Monza seeking $9 million cut in F1 race fee

2019 F1 season

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The promoters of the Italian Grand Prix at Monza are seeking a drastic reduction in their Formula 1 race fee.

The circuit to the north of Milan has been on the calendar in every season, bar one, since the world championship began in 1950. It will celebrate its centenary in 2022. However its F1 contract is due to expire before then.

The track signed a three-year deal in 2016 which will keep it on the calendar until the 2019 F1 season. Angelo Sticchi Damiani, President of the Automobile Club d’Italia, told RaceFans he wants to sign a new deal to keep the race at the track.

“I hope to write a new contract for ’20, ’21, ’22, ’23 and ’24,” he said, adding: “I hope.”

A reduction in fee is a key part of their demand for a new race contract. The promoters will pay $24 million for next year’s race, up from $20 million at the beginning of the contract. They are targeting a cut to $15 million if the race is to appear on the 2020 F1 calendar.

Sticchi Damiani added they want greater freedom in their new contract with Liberty Media compared to the previous one negotiated with Bernie Ecclestone.

“The [current] agreement is in general too… we want to have more convenience, not just lower the fee but more rights, more hospitality, more percentile of the sponsorship that now [we don’t] have.”

While Monza already has a deal in place for next year’s race, three existing rounds on the calendar are seeking new deals for 2019.

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23 comments on “Monza seeking $9 million cut in F1 race fee”

  1. Vettel fan 17 (@)
    9th June 2018, 9:54

    I hope Monza stays. I know sometimes it can be boring but so can Suzuka and it’s a crime not to love Suzuka. There”s a lot of history in Monza, it held a race nearly every year. It would be weird not to have it.

    1. +1

      I love these classic circuits

    2. Definitely, the core of the F1 calendar should always be the classic venues with history like this. A Monza Centennial Grand Prix would be a fantastic marketing opportunity too, link the sport back not just to the start of the branding in the 50s, but to the 20s Grand Prix legends as well.

      I also like how fast Monza is and that it requires the teams to make technical decisions on the design of their car to cater for it, in the same way as Monaco requiring greater steering lock and acceleration over top speed. Not only does it emphasise versatile car designs, it also introduces some natural variation to the order by playing to different strengths of a car. I feel a lot of that would be lost in a calendar of modern generic venues as the Ecclestone era was pushing towards.

      1. Yup I absolutely love seeing the cars with their minimal wing configurations on at Monza.

  2. How do they make money when the upfront is $24m? Seriously, that can’t be recouped in a weekend can it?

    1. Worse, it needs to be recovered from gate income only, FOM takes the rest

      1. @dieterrencken Is there somewhere where we can read up on the arrangements the tracks have? Like what they make on entry tickets, what they have to pay FOM etc…?

      2. @dieterrencken
        I suspect “accommodations” around the track make up some money for them aswell.

        1. The problem is that all tracks have differing contracts, with different clauses and rights – and their business models are different. BRDC, owner of Silverstone, receives no external support, Austin relies on a combination of nous and the Texas Big Events tax rebate mechanism and Baku and some Middle East races are basically govt funded even if dressed up as commercial operations. Monza’s race is promoted by SIAS, a company operated jointly by Automobile Club italia, Automobile Club Milano and the Monza Commune – who have to make the books balance. These structures are also dynamic.

          What the circuit pay depends on what Ecclestone could extract plus what rights he retained. If they insisted on retaining hospitality or merchandising rights, the fee escalated.

          In the main the only income circuits have is the gate and some catering rights fees, and hence public funding has been required. That, though, is drying up…

        2. As far as I know there are no structured accommodation ‘kick backs’ anywhere. Where additional taxes are charged by hotels, taxis etc these go to the govt, which normally underwrote the event in the first place.

          One of my major bugbears is the greedy rip-off hoteliers who hike prices by up to 500%, and line their own pockets on the proceeds while make a Grand Prix visit unaffordable for fans. Blame them more than FOM or circuits for the outrageous costs of attending a GP. Ditto airlines

          1. @dieterrencken
            Well thats only fair business i think, they provide rooms to the highest bidder all year long so why should they subvent an F1 event? I dont really think it makes a Grand Prix visit unaffordable for fans either since they are all sold out anyway, they would be just as sold out (and probably even black marketed) with family friendly prices.

            I was refering to campsites, parking and activities outside but in the vicinity of the track, surely theres a major income to be had there. Those prices are also outrageous and probably hurt the fans more than anything else. Its 250€/person for the cheapest possible F1 weekend with an low standard tent spot and general admission.

          2. I stayed in Milan for the 2016 race at totally normal prices in a good quality Airbnb. Not sure why you think this is a problem

      3. WOW, I had no idea. I assumed once they paid to host the race the race host got all of the revenue from the gate, food / drinks, their merchandise vendors etc.

        By watching Liberty’s action I believe they understand the need for the seats to be full of fans which translates in eye balls on TV so the whole business model works.

        1) how much are some races being overcharged? Will they open their books?
        2) Why did they believe they could live with the higher fees year over year?
        3) What cost does F1 cover at each race that could benefit the race host?

  3. That’s the same rip-off factor, so I don’t see how you can justify a hotel with 100 buck rooms charging 500 for a night during GP weekend but complain about camping sites doing same. The circuits may be able to charge if the camp site is within their property, but why should a farmer give away his income? Same as parking etc.

    Equally, of course the nearby hotels are full despite their prices – mainly filled by high rollers on a sponsor freebie, while real fans stay in the low grade tents you speak of by economic necessity…

  4. Does anyone know how it worked in the early days in F1? I always imagined they were greatful to have someone host a race and find new circuits. If it wasnt for the old classics like Monza, Silverstone and Spa (they always seem to be on the edge financially) F1 surely wouldn’t have became what it did.
    Empty seats like we saw in Spain should mean an instant price reduction for the hosts.

  5. In the ‘old days’ each promoter would offer a team an appearance package – the more highly rated you were, the more you received. This promoters obviously bargained and played teams off against each other.

    So Ecclestone corralled the teams into a unit, and offered the promoters a collective package for a certain price, dependant upon desirability of the circuit and costs of travel. This money was then split on an agreed formula.

    Later when he took over the commercial rights fully he negotiated with promoters for his own account, then offered the teams a cut of the underlying revenues. Liberty inherited that structure.

  6. Josh (@canadianjosh)
    9th June 2018, 15:44

    I’m sure Ferrari can take a 9 million dollar pay cut off their huge cut to keep Monza on the schedule.

    1. Why should they?

      1. They won’t, but I can see a ‘should’ reason as Ferrari is demanding extra payments from FOM, and They’re less than a GP distance away (home race).

        1. As a matter of interest there is a ‘deal’ between Renault, Mercedes, Ferrari and Honda NOT to subsidise their home grands prix precisely to prevent them being blackmailed into a price spiral. Hence MB is not involved at Hockenheim – they confirmed to me in Monaco that even a group ticket deal for their grandstand has been passed over – while Honda F1 is not directly involved in any deals for Suzuka despite the parent company owning the circuit. Renault has zero involvement in commercial Sala at Paul Ricard and Fiat/Ferrari refused to get involved at Monza.

          1. @dieterrencken
            Meanwhile Red Bull is very successfully sponsoring their home race.

          2. Not at all successfully – numbers have dropped. Also, it’s not the race team that is sponsoring the GP, it’s the main company, which also sponsors many major events globally. Ferrari doesn’t…

  7. Someone mentioned in the comments a couple of days ago Monza and Imola sharing the Italian GP, and I think that could be a good way to alleviate this situation. It seems to work for the Nurburgring and Hockenheim at least (I seem to remember Hockenheim complaining about having to shoulder the burden alone after Nurburgring reneged). This is speaking as someone who loves Monza, if having the event biennially is the price to pay for the financial stability then it’s better than seeing it gone completely.

    Obviously fixing the circuit contracts generally so independent entities can afford it would be preferable, but I’m not sure Liberty are prepared to take that much of a hit.

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