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Cape Town - It’s Liberty Media’s party, but you can cry if you want to – and you shall, if you’re lobbying for a Formula 1 race in your home country.
Since 2008, F1 has suffered a steady decline in TV global viewership, dropping from 600 million before levelling out at 390-million in 2016 and 352 in 2017.
That hasn’t stopped the number of ministers – and it has to be said, in the days of yore often from nations of shall one say, a cloudier motorsport pedigree – from queuing outside former F1 boss Bernie Ecclestone’s office and waving government cheque books, in attempting to land themselves the rights to host an F1 race.
Massive costs incurred by host city
An article on raconteur.net published in 2016 explains why F1 races are no longer affordable and why governments have taken over the bidding from private promoters.
F1’s youngest full-time track, Texas’s Circuit of the Americas, was completed at a cost of $300-$400m (depending on who you ask) in 2012. The seemingly cheaper alternative is a temporary street circuit, such as Singapore, Baku, Monaco – or that eternal Cape Town pipe dream that only gets reported on each year on the covers of local newspapers on the 1st of April.
And why not? Street circuits don’t require any infrastructure construction and can be tailored around tourist-inviting landmarks to maximise exposure. Right?
So let’s say you are the Sports Minister of Nkanbaijandlaville and are keen to earn yourself a stopover of the F1 travelling circus. What’s the damage? Better have those state capturers on speed dial, because this is going to hurt:
Staffing, marketing and organisation: $16m. The estimated crew count is around 600, which excludes the 120 fire fighters and 550 marshals, of which the latter are often volunteers.
Next, temporary structures. A for-rent 80 000 capacity grandstand costs $14m, and a putting up a pit complex, barriers and safety fencing for a 5km street race another $8m apiece.
For the Azerbaijan city race at Baku, $12m was spent on resurfacing the track. Vehicle, office and utilities a further $6m, with some “miscellaneous costs” pegged at $4.5m, which covers the cost of cranes, ambulances and fire extinguishers, of which one needs to be placed trackside every 15 metres.
But that’s not all – the entire event needs to be insured; another $1m.
Finally, hosting fees vary from country to country. Owing to its illustrious history with the sport, Monaco pays nothing, but your start-up state starter pack comes in at $30m, an amount that contractually escalates by 7 to 10% per year over the next ten years. So that’s a minimum of $87.5m (resurfacing excluded) or R1 054 051 250 for Cape Town’s never-going-to-happen F1 street race, every year, for ten years.
Even if the race were to be held at a permanent circuit like Kyalami – which it can’t because it is only rated by the FIA as Grade 2 in circuit safety (safe for any motorsport activity other than F1) – the hosting fee is still a prohibitive R361 389 000, with no hope for the promotor to recover those cost in hot dog or fake Ferrari t-shirt sales outside the gates.
This death-spiral of unaffordability explains why many of the more-recently added tracks tend to disappear from the calendar after a decade. Some tracks don’t even last their full tenure; Turkey survived 7 years; Korea 4 and India just 3.
Gets more expensive to host an F1 race each year
It was Bernie’s thing: approach a virgin F1 – and sometimes obscure – territory; promise the government the spectacle of PR, investment and previously-unheard of exposure to a global audience in exchange for an F1 hosting contract. Affordability would suitably be ‘hidden in the details’ so to speak, and whatever was left of your white elephant F1 track after the contract had lapsed would be that country’s own problem. Think FIFA 2010 soccer stadiums in South Africa in the aftermath of that year’s World Cup.
That’s because an F1 circuit’s value is wholly dependent on the sport’s willingness to host a race there, which itself only lasts for the duration of the contract.
Furthermore, bear in mind that promoters are only entitled to proceeds from ticket sales, not even trackside advertising or rental from corporate hospitality suites. This means that races have become less of profit-generators for promotors and more of a tourism and business showcase for governments, who have to provide guarantees to Liberty Media, who are the owners of the sport.
Which is why hosting an F1 race gets ever-dearer each year, and many license holders don’t renew after their ten-year tenures, and Ecclestone was forever on the hunt for new takers in increasingly obscure territories, adding to his billionaire bottom line and enforcing the notion that F1 makes only sense as an exercise in image over income.
New owners Liberty Media has changed tack on this approach in aping the audience-less Formula E by taking F1 to the people through more street circuits than to expect third-world countries to build billion-rand complexes in the middle of nowhere with zero prospects of growth.
Bottom line? Rest assured Kyalami or Sea Point residents, not coming any time to you soon is that F1 race you’ve always wanted.