What does Belgian GP deal actually mean?

The Belgian Grand Prix has been secured for four of the next six years according to Formula 1. As one might expect, the press release was positioned as a real “win” for Belgium and F1 fans alike but I’m not happy about it at all.

Justifying F1’s position:

To be fair to F1, let’s draw an analogy. Take a new Micro LED 8k display. A very advanced display technology for consumer use. All the components are more expensive, labor is more expensive, R&D for the technology is expensive. It’s near the top of the display technology evolution. The millions of microscopic LED’s operate as their own light source and thus move far away from traditional back-lit LCD TV’s. It’s the pinnacle of TV technology.

As such, you limit the number of customers you might have in what we call the “Total Addressable Market” or TAM. Not everyone can afford this new technology. So, if for sake of argument, the TAM for TV’s was $3B, your portion of that total might only be $500M because your customer base is limited.

In F1’s case, their customer base—meaning race promoters who can afford the high price tag of hosting an F1 race—is limited. There is also the issue of capacity—in my TV analogy, maybe this is total inventory—as F1 can really only manage 24 races in a season before stressing the teams too far or at least that’s what the teams say. So with 24 races in your total inventory to offer and limited customers who can afford your product, things might work for a while but what happens when more and more customers show up as they have found ways to finance your expensive product?

In this case, F1 has resigned itself to revolving grands prix with circuits hosting races in a bi-annual format in order to include more venues. One assumes that the desire to race at more locations worldwide is a high-value target for them as the price to host a race may vary by region but can’t be outrageously different than other locations.

Point being, the price of a second race in Saudi Arabia may be more expensive than the race fee in Belgium but in the end, is it the premium fee or the new location or both that drive’s F1’s desire to limit Belgium to 4 race in 6 years?

Legacy or European theater?

For me, Spa Francorchamps is a legacy track that shouldn’t be touched. Much like Monza, Monaco, Silverstone, Suzuka, Canada. Apparently F1 doesn’t see it like I do. Or are they treating regions like theaters where they move races around within that region?

For Europe, maybe all circuits are at play here but they will only have 8 races and in so, they need to move them around. This would leave 8 race for APAC and 8 races for the Americas. Then there are a few outliers as well.

But if Europe is viewed as EMEA (Europe, the Middle East and Africa), then 8 races become relatively thin if Rwanda needs a race, Saudi Arabia needs a second race etc. When you look at the Americas, you have Argentina interested, Mexico bullish on remaining despite missing Sergio Perez and now three races in the US.

I can’t recall a race coming on the calendar and off the calendar as quickly as Zandvoort given the current champion is Dutch. Heck, they held on to Valencia longer than they should have given Fernando Alonso’s two-and-out championship run, Max has four titles and is still going.

Rotate the board, that’s numberwang!

Ultimately they’ve chosen Spa Francorchamps as a rotatable race and that’s truly unfortunate in my opinion. They could have chosen Imola, or Hungary or Austria or Bahrain, or Qatar, or Abu Dhabi or Baku and left the historic Spa alone. Unlike its customers, F1 doesn’t seem to view these legacy races as untouchables and that’s an unfortunate slight of its own history in my opinion.

F1, like many companies and organizations, seem unable to ignore the financial gravity of the Middle East. They seem to lack the bravery of holding on to their history in favor of seeking an area with customers most likely to buy their 136” Micro LED TV so to speak and while I understand the economics have to work and interest in F1 is at an all-time high, it won’t always be that way and I hope when the shine rubs off F1’s product, they will return to their legacy.

F1 knows they have to make hay while the sun shines so they will capitalize on their recent growth and interest in their sport. I can’t blame them but surely the Belgian GP is one race that was making hay rain or shine since 1921(long before UAE gained its independence in 1971 or the nation of Saudi Arabia was unified in 1932) and that has to have some weight in the decision matrix for F1.

Oh, and Spa Francorchamps is the one track that actually feels like you’re going somewhere. Regardless, what do I know? These pop-up street races may be what all the fans of F1 want these days and I am simply outdated in my view and love of F1’s history.