JUNE 1, 2007

Formula 1 versus the Olympics

Bernie Ecclestone has finally come out and said it: he wants the British government to pay for the British Grand Prix. The race could be dropped from the F1 calendar in 2010 if money cannot be found to rebuild Silverstone and to pay the fees demanded by the Formula One group.

"The government could and should do something to help ensure the BRDC does not lose the event," Ecclestone told the Daily Express. "We are supposed to be the home of motorsport and yet all the other countries around the world have managed to build circuits to be proud of. Britain has not. It is not my fault. If someone comes up with the agreement we want there will be a British Grand Prix after 2009. I don™t care who comes up with that, but if we cannot strike a deal there are a lot of other countries desperate to have a race."

The irony is that British interest in Formula 1 is growing rapidly at the moment as Lewis Hamilton finds his feet.

Rebuilding Silverstone to a suitable level to impress the world, and to increase the crowd capacity to a point at which a race might be able to pay for itself, is not going to be cheap, but the work could be done for around $200m. This is a tiny amount compared to what the government is committed to spending on the Olympic Games. Construction work alone for the Games will cost more than $10bn, with an additional $5bn having been set aside to cover cost over-runs. The government is using large amounts of National Lottery money in addition to direct funding. In addition to this another $4bn is needed to stage the events, although the government hopes that this bill will be met with the sale of TV rights, sponsorships and tickets.

Sydney, which hosted the Games in 2000, is currently struggling with declining tourism, while Greece, where the Games took place in 2004, is doing rather better with around 16m tourists expected this year, an increase of seven percent over last year's figures. In 2006 tourism revenue was reckoned to be $14.8bn, which is about that the city spent on the Games. Prior to the Olympics Greece was already an important tourist destination so only a small percentage of the profits can be ascribed to the Olympics, which means it will be years before the country pays off the investment made.

While there is no doubt that the Olympics can bring some financial gain to a country, there is a very strong argument that spending such huge sums for an one-off event lasting just a couple of weeks in 2012 is not as efficient as a Grands Prix, which happens each year and is considerably cheaper to stage.

The bad news for Britain is that it is now committed to the Olympics but it might be wise for the government to find a little extra cash for the Grand Prix, just in case it all goes horribly wrong.