Bernie and Russia – the full story

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.

45 thoughts on “Bernie and Russia – the full story

  1. I think it is a welcome addition to the calendar and the key to potentially great new untaped market. I have been to the Turkish GP this year and there were a lot of Russians there so there is definitely an interest in Formula 1 present.

    Do you know will the track be run clockwise or anticlockwise?

  2. What a fantastic plan, I wonder if this is a sign
    Of things to come, with the recent changes to UK planning laws around staging road races – Bernie may yet see a London GP

  3. According to the BBC, the weather in Sochi is best in July. A replacement for the German GP perhaps?

    BTW, I hope Putin isn’t getting out of his depth, dealing with Bernie.

  4. I don’t categorically hate all Hermann Tilke courses the way some do, but surely there must be somebody else out there that can design a decent F1 circuit besides him. Between Austin, Korea and Sochi the man seems to have a hammerhold on new track development. One would think the industry would benefit from some healthy competition in this area. Perhaps via competitive design submissions a la large architectural commissions.

  5. Kudos to the photographer for getting Eccelstone with his crown!

    Where next? Haiti? North Korea? Congo?

    Roll up, roll up, pay yer money get yer race.

  6. That’s a clever one Joe. Surely *something* must explain why Ecclestone recently proposed a medal system to decide the World Championship, and I can’t think of any other possible explanation, so perhaps it’s that.

  7. The Olympics is the highest echelon of sport in the world that attracts hideous sums money. What Bernie is trying to do is to create a link, an association between his sport and the Olympics by hosting the race in the Olympic cities and changing the points system to medals. This is clever because this association will increase the prestige of F1 and attract the same type of multinational sponsor who will be willing to pump similar sums of money into F1.

  8. It appears that the government has a big role to play in most of the new Grand Prix venues. A notable exception seems to be India, which seems to be an entirely private enterprise by the JPSK Sports.

    I can understand the rationale for the government promoting F1 in their country as there are plenty of side-benefits (such as tourism, international visibility etc.), but how would a wholly private enterprise manage to break even?

    Apart from ticket sales, and renting the track off-season, what other sources of revenue would JPSK get to recover its costs for the Indian GP??

  9. Many, many architects, and surely civil engineers too, are active in motor racing all over the planet. Why ALWAYS tilkitedium?

  10. Gack. Another temporary street circuit = more professional racing. MIght as well call it Valencia East. Cant imagine why people are excited about new tracks on narrow streets where ever. Please no London or Rome GP. Purpose built tracks are soooo much better.

    Highly doubt that Bernie looked into putting a race in Vancouver after the 2010 Winter Olympics. Would have been awesome though.

  11. you really do have to admire the russians, they dont mess about, if its not right they dont want it, and they can see when something makes sense, like having both the games and F1 together really would save a hell of a lot of money.
    Would you ever see our government have sense and do something similar with our 2012 village, i highly doubt it, i bet it just rots away like the billions being sent on it, yet they wont back the biggest international event to come to our shores year in year out showcasing our british engineering excellence, in a field very few countries excell at.

    They people who make the decisions really should thing out side the box, or at least take a look outside of it!

  12. Anthony,
    If I remember correctly, Bernie first suggested the medal idea in the late-80’s after how the ’88 Championship finished up.

    Not a huge fan of the initial outline of the circuit, but it still might change in the time building up to it.

    Joe – if the circuit is working around the Olympic area, how much say in the design does Tilke realistically have?

  13. Great question Joe? Who owns Tilke and who benefits from his monopoly? Of course it would be difficult for Bernie to suggest putting track design out to competitive tender given the manner in which he placed Max at the head of the FIA to give him 100 years of commercial rights for $3 million a year. No other sport would ever get away with such a corrupt deal. Only one bidder was considered and he was handed the sport for a century.

    I try not to look at Tilke track layouts because I tend to wake up an hour later with a keyboard imprinted on my face but I risked it and my first impression is that the pitlane doesn’t look close to long enough either than or the track is longer than the recent norm. The only good thing I can say about the layout is that there are (very slightly) fewer than 20 corners on it. That at least is progress.

  14. Mmh, Tilke started his company in 1983 with a focus on environmental technology. Apparently he was a keen racer, which might have given him the necessary contacts to move into race track building.

    His competitive advantage might lie in the fact that his company is not just able to build the racetracks but also the “surrounding” infrastructure like hotels, media centre, box area etc. which gives him an advantage in a time where F1 is alway moving into new countries. Building streets and constructing buildings are completely different fields of engineering.

    There is one person in his company apparently having contacts to Bahrain, if those are the reason or the result of building the race track in Bahrain I do not know.

    There were some changes in the companies’ ownership structure in 2006, changing from a simple limited to a KG, a company of several partners where only one partner has unlimited liability, howevers most of the time this is another limited company 😉 .

    Finding out who owns it is another matter. At the moment there is another managing shareholder, Peter Wahl, who started in 1994, four years before the first Tilke Track was build in Malaysia, and was made a partner in 2000.

    The company is based in Aachen, one if not the powerhouse of German engineering universtities, which might help attracting skilled engineers.

    Finding out about other shareholders is another matter, these things do have to be made public, therefore they are not, maybe Norbert knows… 😉

  15. Very interesting comment you made about the ownership of Tilke, Joe. I was under the impression that it was owned by himself and his parther Peter Wahl. Surely, it would be a scandal if anyone with a financial interest/stake in formula 1 was also an investor…

    What is even more interesting is that Ecclestone has talked personally to Brezhnev about F1 in Russia.. The iron curtain is not enough to stop him, it is extremely rare to see such drive and determination in any industry!

  16. No, Joe! Don’t tell me…
    come to think of it…it has to be Bernie!

    It’s so obvious, so monstrous, but the only explanation for the fact that the company is hired and hired and hired again.

    And to think of all the circuits who have been build, payed for by governments, but where at the end no F1 races take place… Isn’t that a scheme which has Bernie written all over it? Use your power within the F1 to convince – but no guarantees – governments all over the world to hire what is in fact your company to build a circuit.’Yes, of course, I do everything within my power to make sure you get the grand prix, but you must build a circuit first!’

    This man…

  17. In this picture… a ruthless dictator who rules by fear, intimidation and a long history of dodgy contacts, who will stop at nothing to get his own way.

    And on the right is Vladimir Putin. :))

  18. Dare I say it, I don’t mind the layout. It’s the ‘wiggles’ before big braking zones that spoil Valencia, this has long straights followed by right-angled corners which aint pretty, but may give us a reasonable chance of some overtaking. Assuming the track goes clockwise, the first half of the lap is decent, although the giant parabolic corner will be a downforce-hungry corner like the useless third turn at Barcelona.

    We need to go to Portimao, it’s surely the only track built since Suzuka that could be considered as a truly great place for a race.

    I hadn’t spotted Bernie’s crown until I read these comments!

  19. It is a good thing for Formula One to add Russia to the calendar for a number of reasons. First and foremost, they have a burgeoning car class that clamors for all things exotic and with the money to spend. Secondly, there are many Russian companies that can promote themselves to the world that have not yet done so, and F1 will allow them to do this, as it is a market that has a billion or so viewers worldwide. It is also a seemingly great spot to have a GP.

    The only problem I have is once again is that this will be a Tilke track. Honestly, I can get 10 year olds who love cars and racing to design a better track than Herman Tilke can. That is fact. I am sure you can find a few as well, Joe. Heck, I am sure you can pen a track that would be all-world status….as I am sure any rabid F1 can. Why oh why do we have to put up with these boring layouts of Tilke.

  20. Stefanos

    We had the Hungarian GP while the iron curtain was still in place and assuming my memory is correct the reason Hungary got the race was because Bernie had tried and failed to convince the Russians to have one.

  21. verstappen: would explain why the FIA and Bernie were not phased by Korea missing its deadlines. Tilke managed to destroy Fuji Speedway, I’m sure there are many more too.
    The Silverstone upgrades show what is possible outside of the Tilke monotony.

  22. 2 Ruthless politicians one a brutal dictator who cultivates foreign governments, one of the toughest negotiators on the planet, never takes “no” for an answer, is motivated by a global power base and eliminates any opposition to him, the other the Prime Minister of the Worlds’ largest democracy.

  23. The only problem I have with it, is that my country is on the verge of economic and social collapse, while the government is pouring money like concrete into Sochi, 2018 FIFA bid, and now an F1 race. The local championships are a joke with what, 3 races on the same track per year. Ordinary people have nowhere to race, the last and the only proper circuit was demolished recently.
    As much as i loved and enjoyed F1 for the last 7 years, no, I don’t want to have a race here. After another revolution, maybe…

  24. Joe

    Which races do you think are going to disappear so that Russia and the States can enter? Hungary, Turkey?
    Also is this the last nail in the coffin for the French GP?

    1. Turkey, certainly. No idea otherwise. I hope that the French GP will return, if only because it is my home race…

  25. Oh, no!
    Not another Tilke track.
    Sadly, will it be another predictable processional F1 race?
    I just record them to run through quickly later for the highlights.
    Maybe, just maybe, they have learnt how to do better this time.
    We live in hope.

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