Nicolas Sarkozy’s defeat in the French Presidential election last weekend has thrown the future of the French Grand Prix into uncertainty once again, as the plan to have a race every two years was not completed in time. The socialist government which is currently being formed would prefer to see a race at Magny Cours, which is located in a region that is one of the strongholds of the socialist party. The government must decide whether or not it wants to try to create a deal that would alternate the event between Magny-Cours and Paul Ricard, but the problem remains one of funding, as the new government would be unwise to use government money for the project. The problem is that Bernie Ecclestone and most of the Formula 1 circus is not really interested in going to Magny Cours, which lacks the infrastructure and failed to attract big crowds the last time it was on the F1 calendar. The one thing that has changed since then is that the long-promised autoroute has now finally arrived at the gates of the circuit, albeit 20 years behind schedule.
We hear, however, that if there is to be a French GP at Magny Cours it will not be at a “mate’s rate” as had been discussed by Bernie Ecclestone and the last government for the Ricard project, but would be at a much higher tariff, with the usual 10 percent increase per year.
Before the election Hollande told the sports journal L’Equipe that he was in favour of the return of the French GP “in principle” but would prefer alternation between the two circuits in order to spread the economic benefits of a race.
Patrice Joly, the president of the Conseil Général de la Nièvre, where Magny Cours is located, has proposed building a mobility and transport theme park on land near the circuit, with the goal being to attract between 350,000 and 400,000 visitors each year. This would cost the region around $60 million as most of the infrastructure is already in place at the circuit and the authorities own the land needed.
Joly believes that the park would result in more hotel rooms and that these would help to make Magny-Cours a more attractive F1 venue.
There are also plans for a new high speed train route from Paris to Lyon, which are very likely to include a major station close to the circuit. This would reduce journey times from Paris to just one hour. The Commission Nationale du Debat Public has revealed that the preferred route is one that will include the stop near Nevers, and a final decision will be taken in June. If the line is built it will not be operational before 2025.
Maybe Bernie will do a special deal with himself and let Paul Ricard have it for nothing, there is still a huge amount of money needed to be spent to make it into a race track as opposed the the test track that it is now.
There could be a serious amount of wear on Bernie’s pockets as money is transferred from one to another.
I keep overlooking Bernie’s lovely 10% accelerators. Just because I’m amazed he ever got away with it, and always assume sense will prevail upon such deals and cause them to be torn up. So far, I have just shaken my head aghast at how our elected officials love to waste public funds. Sure, GP’s a good idea in the right conditions, but who pays that rate of increase in their right minds? Going to skip the real inflation rate debate, because the problem is ticket sales and fans’ incomes are not growing but shrinking, so there’s a enormous problem inflating the cost when potential income shrinks. Not sustainable at all.
If they don’t hold, the change to the value of the contract incomes will dive.
Somewhere else was in part trying to argue F1 is not a sports business, or something like that, but instead a revenue stream from race hosts.
Erm, okay,
When I read this argument, coming from someone we usually call out to be a Bernie mouthpiece, I just thought you can’t shoot yourself in the foot much harder.
The argument was how lovely and secure all these race fees are from local governments. In other words what a safe purchase the floated shares will be!
Well, the one thing local governments can be is fickle and ignore rules, to a certain extent that’s also their privilege to look after their citizens. You have to be able to undo unfair deals which hurt a populous. Politicians ignore plenty when squandering the money, and they can also do that when reneging on contracts. Governments are harder to bully than private companies.
Paying a 10% hike year on year on a long deal is a scary compound rate. If a public servant can justify that today, he or she ought to be hauled up on a charge.
I think we really are at the ragged limit at 20 GP’s a year. So there’s no growth to be had. To get a new race in the calendar, Bernie needs to get an extortionate rate, to substitute for another. He can’t trade down. The race calendar will affect the stock so much.
Especially if his line in selling these shares is that their true worth is the racetrack fees income. Selling some kind of implied state guarantee.
I get less and less optimistic about the foreseeable future of F1 every day. I am starting to believe this flotation plan will hamstring the sport for longer than tolerable.
Certainly I appreciate why it is reported some parties are telling Bernie to get a move on. That’s because the longer you think about it, the worse an idea it becomes. Assuming you accept a unknown plan and a secret prospectus is a plan. It’s worse, as any party who works this out for themselves and is in a position to argue inside the sport, can be demanding sweetheart deals off of Bernie, and he’ll have no choice but to buy their silence. This I how I think it happened with Mercedes. Real tight spot. The teams need to realize this, if they have not already. Vulnerabilities are visible to me, so much more must be visible to them.
And we are not even yet at the time all sorts can leak out when this due diligence is needed to prepare the shares, even if there is no public prospectus. It is always possible some share broker will grow a conscience and not want to stiff their clients with a bum note. Or see the value in enriching themselves on a short sale. The latter being greater, if less moral, incentive to leak.
Yes, I really understand the hurry up message. This one has to be laid off before people (sucker share buyers) wise up.
So although I believe Hollande et.al. to be sincere in wishing the homecoming of the sport (why simple pride and history has not cut in here, long before, I don’t know) , quite apart from the worry their infrastructure plans will not materialize, I don’t think now or the next few years is the right time to cut any deal.
Unless, that is, both sides need to save face. You see, cutting a long term deal now is just wrong, you have to engorge the bottom line prior to flotation, basically pile the gold at Bernie’s feet. I say his business model gouging the race hosts won’t hold, so wait a bit.
However, he might just want to garnish his image before the float by agreeing a temporary deal. F1 without a French GP looks wrong.
Consider that French politicians might be legitimately concerned not to have toxic shares ending up in their citizen’s pension funds . . I am sure they can have words with their banks and fund bosses, to express a legitimate concern.
F1 I believe really needs – deserves – all change, fresh think. I believe it can’t grow with the recent model. Won’t share buyers need to know how it can grow? The article on that other site pitches it like a secured muni bond, not a proper stock. All I think the float will do is hold the status quo whilst building up breaking pressure. I can’t find the upside right now. With all the secrecy, for all I know, deals are being cut that truly help the teams, and we just don’t know. What I do know, is that the longer it takes to get this deal off the ground, ever so slightly more the chances for sense to creep in. I am to be honest baffled how they have kept it hanging together. Do not even CVC investors want to know how their money is protected? If you were a big investor in them, would you not be really curious to see what passes for the Concorde, right now? If just one of the big investors in CVC is French, well, all it might take is a phone call from a smart newly elected politician, who might like the result for their own ends.
Judging by Bernie’s latest comments Hollande wants the race at Magny Cours but Bernie would rather have no French GP at all than go back there so its stalemate again.
I really hope the French GP comes back but more importantly not at the expense of an annual trip to Spa.
Joe – Do you have any further news on the Nurbugring and do you think there is any way it can possibly continue to host F1 in future years?
This is how it used to be. Bring back these wonderful things already. Our souls need such sustenance!!!
another nice bit of footage here, with the historically notable mention in the commentary that in ’65, Michelin were not making race tires when the race came to their home town! Yeah, can’t think of any arguments at all not to go racing back in Clermont-Ferrand! Sweet Honda pics in there also. Do see here, as well: http://www.pour-charade.fr/
http://goo.gl/btT7y
(shortened link to A 15min docu, so not to embed)
Really, does anyone need persuading that there has to be a *good* French GP again? How would my ideas (of repeated here*) not let this all happen again? Ricard and Nevers may simply not cut it. Oh, had I only taken those jobs at the banks – you don’t get offers, they expect you to grab it, and I was too shy to insist – if that would mean I could do anything to influence these things. If I ever trip over some silly money, I shall hot foot it, loot in hand, to wherever Joe is, I promise, and shake this up any which way for the better.
*maybe i should just link my nickname to a webpage with links to my regular themes when i commented them plenty before. . might help my comments to make sense, stop repeating myself. I only have a handful of themes.
65 @Clermont, vintage viewing thanks John other.
“Mate’s Rate” only gets 10%. Some mate.
so….the chances of there being a gp in the near future are….slim.
But aren’t we going to grow our way out of the grim economic situation? “Non à l’austerité” and all that?
The French doesn’t need the F1 any longer. They have the World Series by Renault. This would be a great series with a “twist” if they could get other manufactureres with teams in the series.
People forget – so will french F1 fans – they will vanish and Bernie will move his show to Middle east where we’ll have the Bahrain, Abu Dhabi, Dubai and maybe Quatar GP. Facinating stuff and well placed for racing fans.
This is not a serious argument