Formula Sochi, the former organiser of Russian Grand Prix in Sochi, has been declared bankrupt by a court in the Krasnodar region. The firm, an open joint-stock company, was a subsidiary of the construction firm OJSC Centre Omega, which is itself owned by the Krasnodar regional government. Centre Omega is the official promoter of the Grand Prix, while this task was sub-contracted to Formula Sochi in 2011. In early 2013 Centre Omega took over the promotional role again, but Formula Sochi remained in business, although it is not clear what it has been doing for the last couple of years.
Whatever the case, there is unlikely to be any effect on the Russian GP as this is one of President Vladimir Putin’s pet projects and it would be a serious blow to his credibility of the GP was to be cancelled. Thus one can expect a new promoter to be constituted and money to be found to pay for the race, which will no doubt be guaranteed by either the national or regional government.
The Russian economy has been in trouble since the end of last year when economic sanctions were placed on the country after the annexing of Ukraine’s Crimea region. This was followed by a dive in global oil prices that hurt the Russian economy and caused the rouble to fall in value. This resulted in a reduction in consumer spending and the economy contracted by nearly two percent between January and March, according to the Russian government. Oil prices are now recovering and the value of the rouble is rising again but the government still expects the economy to contract by 4.5 percent in 2015 and by 1.8 percent in 2016. This means that the race will cost whoever is paying significantly more money than expected, although much depends on the currencies involved. The F1 circuit cost Russia around $200 million to build and with fees around $50 million a year and a contract from 2014 to 2020, with an option for another five years, Russia has a lot to pay to keep the race alive.