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AUGUST 8, 2003

Why Canada is out

The Canadian Grand Prix has been cancelled because of the Canadian government's ban on tobacco advertising. Formula 1 boss Bernie Ecclestone, who at Hockenheim last weekend denied that the race was off, has sent a letter to race promoter Normand Legault saying that the race will not be on the 2004 calendar because of the new Canadian regulations which prohibit sponsorship of sports events by tobacco companies.

Legault said that the decision was not a surprise.

"I'm not throwing in the towel right away,'' he said. "If there is not a race in 2004, maybe it'll be in 2005.''

The loss of the race will be a big blow to Montreal's tourist trade as it is the country's biggest sporting event each year and it brings in around $40m a year of direct income to the city.

But the cancellation of the Canadian Grand Prix may not be entirely related to tobacco issues because the new Canadian law is not excessive when compared to some of those already in force in Europe. In Germany for example F1 cars run without tobacco logos and no-one complains. The race, however, does have a problem of funding because important work needs to be done but there is no money available to do it. The cancellation of the event may, therefore, be more about getting the local government to pay for the race rather than about tobacco.

And there is good reason why Montreal should pay as the city gains massively from the event, during which hotel prices in the city multiply and huge amounts of business are done in the main shopping areas. It is for many retailers one of the busiest weeks of the year and the loss of the event will have serious effects on the local economy.

The cancellation of the race may be an attempt to force the Canadian government to vote through an amendment to the law, but even if that is now achieved a new contract will be needed and, as Belgium has just discovered, dropping out of the World Championship is an expensive thing to do because any new deal will involve the need for a larger fee and other commitments from the local authorities.

The Canadian race has been struggling financially in recent years and this year lost backing from Air Canada. Legault has become more involved in working with Bernie Ecclestone on other matters in North America.

"We recognize that there will be an important impact on Montreal's economy but we also have an obligation to protect the health of Canadians," said Farah Mohamed, a spokesman for Canadian health minister Anne McLellan. "We feel very strongly about our legislation."

If that is the case and Canada is not willing to give way, one of the most popular events on the F1 calendar will disappear. The fans who visit will no doubt decide to go to Indianapolis instead and that can help to build up interest for Formula 1 in the US in the years ahead.

There are still rumors that Ecclestone is planning for a second United States Grand Prix in San Francisco in three or four years and getting rid of Canada may be part of the plan.

We will find out if Legault one day ends up running a Grand Prix in San Francisco...