Omega wrote:
as long as there are countries willing to pay, who cares about popularity. And Bernie will be dead before F1 hits rock bottom
Agreed. However for countries interested in "buying Bernie's product" there are a fair few cautionary tales sitting out there... see India, Korea, Turkey, Valencia, all of which are only a handful of years old.
Once again Dieter Rencken hits the nail firmly on the head.
Quote:
What's happening to European F1 crowds?
With the iconic Monza's Formula 1 future still in jeopardy, DIETER RENCKEN analyses crowd numbers in Europe, how the slump could be reversed and where other threats are coming from
By Dieter Rencken
AUTOSPORT contributor
Italian Grand Prix 2014
As Formula 1 decamps at Monza amid talk of whether motorsport's 'Temple of High Speed' will retain its grand prix beyond 2017, let alone to '22 - when the circuit in an ancient royal park north of Milan celebrates its centenary - F1's commercial rights holders could do well to reflect on plummeting race attendances across Europe, and the causes thereof.
Never has this been more apparent than this year, when the continent hosted less grands prix than ever before, certainly when expressed as a percentage of the overall calendar, and the remaining venues have failed to attract fans from neighbouring countries as could be expected.
Travel connections and logistics throughout Europe are such that, since the demise of the French Grand Prix in 2008, Gallic fans have a choice of four races situated within easy and (relatively) cheap distance - Spain, Monaco, Britain and Belgium. Thus it could be expected that each event would benefit to the tune of 20,000 fans, given that Magny-Cours used to host race day audiences five times that figure.
Ditto Germany, which, in its F1 heyday, annually attracted a combined 200,000 to its two circuits. On that basis, Austria, Hungary and Belgium could have gained at least an extra 40,000 each, particularly given the lure of Sebastian Vettel in red and Nico Rosberg being the only man to challenge Lewis Hamilton on a regular basis. And then add the domination of Mercedes, which powered seven of the top 10 qualifiers at at Spa-Francorchamps.
Thus the Ardennes circuit should arguably have played to 100,000 punters, made up of the 60,000 it previously attracted on merit, plus (as a low base) 40,000 from France and Germany combined. Reality, though, paints a different picture. Just 53,000 fans paid to see the race a fortnight ago, despite it coming off the back of fantastic spectacles at Silverstone and Budapest, the latter won opportunistically by Vettel.
Monza, too, should have a seen a surge in tifosi when San Marino's race at Imola died. At the very least, neighbour Monaco should have picked up a portion of those Italian fans who attended two events a year during Ferrari's halcyon days. Yet, again, not even the most dextrous analyst could massage the numbers to that extent.
True, there have been highpoints such as Silverstone, but, as always with promoters' numbers, the official Sunday attendance of 140,000 doesn't tell the full story. According to insiders the true 'through-the-gate' figure was closer to 120,000, of which around 10,000 were F1 personnel, primarily team employees attending their home race as guests or on subsidised tickets, BRDC members on club passes, marshals and so on.
Then, forget not that Silverstone ran a 44 per cent discount-campaign as the race approached, which successfully boosted stands but impacted on income. There is, though, a moral in cheaper tickets, but only if the commercial rights holder plays ball...
Cursory analysis shows that Europe as a region - F1's heartland, with a total population of 750 million, largely affluent citizens - has lost around 50 per cent of race goers over the past decade. Consider the European portion of the 2005 calendar, with estimated race day audiences:
San Marino 80,000 (Ferrari factor)
Spain 120,000 (Fernando Alonso factor)
Monaco 60,000
Europe (Nurburgring) 100,000 (Schumacher factor)
French 100,000 (Renault factor)
British 100,000 (David Coulthard and Jenson Button the locals)
German (Hockenheim) 100,000+ (Schumacher factor)
Hungarian 70,000
Italian 100,000 (Ferrari)
Belgian 60,000
Total 890,000
In addition, 30,000-odd could conceivably be added for the Turkish Grand Prix, given that the majority of fans attending the inaugural race were European. Thus, in 2005, F1 attracted nearly one million pan-European fans. Now compare that with the present situation:
Spain 70,000
Monaco 50,000
Austria 75,000 (Red Bull factor)
Britain 110,000 (Lewis Hamilton factor)
Hungary 65,000
Belgium 55,000
Italy (predicted) 65,000
Total 490,000
A decade on, admittedly with three (of four, counting Istanbul) less grands prix, approximately 400,000 fewer Europeans will attend a Formula 1 race this year. Have F1's politico-glamour events that replaced the now-defunct European races partially compensated for that annual shortfall? Not if Turkey is the measure, nor Korea and India, with all three dead already. Equally, Abu Dhabi battles to attract 50,000 people even with gimmicks such as a double-points finale...
Should Germany lose its event permanently - not unrealistic given the noises coming out of F1 HQ in London - and Monza fail in its quest despite the best efforts of former F1 driver and organiser Ivan Capelli, then the entire Europe continent could be down to under 400,000 payers within two years. To put that into perspective, just 10 years ago Germany alone attracted 200,000 fans...
Monza's future as grand prix venue depends solely on F1's oldest and most traditional circuit being able to strike a deal with Bernie Ecclestone, CEO of commercial rights holder Formula One Group. FOG is a subsidiary of CVC Fund IV, an investment vehicle controlled by venture fund CVC Capital Partners, which has forsaken F1's heartland and moved the sport offshore, to where the grasses were figured to be greener.
Are they? Look no further than Turkey, Korea and India, or the state of Shanghai's stock market...
As an aside, Malaysia extended its grand prix contract for three years and was promptly rewarded with having its race twinned with Singapore's glamour race. Reliable sources suggest that Malaysia now wishes to swap with Abu Dhabi and host the season finale. Indeed, said insider is adamant talks have commenced...
FOG's strategy of dramatically increasing hosting fees in a plummeting market must be seriously questioned, and this myopic tactic is best compared to a car maker countering falling sales in a bearish auto market with price rises. Pricing popular family sedans on par with a Rolls-Royce, then wondering why its dealer networks lack footfall.
"We don't want give any more [away] than we give other people," Ecclestone told AUTOSPORT last week, when asked whether Monza's latest terms were not possibly exorbitant. "We want to give the same [as to other circuits]."
All well and good, but there is another way to achieve the stated objective - reduce the patently excessive ticket prices demanded for European races. The fact of the matter is that families can no longer afford grand prix tickets, or, if they can, simply cannot justify expenditure.
The Nurburgring's new owners considered F1's fees as unrealistic - hence the race dropped off the calendar - yet had no qualms about promoting WEC last weekend. A figure of 62,000 payers, including 40,000 of those on race day, passed through the turnstiles to see Porsche trounce Audi.
True, that race day attendance was two-thirds that F1's last Eifel visit in 2013, but in return the promoters paid WEC 20 per cent of F1's hosting fees. Equally true, TV coverage of the six-hour race reached a fraction of F1's footprint, but given that race promoters see not a brass bean of TV income (whether F1 or WEC), who are they to care what ratings are achieved? Indeed, it works the other way.
It does not require the accounting skills of venture fund founders to realise that in a falling market increased prices mean only one thing: eventual bankruptcy for the promoter. Unless, that is, venue coffers are filled by other sources. For proof look to Turkey, where the former F1 circuit is to become a used car lot, or India, where the Buddh circuit is now mainly flat pasture for animals. Korea? Sinking in wasteland.
However, a bunch of venture capitalists with an eye only on the short-term - as such investments generally are - are unlikely to reduce hosting fees (and, by extension, ticket prices). Thus Ecclestone has pushed the Lombardy region and cities of Monza and Milan to subsidise Italy's flagship race through putting the screws on the local motor club.
This, though, begs the question: why should Italian taxpayers line the pockets of such as Donald Mackenzie, co-founder and -chairman of CVC, and beneficiaries of the Ecclestone family trust? Why should Fund IV institutional investors such as California Public Employees' Retirement System and Teacher Retirement System of Texas benefit massively from Lombardian toil?
The counter argument is generally that grands prix provide enormous economic benefits for local communities, and while Korea and India may argue that point, there exists little doubt that influxes of tens of thousands of free-spending visitors provide welcome boosts for politicians. Despite the first 10 or so million quid heading straight for Fund IV...
Here, the post-Belgian Grand Prix numbers cursorily provided by the communes of Malmedy and Stavelot (within whose boundaries the Spa circuit lies) are particularly instructive. Over the past six years, the commuities have pumped around €40m (£32m) into the event, with €7m (£5m) being contributed this year alone. In return the local economy received cumulative benefits of around €45m annually.
On the surface of it that appears an absolute bargain. The numbers should not, though, be taken at face value. Only about a fifth (€9m/£7m) of that eventually flows into public coffers via taxes, and of that portion, only that spent by foreign interests is incremental. Any Belgian spend would in any event have been blown within the country, albeit on other pastimes. Thus the residual benefit can be sliced in half.
However, that pales into insignificance when compared with another four-day event held simultaneously, less than 100km away - the annual Pukkelpop music festival, founded in 1985. However, it is only during the past decade that Pukkelpop gained real traction, this year, for example attracting more than 200,000 people representing 75 countries. During the weekend they collectively spent €70m, mainly locally.
The foreign interest was greater than that of the grand prix and arguably a larger portion flowed into public coffers. On top of that, the promoters receive little or no public funding. Pukkelpop is one of four major concerts staged annually in Belgium, sitting second behind the world-renowned Rock Werchter double-weekend classic.
Collectively, Belgium's annual festivals generate €200m in local spend, with nowhere near the costs of hosting grands prix. As aging acts increasingly turn to tours to top up in the face of increased life expectancies and dwindling royalties due to disruptive technologies such as streaming and iTunes - which both popularise their music and force to artists to return to stage - festivals are growing in popularity.
While such a plethora of music festivals packed into a single summer is relatively unique to Belgium, every race promoter faces similar competition within their territory, in whatever form and usually at lower entry costs, at that. This factor must surely be taken into account by FOG and CVC going forward, starting this weekend in Monza. That fact is that consumers, the fans, have more options for their leisure dollar, and are voting accordingly.
Failure to recognise this trend will result in further erosion of F1's popularity in its primary territory. It could lead to fewer than four grands prix being held in Europe by 2025, if the drop-off in interest continues. Kill off European interest, and you kill off F1. CVC, you have been warned.
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