I read a headline somewhere about how the Lotus F1 team has nearly $1 million of unpaid bills. I should think that most of the F1 teams have much the same at any one time. To single out Lotus is a fairly daft thing to do, although – to be fair – the team has not helped itself by not dealing with its creditors unless they take the organisation to court, or threaten to wind up the operation. But stop and think about it for a moment. Yes, to you, me and a lot of other people $1 million sounds like a great deal of money. But it is not something that the Greek Prime Minister would lose any sleep over. These kind of people worry about hundreds of millions and billions. The media has been making a huge fuss of late about Greek debt and it seems that almost no-one noticed that between June 12 and July 8 the value of the Shanghai Stock Exchange Composite companies dropped by 33 percent, wiping more than $3.2 trillion off the value of the companies involved. To put that into some perspective, it is 10 times that size of the entire Greek economy… So one needs to put things into perspective. The current Formula 1 teams are all owned by people who can afford to own them. If they reach the point where it becomes impossible, they will sell them, but they don’t want to lose money and so they are all holding on, hoping that the sport will change and that costs will come down and rewards increase. In the interim they are investing as little as they possibly can. You have to remember that the sport’s costs are astonishing, with the small teams burning through more than $1 million a week and the big teams spending that amount EVERY DAY. So big headlines claiming that a team that owes a million is in trouble are simply naive.
Similarly, there are reports that the Russian Grand Prix is in financial trouble and might not happen, on the basis that the local interim governor Veniamin Kondratiev told the media that the region was not going to be paying the fees for the race. This was spun into a big story, without anyone actually stopping to think it through. Kondratiev is clearly not the kind of man who is going to go against the will of President Putin, who wants the race to happen because it makes him look good, if only in the eyes of his own people. Kondratiev was appointed only a few months ago and prior to the appointment was serving on Putin’s presidential staff. So, it is fair to suggest that he probably does what he is told…
The truth is that the deal between Bernie Ecclestone and the Russian authorities is guaranteed by the Ministry of Finance. In order to pay the fees the government is loaning the money required to the rights holder, OAO Omega Centre, which provides construction and engineering services in the Krasnodar region. This organisation then pays the fees to the Formula One group. The word is that the money required this year is $70 million, which perhaps explains why Bernie Ecclestone always makes such a fuss about Vladimir Putin. Anyone who pays that much for an F1 race deserves to be pampered. That is an amazing amount of money to pay each year for a motor race.
The race promotion company is operating the circuit and all it needs to do is to cover its operating costs. The word is that this year there are only 20,000 tickets sold, which if true is disappointing, although it is not unusual for the crowd to drop off significantly in the second year of a new event. The Russians don’t much like the date that they have and are moving to the May 1 holiday next year, in the hope that this will make the race more successful.