Start, Interalgos, 2017

F1 to hold next three Brazilian Grands Prix ‘for free’

2018 Brazilian Grand Prix

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Formula 1 will not receive a hosting fee for the next three Brazilian Grands Prix at the Interlagos circuit in Sao Paulo, RaceFans can reveal.

The race’s last contract extension, which runs until 2020, was announced in 2014. The agreement included separate contracts with the race promoter and a financial arrangement with the city of Sao Paulo to cover F1’s hosting fee.

RaceFans has learned that while the promoter agreement was extended before Liberty Media took over as the sport’s commercial rights holder, the financial agreement was not.

Despite this the deal to hold the race is not thought to be at risk. This year’s Brazilian Grand Prix is set to take place on November 11th and next season’s race was included on the 2019 F1 calendar confirmed by the FIA World Motor Sport Council last week.

As a result F1 stands to miss out on a hosting fee for the race, which can run to tens of millions of pounds for other rounds of the championship, for three seasons in a row. F1 teams will therefore lose their share of the income from racing at one of the most distant venues from their European bases on the calendar.

Read more about the financial pressures F1 is facing in the latest instalment of Dieter Rencken’s RacingLines column later today on RaceFans.

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20 comments on “F1 to hold next three Brazilian Grands Prix ‘for free’”

  1. OK, so this seems to be the teaser for Dieter’s actual feature. So, I’ll hold off on my questions until that article.

    1. I’ll just say that this is a very interesting development, one that no doubt many venues are now closely watching.

      You’d think that the economical side of things would have been a killer paragraph in the promotor contract. Unless Bernie was already planning for some fun after he left?

      1. one that no doubt many venues are now closely watching.

        Exactly, @bascb , as well as the question as to how teams are going to take losing their share of this money,while still having to manage the logistics.

        1. Peter Scandlyn
          17th October 2018, 19:00

          And lets not forget the personnel safety angle at this venue, which is always an issue here, as well.

          Seems apt that teams should show Liberty the middle finger and sit it out. Be a reality check for them staging an event going down the drain before it even got underway.

  2. TBH, it’s rather surprising this venue is still even part of the Championship (and has managed to stay in F1 through all these years) despite all the security problems around the circuit over the years.

    1. I do like the circuit, but you are correct, you cant have teams going in with such safety risks and corrupt cops turning a blind eye.

      I would have thought teams wont get less revenue but maybe Liberty will cough up a little more so team are not out of pocket.

      Any other cards BE still has kept up his sleeve to screw Liberty over?

      1. @garns To your question: I’m not sure. Maybe there is something still up to his sleeve, or maybe there isn’t.

  3. So was it a royal cock-up or did they know it was locked in no matter what they did?

    1. @david-beau – that is a good question. Such things would normally be picked up in due diligence, but seeing Liberty’s rushed approach to some high profile changes (the logo, F1 TV), I wouldn’t be surprised if this was missed out.

  4. Jonathan Parkin
    17th October 2018, 13:11

    Why does the hosting fee have to be so large. If I saw correctly IndyCar doesn’t have anything like the same fee for hosting a race

    1. IndyCar didn’t have Bernie E. at the helm.
      The fee is what it is because that is what the race hosters have been willing (or forced) to pay.

      1. @rekibsn The hosting fee’s in F1 got as high as they have because there were tracks willing to pay them in order to be part of the championship & that pushed the fee’s up for everyone. Bernie didn’t exactly do much to lower them but if someone comes to you & offers a crazy sum to host a race I don’t think many would say no.

        In terms of Indycar there fee’s are lower because there’s less demand, They don’t have circuit’s banging on there door desperate to host races & the circuits they have aren’t exactly raking in the money on race weekends. You also did recently have Sonoma back out of the series due to feeling there race host fee’s were too high given how little they were making from poor attendance.

        When the series was bigger in the CART heyday 20+ years back they were asking for higher fee’s because there was demand from circuits to host there races both in the US & internationally. As interest in the series declined thanks to the CART/IRL split between 1996-2007 there was less demand so prices went down as both series ended up having to pretty much take what they were given & even then many races become unprofitable which is why so many tracks fell off there calender’s. Big reason why champcar went through so many mickey mouse street circuits (At the expense of traditional venues, Ovals especially) the final few years was because the respective city councils were more willing to pay more than the more traditional venues.. Well up until those city councils found that it was costing them a fortune & they weren’t making the profit they expected (Actually making a loss in many cases).

        1. Enter … and exit, the Vancouver Indy. A popular event locally, but an event no longer.
          The Montreal race is a brutal expense for the local and federal Governments, and likely if it wasn’t in the local where it is … probably wouldn’t be funded with tax $$$.
          We should enjoy it while we can.

        2. …. have aren’t exactly raking in the money on race weekends…..

          Tracks that host F1 aren’t making money; the advertising fees at the track go to Liberty, the tracks aren’t even allowed to use pictures of F1 cars or videos in advertising (because of trademark rights), and attendance is down. Silverstone has been losing millions each year by hosting F1 and has, almost, declared bankruptcy. The tracks are basically screwed in the deal and have to make up the shortfall for an F1 race by means other than attendance – i.e. government subsidies. That’s why Germany is so problematic. That’s why the Malaysian GP went bust. That’s why Austin is in doubt for the future. That’s why the Brazilian GP isn’t paying any money to F1 for the next three years. This system is not sustainable. Las Vegas GP? Done that, been there and it was not pretty. Long Beach? They used to host F1 but wisely declined the recent invitation. No, the F1 rape the venue model formulated by a certain B.E. is done. Liberty is going to have to come up with another model that rewards the track owners and allows them to make some money on the deal.

          And by the way, it’s ‘their’ (shows possession), not there (specifies a location). I’m an American and even I know that.

        3. You also did recently have Sonoma back out of the series due to feeling there race host fee’s were too high given how little they were making from poor attendance.

          Fees have little to do with Sonoma leaving the calendar – IndyCar wanted Laguna Seca as well but Sonoma said it’s either them or us as the economics of having 2 races at tracks serving the Bay area market (150 miles apart) don’t work and would have split attendance numbers. IndyCar signed with Laguna Seca, so Sonoma ended talks to extend their contract. Sanction fees aren’t the direct reason for Sonoma being dropped..

  5. I guess thats good news for Silverstone.
    A precedence has been set.

    1. @eurobrun Bad news for teams though as it robs them of a significant chunk of revenue at a time when most need more rather than less.

      It’s easy to look at things like race host fee’s & see it as money going into the pocket of Bernie, Liberty etc.. But it’s often ignored that teams also get a sizable chunk of it as it’s what goes into the prize pool thats distributed to teams.

  6. My guess is that both Liberty and the teams want/need a Brazilian round. Granted, Brazil is not the market it was in the 80s and 90s with so many local drivers but commercially it is the only one in South America right now…hence it has value. Brazil is in the midst of a corruption crisis but it has seen worse, including a long-lasting military dictatorship. I think this is a holding strategy, take a hit in the short-term while laying the groundwork for the long-term. If Argentina gets it’s act together (iffy proposition right now), they could be in a position to host a race in the near future. Then Liberty and the teams could play hardball with Interlagos and the City of Sao Paulo. That’s how I see it, could be wrong but I regard this as a plausible scenario.

    1. I think Globo (the major tv network in Brazil) pays a good money for the F1 rights. Maybe it’s an requirement of them to have a GP in Brazil. That would make sense.

  7. Bernie must be turning over in his grave… (Oh wait, he’s not dead.)

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