The Black Sea resort of Sochi will host the first Formula 1 Russian Grand Prix in 2014, if all goes to plan.
Bernie Ecclestone and Russian Prime Minister Vladimir Putin met in Sochi on Thursday and signed a deal for a five-year period with an additional five-year option. The deal will cost Russia around $40 million a year in fees, but Putin declined to reveal any figures.
“This kind of commercial information is usually not revealed,” he said. “Let’s say several billion roubles.”
The first race could be pushed back to 2015, if preparations get in the way of the Olympic Games, which are scheduled for February 2014. The aim is to use the facilities being built in Sochi and thus reduce the cost of an F1 race. The track will be designed (inevitably) by Hermann Tilke, and will include public roads in the Olympic Park, although there will be purpose-built sections as well.
The funding of the project is not yet fully decided but Ecclestone does not sign contracts without guarantees and it seems that these have been given by the various authorities. Putin said that a special company will be created to oversee the construction and manage the event.
Ecclestone has been trying to get a race in Russia since the late 1970s.
“I know that you have been discussing the plans to build a track for Formula One races with the Soviet and Russian leadership for a long time,” Putin said. “You even discussed this issue in person with Leonid Brezhnev. Finally, after decades of negotiations, we have reached a solution. We are happy about this for several reasons. First of all, thanks to your efforts, Formula One has become extremely popular and counts millions of fans all around the world. This was all made possible by your efforts and your talent. Now, I hope, we will be able to bring everything you have developed over these decades to Russia and use it on Russian soil. This is very important for us because we have to use everything we build for the 2014 Olympics to its fullest, including the infrastructure and hotels. There are other reasons for our enthusiasm. This new Formula One track will provide our drivers and Russian motorsport with another good, modern venue for training and competitions. This will get a lot of young people interested in sports, particularly motorsports.”
Ecclestone said that he has been trying to do deals to use all the Olympic venues after the Olympics.
“In all the Olympic cities I have been to so far these venues are often almost never used after the games,” he said. “I think it is very important that these things are thought through properly, and, obviously, that is being done in Sochi.”
Putin said that the plan was entirely logical.
“It makes sense to build the track here,” he said. “We have to build a section of the road anyway. It will help make the project significantly cheaper. It is much cheaper than building the entire track from scratch in the middle of nowhere. First, it costs less, and, second, it will fit better here and allow us to fully utilise all the facilities and infrastructure created for the Olympics. So the money will not be wasted.”
Putin said that the company that will be formed will be a public-private partnership.
“It should consist of interested private companies, national companies that would be interested in promoting their products and also those having direct connections to the auto industry,” he said. “Formula One is not only the most prestigious car racing competition, but also a display of the achievements made in automotive technology.”
The deal will also involve the regional government of the Krasnodar Krai.
Sochi is a resort sometime called “the summer capital” of Russia. The city is a popular destination for Russian holidaymakers in the summer but there is much potential to expand tourism as hotels tend to be only half-filled for the rest of the year. The climate in the region is unique as a result of the Caucasus Mountains meeting the sea, creating a sub-tropical microclimate that is not unlike that of Monte Carlo. The beaches are lined with palm trees, but in the mountains behind there are ski resorts.
Among those who attended the events in Sochi Vagit Alekperov of Lukoil, Sergei Soldatenkov of mobile phone company MegaFon, oligarch Oleg Deripaska of the investment company Basic Element (who grew up in the area) and Sergey Chemezov, a former KGB colleague of Putin, who is now Director-General of the Russian Technologies State Corporation, the vast government holding company.
Chemezov said that the telecommunications company Startel is keen to sponsor the race using its Yota brand, to promote its WiMAX technology, which gives Internet users access to the web across entire cities or regions. The firm is partly owned by the government.
Using the Olympic facilities means that facilities such as broadcast and media centre will not need to be constructed. One of the companies which signed the deal with Ecclestone was the Omega Construction company which is heavily involved in the Olympic Park construction work.
This has involved working closely with the International Olympic Committee in recent months, which might help to explain why Ecclestone recently proposed a medal system to decide the World Championship.