The delayed start, if any start at all, to the Formula 1 season has thrown a spanner in the works for just about everyone in and around the sport as well as fans who patronize the sport. The delay has been extended with an ambiguous date of sometime this summer but that’s a moving target and race organizers are squarely in the impact zone.
With the first eight races of the season canceled or postponed, the promoters/organizers are all looking for relief from their contractual obligations as well as a green light on when to engage the logistics needed to host a race sometime later this year.
An article by Christian over at the Independent echoed these concerns and if you were a race promoter, you’d be looking for price reductions, confirmed dates and details from Formula 1 who, to be fair, don’t have by the truck load given the fluid nature of the current COVID-19 pandemic.
“They have to be willing to accept lower fees if they want their promoters to be healthy,” says one of F1’s race organisers. He explains that they are in a Catch 22 as they need to order equipment to ensure that their races can go ahead but they lack the funding to do so. It usually comes from advance ticket sales but they have crashed because fans don’t know if they will be able to travel or if the races will take place.
“We reserve hundreds of buses which have to be booked 90 days before the race and have cancellation fees,” says the organiser. “We have another contract for the traffic because we hire hundreds of police officers over the race weekend and there are cancellation penalties for that too. Then there’s the setting up of all the temporary grandstands and hospitality tents which are ordered and negotiated six to eight months before the race and are set up 60 to 90 days ahead of it. Once the race is six weeks away we are spending more than a million euros a week to prepare.”
There’s no doubt that in a normal reality, the machine would be churning, details determined, orders placed, infrastructure booked, built and set up. There is also the issue of tickets sales and as a promoter told Chris in the article:
In previous years it has been fueled by advance ticket sales. “We usually sell most of our tickets now,” says the race organiser. “Most of the sales are out of town visitors and they don’t usually make last minute plans. Around 80% of them book more than four months ahead. So the key selling time for us is now.” It isn’t alone.
If ticket sales have stopped and in the best case scenario started again when the virus passes, one might suspect that the recovery would be modest by any measure. With lower ticket sales, revenue isn’t there to pay for infrastructure and promotional fees which are in the $20m range.
“F1 is attracting lower ticket sales so they should take a lesser fee. If our revenue is down by from last year, we would like F1 to absorb the amount we are down by. They should just adjust the fee by that amount and if it goes up they can have more.”
Would and can F1 reduce their fees for any potential races in 2020? If the races resume as TV-only, surely the lack of tickets sales would prompt a reduction in promotional fees? Easy to say but when F1’s revenue stream is dependent on those fees, reducing them is a touchy subject.
Check out the rest of the article here. There are some interesting comments and concerns about bankruptcy and how some promoters are suggesting a complete cancellation of the season is a better idea than trying to run a half-season concept.
F1 has a lot to consider and I don’t envy the situation they are in. Being a part of the F1 ecosystem, all parties have to have some deference to all stakeholders but some will fare better than others and that’s the concern.
Hat Tip: Independent