OCTOBER 8, 2008

Why the Canadian GP was cancelled

Canada is in shock today following the news that the Formula 1 race in Montreal in 2009 has been cancelled and its slot on the calendar taken by Turkey.

"It was voted on by the FIA and that's really the end of it," Roger Peart, a Canadian FIA official told the Montreal Gazette. "It's a done deal. It's sad news for Montreal. It's sad for racing in Canada but I don't think anyone can do anything about it."

Peart, who designed the original track on the Ile de Notre Dame, said that the problem was entirely commercial.

Or to put it another way, Canada did not pay.

One can deduce this from the fact that fees to host races are written into the contracts by Formula One Management. They may increase annually by 10% but all of this is written down so there are no arguments. Thus the only explanation for FOM being able to walk away is if the money owed has not been paid. The Canadian deal is believed to cost about $20m a year.

It is probably not a new problem as FOM's Bernie Ecclestone has always been very supportive of the Montreal event, allowing it to get away with facilities and access which have been well below par in current F1. Montreal was deemed important because it maintained F1's presence in the North American markets.

At the moment the Circuit Gilles Villeneuve is owned by the Societe du Parc des Iles, a subsidiary of the Montreal City Council. This rents out the facility to race promoter Normand Legault, who runs a company called Grand Prix F1 du Canada Inc (GPC). Legault has been organising the race since 1981. It is an expensive event to run with 15 grandstands, four bridges and miles of barriers, fencing and advertising hoarding needing to be erected and dismantled each year. In recent years the race has continued to do well with crowds of 120,000 on race day and it is popular with F1 fans and sponsors but it seems that GPC has not been able to balance the books and pay the fees needed. This year Legault did improve the facilities with a a $5.5m revamp of the paddock and media centre. That money came from a variety of sources, including the Canadian federal government, Canada Economic Development, the city and Tourisme Montreal.

At the time the federal minister of public works and government services Michael Fortier said that the Grand Prix was "the number one event in Montreal, Quebec and Canada".

Politicians are up in arms following the FIA decision, with Quebec Premier Jean Charest wanting to know why the race has been taken off the calendar.

Thus far the organisers have said little, making no comment until after talks with the FIA and Formula One Management. In theory there is a contract in place until 2011.

The shock is going to hurt the city. It is reckoned that the local economy gets a $100m boost each year when F1 comes to town. Hotel occupancy rates in Montreal are around 66% year-round but at Grand Prix time that goes up to 95% (and the prices also rise significantly). Shops and restaurants say that their business doubles on the GP weekend.

"The Grand Prix is very important for Montreal," the city's mayor Gerald Tremblay told reporters. "It creates economic spin-offs, but even more, it makes Montreal famous internationally. There are more than 300 million people who watch the Grand Prix, so it is important not just for Montreal, but for Quebec and for Canada."

It is now very unlikely that the race will be on the calendar in 2009 but the locals will be trying to find a solution to get the race back in 2010.

That will almost certainly mean that public money will be needed. The locals are hoping that the government, which makes considerable money in taxation relating to the event, will now decide to help out Legault with money going towards the fees.

The only good news for the Canadians is that the automobile companies are not going to be happy to lose their last race on the North American continent.

There are attempts going on to get a Grand Prix in southern California but it will be at least two-three years before that happens, if indeed it happens.