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18 Nov 2012, 13:05 (Ref:3167886) | #26 | ||
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F1 Circuits
Why should a circuit have to pay Bernie for holding a GP there anyway,surely it should be the other way round like when clubs want to hire a circuit to race on.
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18 Nov 2012, 13:23 (Ref:3167895) | #27 | ||
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18 Nov 2012, 13:25 (Ref:3167897) | #28 | |
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18 Nov 2012, 14:30 (Ref:3167914) | #29 | |
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19 Nov 2012, 00:08 (Ref:3168195) | #30 | |
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Just out of nosiness, does anyone know roughly what the fee is?
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19 Nov 2012, 00:18 (Ref:3168201) | #31 | ||
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19 Nov 2012, 19:16 (Ref:3168669) | #32 | ||
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No one knows for sure what each circuit pays Bernie as a "sanctioning fee." However, news reports and rumors indicate a wide range of annual fees, for example:
Average annual F1 sanction fee: $27-28M Monaco: a relatively small amount, might even be zero (!) Austin: $25-30M Montreal: $15M European races: hard to say, but probably $15-30M+ Races in nouveau riche countires: 30-50M+ Monaco's safest bet If ever there was a deal which Bernie Ecclestone let slip away it was getting money from Monaco’s F1 contract. The ACM is one of only a handful of circuit operators which takes all the revenue from trackside advertising and this alone totalled $16.25m in 2008. Monaco is also the only circuit which hosts F1 without paying fees and since these average at $28m annually it is a huge saving. ...However, the ACM’s subsidy is far from the highest on the calendar which is the $60m paid to fund F1’s other street race in Singapore. Does Formula 1 need America’s support F1 in 2011 had revenue of $1.5 billion and it generally comes from four main sources. Starting at the bottom, trackside advertising at each race and sponsorship of the series itself comprises 15 % of the revenue... Next up is revenue from corporate hospitality, freight fees and F1’s junior series, which provides around 20% of the total. Fees from F1’s 63 TV broadcasting contracts bring in 32% of its revenue and are second only to the money received from the promoters of the 20 races on the calendar for the right to hold those races. Together, the race-hosting fees comprised 33% of F1’s revenue last year and came to a total of $512 million. Each race paid an average amount of $27 million but, remarkably, they do not share in any of F1’s profits. While the top 10 teams share 50% of F1’s profits, the race tracks and their promoters generally get no money from the sport’s trackside advertising, TV fees or corporate hospitality. Instead, their sole take from the sport tends to be from ticket sales... The revenue from ticket sales usually barely covers the annual hosting fee—and then there are the administrative and logistical costs to hold the race, which cost almost another $20 million. It would leave a significant shortfall in the budgets of F1 races if it wasn’t for investment from governments. |
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19 Nov 2012, 20:20 (Ref:3168715) | #33 | ||
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this is a hard conversation to have because we know so little about what money is collected and even less about how its paid out.
one question with Christian Sylt's article, i thought the Texas gov't opted to not make the state funds available for the race? if they did get that money then this was a massively profitable event from the point of view of the organizers. |
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20 Nov 2012, 01:45 (Ref:3168863) | #34 | |||
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About half the $1.5B is paid out to the teams and so F1 has a gross profit of $750M/year. Yes, they pay out some of that in transportation costs and race expenses but they are still left with a net profit of hundreds of millions of $/year. However, none, nada, niente, rien, zero of that money goes to the circuit owners and promoters. The main point remains that the circuit owners and promoters cannot make money under the current business model unless they get a big government subsidy in the range of $15-30M/year. No such government subsidies are currently available to Hockenheim or the Nurburgring. Don't you think that, if you could realistically make money from hosting a race without a subsidy that both Hockenheim and the Nurburgring would both be clamoring to host a race each year? The fact that both tracks are saying "nein danke" tells us everything we need to know. For tracks without a government handout, the business model is kaput. As for Austin, the state has not yet paid out its promised subsidy of $25M/year. However, it will do so sometime in the near future after a bogus "economic impact study" is completed, proving that the race magically generated "additional tax revenue" of $25M. |
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20 Nov 2012, 15:54 (Ref:3169082) | #35 | ||
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It will all go t*ts up eventually. Banks have proven in recent years that they can't run a p*ss up in a brewery yet we still seem intent on the old ways. Bernie has always said that the western economies can't live with Asia hence the growth in races there. If any government actually funds F1 in the current climate they are crackers. Don't pay and Bernie has to rethink his strategy.
We could have a fantastic F1 championship with strict financial controls on the teams, that fully pays its way with affordable ticket prices, held on proper race circuits around the world and when the current system collapses maybe we will. |
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20 Nov 2012, 17:40 (Ref:3169106) | #37 | |||||
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for example, the article mentions admin and logistic costs at 20mil but makes no mention of earnings other than ticket sales. track side advertising, sponsorship deals, concession sales, parking fees are ignored as sourses on income and fees, salaries and dividends paid to owners and promoters as parts of their payouts. so i dont believe that the owners are losing their shirts over F1 and if they get a gov't subsidy their profits simply increase. to go even further with that thought, imo, they would be looking for gov't subsidies even if their were no sanctioning fees. its a public event that provides money for local business (agreed we dont know the true benefit either) and employes locals...so they are in a position to ask for subsidies so they do and their interests are satisfied through larger profits...hence their motivation to seek out subsidies. imo its not a function of profitability of their race but rather a rational attempt to maximize the return on their investments. Quote:
not sure who owns Hockenheim but im also pretty sure their loses (which are F1 related) are also subsidized by various govt levels. they have always existed with the help of govt so naturally when that stops they reevaluate their involvement. they would make that same calculations if the sanctioning fees were zero. Quote:
being in business with govt can be a very profitable enterprise and i think they are in this business because with the subsidies they can make more money here than using their capital elsewhere...as evidenced with them being involved with hosting F1 races in the first place. sorry kind of went off there...i guess the bottom line of my story is how is this different than any other owner involved in sports...at the end of the day i like the subsidies because they are actually ones that benefit me. |
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20 Nov 2012, 23:29 (Ref:3169225) | #38 | |||
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The recent story of the Ring is a classic example of why government subsidies are bad for motorsports. The Nurburgring is owned mainly by the regional government of the German federal state of Rhineland Palatinate. Several years ago, in a misguided attempt to support the economy of the rural area in the Eifel Mountains where the track is located, the state government spent about $350M on what is now derisively called Nuro-Disney. The state government built a fancy hotel, a casino, a huge shopping area, an arena and a roller coaster that never worked right next to the modern F1 track. Then they rented out the whole operation, including the old Nordschliefe test track to two incompetent businessmen who badly mismanaged everything. Even if they had been competent, the market was just not there to support the state subsidized fancy facilities. The whole thing fell apart this year and the Nurburgring declared bankruptcy. While the Nordschliefe test track remains open for track days and is probably profitable, the modern track limps along with its future in doubt. The state, having already wasted a few hundred million $, is not allowed by the EU to pay out any more subsidies to the track. Without state subsidies, an F1 race at the Nurburgring is a money-losing venture. They can't even make money on an operating basis. If they put on an F1 race, they would lose money on each ticket they sold. If they raise tickets to astronomical levels, no one would show up. The Nurburgring is bankrupt. They need cash to keep operating. It's obvious that, if they thought they could at least generate some positive cash flow by putting on an F1 face, they would do that. Bernie is ready to have the 2013 German GP take place. But only if he gets his $30M sanctioning fee and, like always, he would keep all the TV money, all the signage money and all the Paddock Club money. The Nurburgring would get the ticket money and there's not enough of that to cover the expenses of putting on a race. If there were, then it's a no-brainer that the Nurburgring would stage the 2013 race. Hockenheim is much better off than the Ring. They might still have access to some kind of subsidy money from a local/regional government, But, as evidenced by the fact that they are not jumping at the chance to host the 2013 race, they also view an F1 race as a money losing venture. It's pretty much the same situation all over Europe. That's why Bernie is constantly scouting the world for new cities in new countries that can get access to new subsidy money ( Hello Austin!) so they can afford to stage a race. Chilli, you say you like F1 subsidies, fine. I admit that I also like the fact that the taxpayers of Canada, Quebec and Montreal have indirectly subsidized my many trips to the Montreal GP. But I still don't like the fact that Bernie has made F1 into a sport that is completely dependent on government subsidies. Just as government subsidies are ruining the Nurburgring (not to mention the national economies of several European countries), they will eventually ruin the sport of F1. |
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21 Nov 2012, 09:40 (Ref:3169355) | #39 | |
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With the current fees charged by Bernie to host a race it is almost impossible to even break even.
To take approximate figures if a circuit has 120,000 paying spectators at an average of $200 each that make a gross income of $24million. If Bernie gets a fee of at least $20million then $4million is not going to go very far in the rest of the costs of hosting a GP. |
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21 Nov 2012, 10:21 (Ref:3169378) | #40 | |||
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21 Nov 2012, 14:18 (Ref:3169445) | #41 | ||
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21 Nov 2012, 15:11 (Ref:3169457) | #43 | |
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21 Nov 2012, 15:44 (Ref:3169461) | #44 | ||
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21 Nov 2012, 16:20 (Ref:3169472) | #45 | ||
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I think it all depends on the people culture in motorsport. They can expect to change the race into a profitable venue, but it would be hard if not feeding the domestic motorsport and creating a bigger view for international motorsports and hosting more international events also.
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21 Nov 2012, 19:47 (Ref:3169549) | #46 | |
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Bob, thanks for the informative posts.
I would love to know which little tricks were played by the organisers of Monaco. Explains though why that was the only race I could afford to go to last year, general admission mind, but I did wonder why the ticket prices seemed to be so out of proportion with the wealth of the state. Surely though when the deal comes up for renewable, Bernie won't allow that fee revenue to slip through the net? I mean, Monaco is prestigious, but France and Britain can be considered the homes of motorsport and if he thinks them to be ditchable** then I don't really entertain the idea that sentimental value would count in Monaco. But even if Monaco did get a 28 mil fee, would a 1.5 mil reduction per other race be enough to keep any afloat? (Obviously that's the "demented socialist" in me talking hypothetically, of course I know that extra 28 would go straight into the pockets of the powerful!) **my worry for Silverstone is based on the increased prices in recent years (I assume the caterers kept my extortionate beer money ) |
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21 Nov 2012, 20:20 (Ref:3169563) | #47 | ||
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Monaco is THE "wine and dine" spot for the rich, powerful, and famous. THAT is THE reason why Monaco gets away with no fee, and will continue to do so.
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22 Nov 2012, 12:58 (Ref:3169793) | #48 | |
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i think you just have to not consider monaco in any way shape or form when discussing potential venues. it's an asset to everyone - it's a mad disneyland experience for fans, it's an obvious marketing tool for everyone and monaco probably makes a bit of cash from the harbour fees to pay for the general faffing it takes to put up a street circuit.
with silverstone's daft plans to build a hotel etc i worry that it's going the exact same way as the nurburgring, and we'll be left with a totally overdone venue that has little or no relevance to anyone except f1 for a week a year. the new pit complex already has that feel about it, particularly when they try to host anything that has a support paddock. |
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23 Nov 2012, 14:02 (Ref:3170239) | #49 | |
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FOM's fees are too high for the current market. If they are not more attentive, they will end up with no more races in Europe besides Monaco...
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23 Nov 2012, 14:11 (Ref:3170242) | #50 | |
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