 is a bubble, they want to go on their unsustainable merry go round then go for it, but it'll burst in the end. How is it that F1 is supposedly cheaper and most cost effective than ever, and continuously pushing for more cuts yet the hosting just keeps spiralling out of control. F1 and promoters are either sacrificing alot in order to service Bernie's debts or they're all just taking the promoters and fans for a ride and laughing on their way to the banks!

F1 should break away from Bernie, and still be F1 too. It needs to happen. The FIA need to step in. The teams need to stay united, but I think they'll just wait for the bubble to burst and the **** to hit the fan before anything real happens.

I agree. One way or another the fans are being sold down the river. Not only is the fee to go and watch a race extortionate, but now in Britain we are even losing it to PPV to watch on TV. To be honest I want to see it implode now as I think that's the only way some sanity will come about.

[zepunishment]

I think the recent spurt of new racetracks are a legacy of the economic boom, and now people are seeing that in the wider scheme of things they are just a costly liability. It used to be that a grand prix could show off your status to the world, now there are more pressing concerns and having an economy that balances it's books is more relevant.

Is it really true that they found some things such as bins and stickers on doors were untouched from last year?

[Clatter]

I think the recent spurt of new racetracks are a legacy of the economic boom, and now people are seeing that in the wider scheme of things they are just a costly liability. It used to be that a grand prix could show off your status to the world, now there are more pressing concerns and having an economy that balances it's books is more relevant.

Is it really true that they found some things such as bins and stickers on doors were untouched from last year?

That's how it was sold, but really was there ever any real truth to it?

[Wi000]

Bernie is not a philanthropist, they should have considered matters before a contract was signed. Surely there will be a get-out clause in the contract but it will be expensive.

With Mexico, Russia, Thailand and Argentina all interested in hosting a GP I can't see a problem in the foreseeable future.

[Diablobb81]

Much cheaper to have an F1 team than to host a race. And more exposure.

[smitten]

I think this highlights how wrong current business model of F1 is.

Nothing wrong with the business model when you are FOM! Remember this is not a sport, but a business.

But this is exactly when we have lost a number of "classic" races to tilkedrones. The classic races have been doing it for longer and know they can't break-even at those prices, so they are outbid or no longer bid. Developing countries have been convinced that it is prestigious to host a GP and so frequently have government support and funding. When the money runs out we get a developing mess.

[ed24f1]

The fact that the initial fees ars so high is that Bernie wants long-term commitments, not just some tracks that come in for a year or two and then disappear again.

Edited by ed24f1, 18 October 2011 - 10:22.

[Wi000]

Nothing wrong with the business model when you are FOM! Remember this is not a sport, but a business.

Yes people seem to forget that it's Bernie's main task to get as much money as possible out of F1, FOM, CVC and the teams count on him for that.

But this is exactly when we have lost a number of "classic" races to tilkedrones. The classic races have been doing it for longer and know they can't break-even at those prices, so they are outbid or no longer bid

They'll keep a certain number of the traditional races on the calendar as they generate value to F1 just by being scheduled.
Alternating between tracks is Bernie's solution for the tracks that no longer can afford a race every year.

Developing countries have been convinced that it is prestigious to host a GP and so frequently have government support and funding. When the money runs out we get a developing mess.

People have been saying that the money will run out for years now but really it isn't. Look at all the countries interested in hosting a race,
F1 will be fine for the foreseeable future.

[nbhb]

Renogotiate? Bernie?

Good luck with that!

Now the koreans are also to blame. Why the hell did they build a circuit in somehow the middle of nowhere, when the only appropiate place would have been near Seoul

[Clatter]

The fact that the initial fees ars so high is that Bernie wants long-term commitments, not just some tracks that come in for a year or two and then disappear again.

You don't need high fees to achieve that. Lower fees plus a contract with penalties for early pullout would make it far more likely that circuits would be able to stay for the long run.

[smitten]

People have been saying that the money will run out for years now but really it isn't. Look at all the countries interested in hosting a race,
F1 will be fine for the foreseeable future.

I agree. My point was that individual venues will run out of cash to give to F1, not that there won't be a queue of venues waiting behind them.

[Fastcake]

Now the koreans are also to blame. Why the hell did they build a circuit in somehow the middle of nowhere, when the only appropiate place would have been near Seoul

You do have to question the idea behind building this track where it is, together with an as-of-yet non-existant city/marina development on such an expensive contract.

[ExFlagMan]

I guess that will be Bernie's legacy - a redundant circuit in every country in the world - I suppose it saves the family having to argue who is going to pay for the gravestone!

[Mastah]

With Mexico, Russia, Thailand and Argentina all interested in hosting a GP I can't see a problem in the foreseeable future.

And which of these potential races would be profitable? Thailand ?

Nothing wrong with the business model when you are FOM! Remember this is not a sport, but a business.

Of course it's business, but unhealthy one. When only 2 out of 3 sides have profits, then you have to ask some questions.

They'll keep a certain number of the traditional races on the calendar as they generate value to F1 just by being scheduled.

And guess what, they also generate losses (compiled from various sources):

Australia - 50 million dollars in 2010 (1.5 in 1996)
Catalynya - 7.5-10 million euros subsidized by local goverment in 2010
Monaco - little to no fees, but soon new deal will be signed
Canada - 4-5 million dollars in 2008, they have to pay 75 million dollars for hosting GP in 2010-2014, at first Bernie wanted 175 millions!
Valencia - 20 million euros in 2010, 18 millions of hosting fee, 10 millions of profits from tickets
Hockenheim - 5.3 million euros in 2008, fee was lowered by about 5 millions since then
Nurburgring - 13.5 million euros in 2009, 20 millions of hosting fee
Hungary - no numbers, but it is subsidized by goverment
Belgium - no numbers, but it is subsidized by goverment
Italy - no info, probably profits
Japan - small profits
Brazil - no info, probably profits

Average for hosting race in 2010 - 31.2 million dollars.

Alternating between tracks is Bernie's solution for the tracks that no longer can afford a race every year.

And it was working like a charm with losses of 5.3 millions at Hockenheim and 13.5 millions at Nurburgring . Only after they signed new deals, they can generate any profits.

[Wi000]

And which of these potential races would be profitable? Thailand ?

Not Bernie's or F1's problem, as long as there are countries practically begging for a race the business model works just fine.

Of course it's business, but unhealthy one. When only 2 out of 3 sides have profits, then you have to ask some questions.

The promoters or track-owners that is but not F1 or Bernie. It's simple supply and demand and awarding F1 races is a sellers market for now.

[bourbon]

Well hopefully they don't go the way of Turkey. But it seems location might have been a problem as it is so far out from Seoul.

[fieraku]

I've always said F1 is a bubble, they want to go on their unsustainable merry go round then go for it, but it'll burst in the end. How is it that F1 is supposedly cheaper and most cost effective than ever, and continuously pushing for more cuts yet the hosting just keeps spiralling out of control. F1 and promoters are either sacrificing alot in order to service Bernie's debts or they're all just taking the promoters and fans for a ride and laughing on their way to the banks!

F1 should break away from Bernie, and still be F1 too. It needs to happen. The FIA need to step in. The teams need to stay united, but I think they'll just wait for the bubble to burst and the **** to hit the fan before anything real happens.

Bernie gets half of the cut as a promoter,where in truth he should be getting 15%. So if the team get that extra 35% they deserve they'd still be earning more even if they lower the hosting fees with the tracks,who can lower ticket prices,which means more fans at the races.
It's a win win for all,but the LEACH BE who has single handedly made F1 a NONE SPECTATOR sport! And is relying in countries run by DESPOTS and TYRANTS to keep his machine rolling.

Kabul GP anyone?

[smitten]

It's a win win for all,but the LEACH BE who has single handedly made F1 a NONE SPECTATOR sport! And is relying in countries run by DESPOTS and TYRANTS to keep his machine rolling.

Must be true, otherwise it wouldn't be in capitals...

[Szoelloe]

Bernie gets half of the cut as a promoter,where in truth he should be getting 15%. So if the team get that extra 35% they deserve they'd still be earning more even if they lower the hosting fees with the tracks,who can lower ticket prices,which means more fans at the races.
It's a win win for all,but the LEACH BE who has single handedly made F1 a NONE SPECTATOR sport! And is relying in countries run by DESPOTS and TYRANTS to keep his machine rolling.

Kabul GP anyone?

Are you drunk? Or just uneducated?

[primer]

The future of Korean GP does not look good, and race fees is only one concern. They had huge plans to build a city around the circuit and what not, it still looks like a disaster construction zone. The project seems doomed, first we lost Turkey and I suspect Korea's next.

Of the recent debutants, only the Arabian tracks seem secure thanks to petrodollars riches.

[Wi000]

Must be true, otherwise it wouldn't be in capitals...

Guess so
Maybe he means the Dehli DESPOTS and the Texas TYRANTS who do seem to have gotten a foot in the door in F1.

Regarding the Korea GP I guess the whole project city/marina/track isn't what it's supposed to be right now and isn't meeting universal Korean approval hence the public plea for re-negotiations.

Bernie has seen those pleas many times before and will do the math for the Koreans which will result that if they want out they'll be also out of pocket but then just without a race.

[fieraku]

Are you drunk? Or just uneducated?

And are you blind or just naive?

[fieraku]

Guess so
Maybe he means the Dehli DESPOTS and the Texas TYRANTS who do seem to have gotten a foot in the door in F1.

No I mean the Bahrain and Abu Dhabi ones,but lets not get into it.

[alexocfp]

Guess so
Maybe he means the Dehli DESPOTS and the Texas TYRANTS who do seem to have gotten a foot in the door in F1.

Regarding the Korea GP I guess the whole project city/marina/track isn't what it's supposed to be right now and isn't meeting universal Korean approval hence the public plea for re-negotiations.

Bernie has seen those pleas many times before and will do the math for the Koreans which will result that if they want out they'll be also out of pocket but then just without a race.

I have a feeling bernie's math breaks all the rules you learn in school. I don't know what the exact equation is but i assure you it will conclude as such: "nation of korea<bernies pockets of cash"

[nada12]

I'd seriously like to see the business plan of one of the newer venues, especially the numbers they put in, and see if they were even remotely close in their estimates. If the cost exceeds the income by more than three times that begs the question if they shouldn't have seen it in their calculations that this race isn't sustainable.

[Wi000]

I have a feeling bernie's math breaks all the rules you learn in school. I don't know what the exact equation is but i assure you it will conclude as such: "nation of korea<bernies pockets of cash"

I guess Bernie was never a believer in the rules and math you learn in school and I've to give it to him, he didn't do too bad without those.

Bernie has seen plenty of business partners trying to wiggle out of a deal and he usually takes that very badly.
Best the Koreans could achieve is a short term financial breather followed by a hefty financial penalty later on.

[Clatter]

I'd seriously like to see the business plan of one of the newer venues, especially the numbers they put in, and see if they were even remotely close in their estimates. If the cost exceeds the income by more than three times that begs the question if they shouldn't have seen it in their calculations that this race isn't sustainable.

I have a feeling that every new circuit thinks the fans are going to fly in from all around the world and that the grandstands will be full. Must come as quite a shock when they can barely fill half of them.

[nada12]

I have a feeling that every new circuit thinks the fans are going to fly in from all around the world and that the grandstands will be full. Must come as quite a shock when they can barely fill half of them.

I get the same feeling. If they were some 5m off okay, **** happens. But these numbers make it look like they just didn't do their homework.

[Onsokumaru]

Now the koreans are also to blame. Why the hell did they build a circuit in somehow the middle of nowhere, when the only appropiate place would have been near Seoul

Only Seoul? I suggest you to research about a city named Busan. A track there would have been good too.

[Wi000]

I have a feeling that every new circuit thinks the fans are going to fly in from all around the world and that the grandstands will be full. Must come as quite a shock when they can barely fill half of them.

Can't be the problem in Korea they sold 80% of the tickets according to the promoter and the surrounding restaurants and hotels were very content with the extra business the GP generated.

In Korea it sounds more of a political problem, in other words who picks up the bill and frankly that's not Bernie's problem at all.

[Clatter]

Can't be the problem in Korea they sold 80% of the tickets according to the promoter and the surrounding restaurants and hotels were very content with the extra business the GP generated.

In Korea it sounds more of a political problem, in other words who picks up the bill and frankly that's not Bernie's problem at all.

Depends on how many tickets they actually made available. Judging by the empty grandstands you could see on TV I'm far from comvinced they were anywhere close to 80% capacity and the figures being bandied around regarding the losses they are making rather bears that out.

[Wi000]

Depends on how many tickets they actually made available. Judging by the empty grandstands you could see on TV I'm far from comvinced they were anywhere close to 80% capacity and the figures being bandied around regarding the losses they are making rather bears that out.

I'm not judging from TV but from what the official said in the Autosport interview and that says they sold 80% of the 105.000 tickets available. So surely them re-negotiating is not because of lack of attendance.

[SpaMaster]

This is the problem with negotiating unsustainable contracts. Lot of people say hosting country should do that, this, etc. In reality, most of the times these host countries get tricked by the wily Bernie, and lose. Let the race survive by its pure financial merit. Countries should stop punting on F1 races with taxpayer's money, and they mostly lose.

[Atreiu]

What pipe were the on to sign such a contract?

[Mediansoft]

The only thing I don't get is "why ?" ... if BE gets 50% of the money as 'pomoter' then hes richer then he, or his children (and the children's children) will ever need... so why does he keep charging that much ? If I was in his place, his age .. his money ... for the sake of closure (because be honest he doesn't have 20 more years) I would cut my fees to 5% or something for leaving a healthy F1 behind... it's not that he NEEDS that money right..

[loki]

The only thing I don't get is "why ?" ... if BE gets 50% of the money as 'pomoter' then hes richer then he, or his children (and the children's children) will ever need... so why does he keep charging that much ? If I was in his place, his age .. his money ... for the sake of closure (because be honest he doesn't have 20 more years) I would cut my fees to 5% or something for leaving a healthy F1 behind... it's not that he NEEDS that money right..

Ecclestone doesn't own F1, CVC does. That money in part goes to pay down the enormous debt they racked up buying it. Looks like Korea is done.

[Tardis40]

Don't forget Texas is coming on board next year. There will be too many races anyway, one less boring circuit is a plus.

[lbennie]

i hope they get it sorted.

it really is a very good track.

korea and turkey being the pick of the tilkedromes imo

[johnmhinds]

Ecclestone doesn't own F1, CVC does. That money in part goes to pay down the enormous debt they racked up buying it. Looks like Korea is done.

I'm pretty sure CVC isn't in the red, they could stop the constantly inflating fees and still be raking the money in.
It's just greed and gullible promotors with deep pockets funding this bubble at the moment, and it's starting to come back to bite them all in the butt.

I don't understand why there isn't any kind of group looking out for the circuits, shouldn't they all be getting together and negotiating for lower deals collectively?
Bernie can't drop every race from a season if they kick up a fuss as a group.

[anbeck]

Let this whole business collapse at last!

Bernie might be greedy, but those who agree to these contracts must be persuaded that something's in there for them as well.

[V8 Fireworks]

Over 50 millions for hosting race in 2015? 35 millions of losses already this year? That's just ridiculous. And only after second GP Koreans realised how out of touch the deal they signed was and now they want to renegotiate contract...

I think this highlights how wrong current business model of F1 is. When majority of races generates losses and only few of them are profitable (Great Britain, Monaco, Italy, Singapore, Brazil?) you know something is just seriously wrong. We have Australia, Malaysia, China, Turkey, Valencia, both German rounds, Hungary, Belgium and Korea (Spain, Canada, Japan, India, Abu Dhabi probably too) some of them popular, some not, but all of them only generate losses. Sooner or later Bernie and his friends will run out of countries willing to pay these absurdly high fees for hosting races, while current hosts are already struggling, what then?

Drop stupid F1 and hold a IRL/1000 km LMP double header for a fraction of the cost.

I am baffled that the circuit is supposedly not used otherwise. Not even to invite neighboring SuperGT/Nippon series to come and race? It appears to be in the middle of nowhere, why can it not be a full permanent race circuit since all the world pit facilities are there permanently?Why is it part street circuit, street circuits should only be located downtown and road circuits such as Bathurst or lemans should be able to be closed at least 3 times a year without residents/farmers complaining too much.

[V8 Fireworks]

Maybe he means the Dehli DESPOTS and the Texas TYRANTS who do seem to have gotten a foot in the door in F1.

You know it doesn't work.

You wonder why NASCAR is so popular? Tickets are less than $50, races are long, entertaining and the whole track can be seen AFAIK.

Yet F1, EPL, Major League Baseball think it is ok to charge ordinary folks $300 in order to prop up their business and pay their players/drivers $10m per season. How did they come to this conclusion? Why should the teams be subsidized to such a large extent? Ferrari does not need to receive $100m+ each season a large proportion extracted ultimately out of exorbitant ticket prices required to pay lumbering sanction fees, they can already afford to race their cars regardless!

If Bernie would only charge reasonable sanction fees (some 50% less perhaps) then the events could be solidly viable - there would no madness like building super tracks at Turkey and Korea and then binning them and blasting them as being rubbish and utter crap and never worthy of F1. And with if they were 60-70% lower, the lower prices would bring in far more fans and ensure better filled stands too!

[loki]

I'm pretty sure CVC isn't in the red, they could stop the constantly inflating fees and still be raking the money in.
It's just greed and gullible promotors with deep pockets funding this bubble at the moment, and it's starting to come back to bite them all in the butt.

I don't understand why there isn't any kind of group looking out for the circuits, shouldn't they all be getting together and negotiating for lower deals collectively?
Bernie can't drop every race from a season if they kick up a fuss as a group.

They run a business, not a charity. The track took the race in the first place knowing what the price was. It wasn't like they had a gun to their head to take the deal. They made a bad call and now they are going to pay for it.

[Clatter]

I'm not judging from TV but from what the official said in the Autosport interview and that says they sold 80% of the 105.000 tickets available. So surely them re-negotiating is not because of lack of attendance.

The capacity for the GP is 135,000, so making 105,000 available already puts them well down. They were also slashing prices to try and get people in, and no doubt a good number of free tickets were given away again. They are not getting the people in, and that's just one reason why they are losing money.
http://en.espnf1.com...tory/42185.html

[Clatter]

I'm pretty sure CVC isn't in the red, they could stop the constantly inflating fees and still be raking the money in.
It's just greed and gullible promotors with deep pockets funding this bubble at the moment, and it's starting to come back to bite them all in the butt.

I don't understand why there isn't any kind of group looking out for the circuits, shouldn't they all be getting together and negotiating for lower deals collectively?
Bernie can't drop every race from a season if they kick up a fuss as a group.

That would be a great idea, but I as they all negotiate their deals at different times I assume it would put them in breach of contract if they tried to take action.