Valencia Looks to Leave F1

[lkjohnson1950]

Alia, I know nobody knows all the ins and outs of the various contracts that govern F1, but isn't Bernie required to provide TV with a minimum number of races? Isn't he in some danger of defaulting?

[Alianora La Canta]

Bernie is required to provide the TV companies a minimum number of races...

...Eight.

Somehow, I don't think that is going to be a problem in the near future

(Bernie's problem is that he won't make the number of races CVC wants in the schedule and thus risk getting sacked for insufficient profit-making).

[lkjohnson1950]

Knew that you would know, thanks Alia.

[lkjohnson1950]

The organizers of the race say it could still go forward if FOM will reduce the fee. Sorry the story is in Spanish:

http://www.laverdad.es/alicante/v/20130820/provincia/jose-ciscar-condiciona-continuidad-20130820.html

[cosworth151]

That'll never happen.

[Irisado]

The race will not go ahead.  Even with a reduced fee, there's no way that the local government in Valencia could afford it.  It's one of the regions of Spain that has the most debt, owing to the amount of money spent on white elephant projects, such as the track, and it certainly cannot afford to pay Ecclestone back.

Just a note to say that Spain as a whole is not bankrupt.  That's an exaggeration.  The problem is that there is so much debt at the local government level, that central government has had to bail them out, putting itself in difficulty.  It's no longer able to bail out local government, and so the country has a serious debt issue.  We won't even talk about the astronomical level of youth unemployment.  It's all very sad.

Ecclestone just needs to let this race go without asking for such a ridiculous fee.  He doesn't need the money.  Of course, he won't let it go without a pay off, but he could at least agree to a discounted rate.

[Scott]

Sets a precedent for others to follow (Q: How many host countries of F1 races are in serious debt and could fold their F1 races at any time?  A: Most of 'em). 

As much as I feel terrible for Spain, I can see it from Bernie's point of view.  But if he wants to avoid the backlash, he should write into the contracts that a track promoter must pay all fees up front for the duration of the contract.  Then he wouldn't need cancellation penalties, and communities like Valencia would need to think a bit harder, and find the backing before they jump into the F1 circus.

[Irisado]

As far as Valencia is concerned, the reason why the local government is in such difficulty is not just because of the Grand Prix circuit, it's because so much money was spent on so many expensive projects which very few people actually visit.  Adding the total cost up of all of these explains why the Valencian government is so desperate to get a break from Ecclestone.

[Alianora La Canta]

As much as I feel terrible for Spain, I can see it from Bernie's point of view.  But if he wants to avoid the backlash, he should write into the contracts that a track promoter must pay all fees up front for the duration of the contract.  Then he wouldn't need cancellation penalties, and communities like Valencia would need to think a bit harder, and find the backing before they jump into the F1 circus.

However sensible that might be from the perspective of knowing where a track stands, the combination of the typical contract length and the fact that most government departments' funds are only guaranteed for one year at a time means that Bernie would have to either do annual contracts for every track bar Britain and India (possibly also Austin and Belgium as their government funding proportions are relatively low), or reduce fees by about 80% across the board. Neither provides the funding level that CVC demands, so it won't happen.