Honda website
Honda website

MARCH 10, 2005

The role of the tracks in the F1 fight

There are some in the current disputes in Formula 1 who say that Bernie Ecclestone will ultimately win because he has control of the race tracks, some of which boast long-term contracts into the future. This is an interesting argument because while it is true to say that the manufacturers may have all the big teams except Ferrari signed up, this means nothing if the Formula One group has race deals with all the important circuits.

The weakness of this argument is that it is hard to find a race promoter anywhere in the world who makes a profit because of the fees that must be paid and the rights that must be signed away in order to secure a deal. There are many side benefits from hosting races - such as boosts to tourism in the local region - but this only really helps when the local government is willing to write off cash because it believes the receipts will counter-balance the expenditure.

Our understanding at the moment is that the manufacturers have been in contact with all the major F1 tracks and that the majority of them are welcoming the opportunity to talk, even if they have contracts with the Formula One group. Because of the competition to get races on the F1 calendar none of the tracks want to come out openly against the current regime, for fear of losing their events, buy many recognise that having two competing series will drive down the price they have to pay.

We understand that only two promoters have committed themselves for the future: Melbourne is one and Monaco the other. Some of the contracts with other circuits are believed to feature an exclusivity clause with FOM, meaning that they cannot run any other mainstream open-wheeler event other than F1 in the course of a year. However the legality of such clauses is questionable, particularly within the European Union. It is questionable whether the non-European venues will be able to fight but there is an argument that a European-based company such as FOM could be judged by European legislation in such circumstances. Promoters will inevitably sign such documents to get their deals but this does not mean that the contracts cannot be overturned at a later date. Some other circuits have insisted on conditional clauses which mean that the Formula One group must deliver the top F1 teams in order for the contract to be valid. At the moment Formula One has a deal with Ferrari but all the other top teams are squarely in the manufacturers' camp and so the contracts would not necessarily be valid if the promoters wanted to get out of the deals.