Legault doubts F1's economic model

In a recent interview with Montreal newspaper La Presse, former Canadian Grand Prix promoter Normand Legault shared his doubts regarding Formula One's economic model, insisting that it cannot survive in the real world.

According to Legault, F1's majority owner CVC Capital Partners owes $240 million yearly in interest, to which must be added $300 million in capital, to pay off its $2 billion debt. The need to reimburse 540 million dollars annually created the necessity of asking Grand Prix hosts to accept $50 million fees in order to present races.

"At that price, it can't be profitable (for a race organiser), no matter how they calculate profitability," stated Legault.

He elaborated on the subject by citing the government-backed Australian event as an example: "The organisers, who know what they are doing, lose $40 million a year. How long can they endure that? Someone in the opposition or the population will eventually ask if it's all worth it. You have to question the business model."

When asked if he believed current Grand Prix organisers are beginning to do so, the Canadian indicated that all the signs are there.

"You can already see the house of cards is falling down," he answered. "The French motorsports federation let go the 2009 GP; Hockenheim will not have a race in 2010, the Nurburgring is in difficulty; the Chinese are reconsidering their participation after 2010."

Bernie Ecclestone's push to augment income by leaving traditional venues in favour of higher-paying Asian and Middle Eastern markets is not the right direction to take, Legault believes, as the focus remains on generating revenue in countries where the public may not necessarily be interested in Formula One

"F1 heading for Asia or the Gulf is a bit like the NHL (National Hockey League) trying to set up a team in Nashville," Legault explained.

"In Montreal, there were more people on Fridays than several GPs have on Sunday," he said. "And the spectators weren't soldiers in civilian clothing as is the case in a few countries I won't mention!"

Legault admitted that the government of Canada, and that of host province Quebec, pulled back from bettering their offer to save the Canadian Grand Prix due to the uncertainty surrounding Formula One's future.

"It's fine to have a five-year contract, but do you know what you will have as a product? What happens if the next Hamilton, Massa or Kubica are in another championship? What are you buying for 30 million a year? What does that guarantee?"

Regarding the chances of seeing the FOTA team alliance cut its links with the FIA and FOM in order to set up its own independent championship with the same teams and drivers, the former Grand Prix promoter revealed that he had been consulted frequently on the concept.

"It is an eventuality," he said. "But I don't know if they're there yet."

When asked if he was keeping the door open in case the job of leading the possible breakaway series was offered, Legault replied with a laugh: "There's no door yet!"

Daniel BASTIEN
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