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Implications of current oil prices on F1


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#1 AlexS

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Posted 16 January 2016 - 23:48

Assuming they will be permanent for awhile.

 

Circuits on oil countries - renegotiation with Ecclestone? 

 

Reduced team sponsorship and technological research? 

 

Pilot sponsorship hit? Note: Maldonado is a situation being discussed in Silly Season topic.

 

Less team expenses? - Training and GP fuel expenses - racing and traveling, air fares?

 

Others?

 

So it will be a significant impact or something that will go mostly under the radar?

 

 



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#2 LORDBYRON

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Posted 16 January 2016 - 23:52

 I cant see the relevance here to F1 IMO

 

The gods will soon lock it I suspect as that is there favourite pastime here.



#3 Stugg93

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Posted 16 January 2016 - 23:59

I wouldn't necessarily say this will have no impact on f1. I believe 9/11 and the following economic crisis had an impact on Arrows and Prost's demise, Honda, Toyota and BMW all left because car manufacturing was in crisis after the 2008 crash. Bahrains race was cancelled one year after the Arab Spring events in that country. Poverty and economic crisis can do a lot of damage in many different places, and F1 is no exception to that. 



#4 Tony Mandara

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Posted 17 January 2016 - 01:16

F1 as a whole survived a worldwide financial crisis and is not funded solely by oil companies. I can't see it having any major or long lasting ramifications. I have only two questions:

What's training fuel?


What gods??

 ;)

#5 ElJefe

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Posted 17 January 2016 - 04:25

There's too much at stake for the Russians to drop their Grand Prix: it would mean a massive loss of face for Putin on the world stage, especially considering the fact that he has always been in attendance since its inception. I think Bahrain might be more at risk, also because the low oil prices have the potential to seriously jeopardise the political stability in the country. 



#6 scolbourne

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Posted 17 January 2016 - 07:30

There may be oil rich countries who will need to re-negotiate their contracts to hold races as funds are running short. I do not really expect to see much change though, except a hopefully gradual return to European races again.



#7 kraduk

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Posted 17 January 2016 - 08:21

Lets face it no oil company or state is poor even though the price of oil is down. Therefore as long as the desire is there the races will still go ahead. It's also important to note that non of these oil states are really democracies so these races are ego trips for the interested parties, and the well being of the local populations has little to do with it.  Loss of a race will mean loss of face if they had to drop their race due to lack of funds, so things would have to get really bad for these people to exit.



#8 LORDBYRON

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Posted 17 January 2016 - 10:46

I still cant see the relevance as Its politics at the end of the day and should not be in a F1 forum

.

This forum used to be one of the best now it has become the place to go to talk about anything.


Edited by LORDBYRON, 17 January 2016 - 10:49.


#9 YoungGun

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Posted 17 January 2016 - 10:54

Oil is now cheaper than bottled water, beer and pop. :lol:



#10 Imateria

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Posted 17 January 2016 - 11:42

I still cant see the relevance as Its politics at the end of the day and should not be in a F1 forum

.

This forum used to be one of the best now it has become the place to go to talk about anything.

Might be worth remembering F1 doesn't exist in a bubble.

 

Frankly the only immediate concern would be for Maldonado, if Venezuela decides to stop throwing £30mil his way every year there is no reason for Renault to retain him. As others have said, the middle eastern races are an ego trip for the local royal families and the hosting fees are chump change to them, things would have to get a lot worse before they have to stop spending the money on F1, though of course they could just get bored and spend the money elswhere anyway.



#11 PayasYouRace

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Posted 17 January 2016 - 11:52

I still cant see the relevance as Its politics at the end of the day and should not be in a F1 forum
.
This forum used to be one of the best now it has become the place to go to talk about anything.


Firstly, it's more economics than politics, but either way, it has a direct effect on Motorsport in general. Also, it's a racing forum, not just F1. You can also post in the threads you find relevant or even start one if there's a topic you want to discuss.

As for the topic, I'd imagine low oil prices would be good news for motor racing in general.

#12 Ross Stonefeld

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Posted 17 January 2016 - 12:43

Oil is now cheaper than bottled water, beer and pop. :lol:


Says more about how much we pay for beverages....


"European" GP and PDVSA money is about the only thing realistically under threat.

#13 pdac

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Posted 17 January 2016 - 15:01

Oil is now cheaper than bottled water, beer and pop. :lol:

 

The WHOLESALE price of SOME grades of crude oil is lower than the RETAIL price of SOME brands of bottled water.



#14 Talisman

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Posted 17 January 2016 - 15:08

 I cant see the relevance here to F1 IMO

 

The gods will soon lock it I suspect as that is there favourite pastime here.

 

I can't see it either, F1 is after all a sport that is totally immune to the state of the global economy....

 

Low oil prices will present a problem for those economies fundamentally reliant on its export such as Abu Dhabi, Azerbaijan and Venezuela.  Some of these host races at tremendous cost, others invest huge amounts into the sport.  Some of this will be put at risk obviously.

 

But low oil prices are partly due to a belief that the global economy is slowing down and demand will be low and if that transpires then clearly the level of sponsorship heading F1's way will also fall.



#15 Jimisgod

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Posted 17 January 2016 - 17:18

We might finally be rid of Abu Dhabi :clap: :clap: :clap:



#16 Jimisgod

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Posted 17 January 2016 - 17:19

Says more about how much we pay for beverages....


"European" GP and PDVSA money is about the only thing realistically under threat.

 

Baku was already in the Pu



#17 Fatgadget

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Posted 17 January 2016 - 20:03

I can't see it either, F1 is after all a sport that is totally immune to the state of the global economy....

 

Low oil prices will present a problem for those economies fundamentally reliant on its export such as Abu Dhabi, Azerbaijan and Venezuela.  Some of these host races at tremendous cost, others invest huge amounts into the sport.  Some of this will be put at risk obviously.

 

But low oil prices are partly due to a belief that the global economy is slowing down and demand will be low and if that transpires then clearly the level of sponsorship heading F1's way will also fall.

I take it you don't recall the year when motor sport activities here in the UK were severely curtailed  because of a fuel crisis?..1974 I think it was.Certainly the RAC and Swedish rallies were cancelled that year.

 

So saying F1 is immune to the state of the global economy beggers credibility frankly  :eek:



#18 maverick69

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Posted 17 January 2016 - 20:08

...... less crashes in F1



#19 PayasYouRace

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Posted 17 January 2016 - 20:16

I take it you don't recall the year when motor sport activities here in the UK were severely curtailed  because of a fuel crisis?..1974 I think it was.Certainly the RAC and Swedish rallies were cancelled that year.

 

So saying F1 is immune to the state of the global economy beggers credibility frankly  :eek:

 

You might want to check your sarcasm meter.



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#20 AlexS

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Posted 17 January 2016 - 20:16

I think Talisman was being sarcastic, hence the ... after the phrase.



#21 Fastcake

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Posted 17 January 2016 - 21:22

We might finally be rid of Abu Dhabi :clap: :clap: :clap:

 

Unlikely. The gulf states have far too much cash to be endangered by the drop in oil prices, at least in the short to medium term. These sporting events are prestige projects for their countries and their royal families, and as such the Grands Prix are unlikely to be high on the list of unnecessary expenditure.

 

Azerbaijan is probably the biggest danger as the country is unstable enough in the best of times. Russia might not last long now they're starting to suffer budget problems, but it's more likely the Grand Prix is gone once Putin is bored of Formula One.



#22 Marklar

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Posted 17 January 2016 - 22:10

Unlikely. The gulf states have far too much cash to be endangered by the drop in oil prices, at least in the short to medium term. These sporting events are prestige projects for their countries and their royal families, and as such the Grands Prix are unlikely to be high on the list of unnecessary expenditure.

 

Azerbaijan is probably the biggest danger as the country is unstable enough in the best of times. Russia might not last long now they're starting to suffer budget problems, but it's more likely the Grand Prix is gone once Putin is bored of Formula One.

Wait. He is stil not bored?



#23 itsademo

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Posted 17 January 2016 - 22:30

The WHOLESALE price of SOME grades of crude oil is lower than the RETAIL price of SOME brands of bottled water.

no the retail price of petrol and diesel is well below the price of many bottled waters

Kona Nigari Water @ $402 per 750 ml

or
Veen @ $23 per 750 ml
I have not included such waters as 
Acqua di Cristallo Tributo a Modigliani @ $60,000 per 750 ml
as most of that price is for the bottle made of 24K gold


#24 itsademo

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Posted 17 January 2016 - 22:41

Unlikely. The gulf states have far too much cash to be endangered by the drop in oil prices, at least in the short to medium term. These sporting events are prestige projects for their countries and their royal families, and as such the Grands Prix are unlikely to be high on the list of unnecessary expenditure.

 

 

Also lets not forget its the Gulf states that are allowing the price to drop, by not limiting production.

 

Also you need to take into account the fact for many of these countries it is not just a vanity project as some here seem to think.

 

Countries like Dubai are using it to kick start tourism, as they are looking more long term to the point when oil is not their major income.

You cant just look at one single sport in isolation without looking at the whole, otherwise you come to silly conclusions like its all about vanity.

But feel free to ignore all those hotels and resorts being built



#25 Nathan

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Posted 17 January 2016 - 23:01

 

Circuits on oil countries - renegotiation with Ecclestone?

 

I think this is the one of significance. Bahrain, Abu Dhabi, Russia, Azbeh-whatever, and even Canada, and perhaps Austin via state funding.

 

I know the Gulf States still make good money, but you can't tell me when you're producing 1 million bbd you don't notice a $20/bbl hit.  That is many, many billions.



#26 Fastcake

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Posted 17 January 2016 - 23:14

Wait. He is stil not bored?

 

I doubt Putin has even sat through a whole race. He just sits in the VIP section with Bernie and Todt, and gets seen on camera handing out the trophies.

 

Also lets not forget its the Gulf states that are allowing the price to drop, by not limiting production.

 

Also you need to take into account the fact for many of these countries it is not just a vanity project as some here seem to think.

 

Countries like Dubai are using it to kick start tourism, as they are looking more long term to the point when oil is not their major income.

You cant just look at one single sport in isolation without looking at the whole, otherwise you come to silly conclusions like its all about vanity.

But feel free to ignore all those hotels and resorts being built

 

If you want to increase tourism you start running tourism campaigns that actually give people a reason to visit your countries. You don't overspend on sporting events that could be held anywhere, with costs that far exceed any independently audited return. The billions wasted on F1 or the World Cup is sheer vanity, nothing more.



#27 CoolBreeze

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Posted 18 January 2016 - 01:29

I don't think the oil prices will have a significant impact in F1. The oil companies now prefer to remove people and engineers, who i personally think they have being overpaying for many years. They have also gives a vss to many employees, and now, the trend is i think looking for less experienced people, with less benefits and perks. 

 

As for F1, it remains one of the best marketing tools for them. 



#28 Fatgadget

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Posted 18 January 2016 - 02:15

I still cant see the relevance as Its politics at the end of the day and should not be in a F1 forum

.that L

This forum used to be one of the best now it has become the place to go to talk about anything.

It's off season bear in mind! :D

 

Not unless of course something like what happened in 2007 when the word got out that Lewis Hamilton would be driving for Mclaren!... :eek:



#29 taran

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Posted 18 January 2016 - 08:35

I doubt Putin has even sat through a whole race. He just sits in the VIP section with Bernie and Todt, and gets seen on camera handing out the trophies.

 

 

If you want to increase tourism you start running tourism campaigns that actually give people a reason to visit your countries. You don't overspend on sporting events that could be held anywhere, with costs that far exceed any independently audited return. The billions wasted on F1 or the World Cup is sheer vanity, nothing more.

 

That's a tad shortsighted. There are a gazillion tourism campaigns going on at any given moment (just watch CNN). And none of them get much attention IMO.

Large international sporting events put countries "on the map". Once they are embedded in people's consciousness, tourism efforts can have an effect.

 

Let's not pretend that political oppression has any effect on tourism destinations unless its overtly visible and/or hampers a pleasant holiday.



#30 saudoso

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Posted 18 January 2016 - 10:21

That's a tad shortsighted. There are a gazillion tourism campaigns going on at any given moment (just watch CNN). And none of them get much attention IMO.

Large international sporting events put countries "on the map". Once they are embedded in people's consciousness, tourism efforts can have an effect.

 

Let's not pretend that political oppression has any effect on tourism destinations unless its overtly visible and/or hampers a pleasant holiday.

On the contrary, it favors safe and clean streets. Abu Dhabi and Dubai look like Las Vegas or a Disney's amusement park.



#31 prpr

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Posted 18 January 2016 - 11:15

Will the dropping of sanctions against Iran this week allow it to sell oil on the international market again? Will that lead to further oil price reductions? If all race hosting fees are paid in advance, there is unlikely to be any change to the F1 calendar this year.

#32 Razoola

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Posted 18 January 2016 - 12:16

Oil has been over valued for a long time, it seems clear its going to go under 20 now opec is all but gone. F1 is really overvalued, the oil price has dropped, in time the value of F1 value will drop also.

 

I think more concerning for f1 is the fixing claims in sports, now its the turn of Tennis.... It won't be long now before eyes turn to F1, maybe this is for a different topic though.



#33 Kristian

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Posted 18 January 2016 - 12:39

Azerbaijan's currency has plummeted, and its only going to get worse. I suspect they'll do the race this year given how much has been invested, but I wouldn't be surprised if it quietly dropped off after that. 

 

Abu Dhabi sadly has too much money from finance other than oil, so we're stuck with that. Bahrain, as has already been said, might be a bit trickier though. It all depends on social upheavals really. 

 

As for teams, with Middle Eastern stocks being hit, potential sponsors from the regions might be wary of committing big bucks for the moment, but given nobody was in the pipeline anyway I doubt it will make much difference.  



#34 noikeee

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Posted 18 January 2016 - 12:48

That's a tad shortsighted. There are a gazillion tourism campaigns going on at any given moment (just watch CNN). And none of them get much attention IMO.

Large international sporting events put countries "on the map". Once they are embedded in people's consciousness, tourism efforts can have an effect.

 

Let's not pretend that political oppression has any effect on tourism destinations unless its overtly visible and/or hampers a pleasant holiday.

 

I agree but there's no way on earth a few of these sporting events are worth the money it's put in. You gain notoriety but at a cost far greater than any income this notoriety will give you, even in the long term.



#35 itsademo

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Posted 18 January 2016 - 20:16

I doubt Putin has even sat through a whole race. He just sits in the VIP section with Bernie and Todt, and gets seen on camera handing out the trophies.

 

 

If you want to increase tourism you start running tourism campaigns that actually give people a reason to visit your countries. You don't overspend on sporting events that could be held anywhere, with costs that far exceed any independently audited return. The billions wasted on F1 or the World Cup is sheer vanity, nothing more.

really perhaps you should talk to the likes of ferrari as they seam to think its worth spending untold millions going after the tourists in such places.

If you cant see how getting your name associated with a big sporting event and lots of celebs helps your profile as a destination to holiday in. Then i guess you also think the Olympics are the ultimate waste of money, or perhaps golf, american football(*sic), baseball and basketball are also just wastes of money?



#36 LeClerc

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Posted 18 January 2016 - 21:04

Some more news regardings PDVSA and Petrobras: http://uk.reuters.co...e-idUKKCN0UW1LE

 

I suppose Nigerian oil industry is hurting as well, but we don't have (not since the Prince left, ahem :rotfl: ) any Nigerian sponsors in F1, at least not that I know of.



#37 Lotus53B

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Posted 18 January 2016 - 22:13

I heard that Venezuela needs oil prices in excess of $100 to be profitable - which could be problematic for Pastor/Renault.

With the possible exception of Azerbaijan, I don't think that the Gulf States will have any problems affording a GP for a few years.

 

If anything the lower oil price should benefit F1 - well, Bernie - the costs of transporting the circus globally should drop as the cost of jet fuel drops, which given that the costs of hosting the races won't drop, there will more shekels in BCE's already tumescent bank accounts.

 

Edit.  A friend who know more about this than me pointed out that commercial jets don't use AvGas.


Edited by Lotus53B, 18 January 2016 - 22:17.


#38 Fastcake

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Posted 18 January 2016 - 23:12

really perhaps you should talk to the likes of ferrari as they seam to think its worth spending untold millions going after the tourists in such places.

If you cant see how getting your name associated with a big sporting event and lots of celebs helps your profile as a destination to holiday in. Then i guess you also think the Olympics are the ultimate waste of money, or perhaps golf, american football(*sic), baseball and basketball are also just wastes of money?

 

Er yes, I do think the Olympics are the ultimate waste of money. As do an increasingly large number of cities in the West, as the IOC is finding as they struggle to find anyone in a democratic country who actually wants to host their event. It's completely unsustainable to anyone who has to account to an electorate.

 

Now I'm not going to say that an event, any event, doesn't have some benefit to the host nation and the local economy. There's a boost to all the local businesses with the influx of visitors, and some form of advertising benefit for the area - though how much a car park in the desert really gets people to visit Abu Dhabi is up for debate. But that benefit is finite, and it's certainly does not increase by spending an extra billion on unneeded stadiums or a hotel that lights up at night. Every independent analysis of these events shows the real benefit is far less than the estimates bandied about beforehand and the costs generally come in far over-budget. As the costs of hosting sport heads into stupid levels of money, the hosts are losing millions.

 

You can dress it up all you want, but it all comes down to vanity of the ruling autocrats.



#39 jonpollak

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Posted 27 January 2016 - 16:34

So then...

Here is a tangible implication on motor racing and one of its most soulful teams.

 

Fisher-Hartman partnership in jeopardy

 

I hope Sarah finds an Angel. !!!

 

fc2bce79c99bb86d6e79b668c68d2f0d.jpeg

 

Jp



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#40 4Wheeldrift

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Posted 27 January 2016 - 17:12

Sort of related - given that sanctions being lifted allow Iran to resume selling oil and help keep the price of oil depressed - my bet is that there will start to be plans for an Iranian Grand Prix.

 

Bernie will be keen because it isn't just Nixon that can go to China ...



#41 chunder27

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Posted 27 January 2016 - 17:30

I do find it hilarious that these greedy son of a bitch companies have been making monumental profits for decades and not passing on the prices of petrol and diesel barrel prices instantly, they kept ramping it up and up and no matter what happened for years the pump prices rose. Now, they can't get away from it and they are suddenly bitching and moaning as their profit margins are falling away and they can't do what they used to do and just rack up the prices anymore. In the UK because fleets use diesel all of a sudden over a period of years diesel suddenly became more expensive than petrol, and we all just put up with it like Hindu cows. And they were allowed to get away with it.

 

They cut corners while they were at it and batter local populations and the environment, and we are supposed to feel sorry for them?  You can stick it up yer jacksy, they are primarily responsible for the environmental situation and have been allowed to do whatever they want for too long, and now they are ******* themselves!

 

They got too big, too fat, too lazy and realised this stuff ain't going to last forever and if we want to keep selling it we have to drill 10 times harder for massive increase in costs in places we don't want to to continue making money, while also investing in future fuels to continue in our marketplace. You know aswell as I do there are alternatives ready to go sitting in safes at Exxon, Total, Shell. But they will only use them and invest in them when it becomes unprofitable to sell oil, not ANYTHING else to do so.

 

If they were more honest about it I would have some sympathy, but instead the ruthless gits just sack hundreds of people to keep shareholders happy rather than doing anything about it, or doing anything about the latent damage they were doing to the environment for decades until it became a selling point to us the consumer. 



#42 Berner

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Posted 27 January 2016 - 18:03

Perhaps already mentioned but a side effect of the oil price decline is the flight of capital from petro-states to the safety of the US dollar. This drives down exchange rates so, for example, the Canadian GP's annual fee (payable in USD) is now some 30% higher than a year ago. Where will a promoter who is already begging at the doors of three levels of government find revenue to offset this incremental cost? And in the world of Indy car, I wonder how secure the budget is at Schmidt-Peterson, given that P's company supplies the Canadian oil patch?



#43 Spillage

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Posted 28 January 2016 - 01:13

Sort of related - given that sanctions being lifted allow Iran to resume selling oil and help keep the price of oil depressed - my bet is that there will start to be plans for an Iranian Grand Prix.

 

Bernie will be keen because it isn't just Nixon that can go to China ...

I don't know if you're joking, but I really, really doubt there'llbe any major international sporting events in Iran any time soon. Women's rights and Iran's patchy relationship with foreign press organisations will put paid to that.

 

I do think PDVSA's cash might not be long for this world. Venezeula is in the grip of serious economic crisis and the government took a hammering in the recent parliamentary elections. I think the money they're splurging on Maldonado will consequently become increasingly difficult to justify.



#44 taran

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Posted 28 January 2016 - 08:08

I don't know if you're joking, but I really, really doubt there'llbe any major international sporting events in Iran any time soon. Women's rights and Iran's patchy relationship with foreign press organisations will put paid to that.

 

 

 

:confused: :confused: :confused:

:well: :well: :well:

 

:rotfl: :rotfl: :rotfl: :clap: :clap: :clap: :drunk: :drunk: :drunk:

 

:wave: