Why 2023 heralds a new dawn in F1’s quest for world domination

Formula One has been clear in its intent to move into new markets in recent years, but 2023 looks set to be a pivotal year for the series. The BlackBook sits down with Robin Fenwick, founder and chief executive of Right Formula, to look at Formula One’s emphasis on new markets, the importance of Las Vegas succeeding, and why Kyalami in South Africa is struggling to find its way onto the calendar.

While not as extensive as originally intended, the 2023 Formula One calendar will still feature a record-breaking 23 races.

The Chinese Grand Prix was recently cancelled after months of speculation about its feasibility. The country’s ongoing coronavirus restrictions, which are much stricter than anywhere else in the world, makes it impossible for events of this scale to occur.

While it is understood that Formula One bosses are in dialogue with a number of interested venues looking to replace the Shanghai-based Grand Prix, the calendar for next season will remain at 23 until an appropriate agreement is reached.

But, due to the nature of recent global expansion by the International Automobile Federation (FIA) and its approach to the commercialisation of Formula One, it would be a surprise if a 24th race is not found, even with the tight turnaround to the now-empty slot on the calendar in mid-April.

“There’s 24 races that the teams have signed up to in the Concorde Agreement,” Robin Fenwick, founder and chief executive of Right Formula, tells the BlackBook. “So, from an FIA and F1 perspective, they’re going to want to maximise that purely from a commercial basis.”

For context, the Concorde Agreement is a contract signed between the FIA, Formula One and the competing teams which dictates the terms of the series and how its television revenues and prize money is shared. The most recent of these was signed in 2021 and runs until the end of the 2025 season.

With plenty of questions to be asked about Formula One’s current route, especially after Formula One president and chief executive Stefano Domenicali joked about the possibility of expanding to 30 races a season, the BlackBook explores just how the series is looking to balance this expansion.

Sacrificing the traditional

Even to those not as well versed in the politics of Formula One, it is obvious that the series is placing an emphasis on new markets over the areas in which it is already established. In some places, such as France and Germany, traditional races have been dropped entirely.

Silverstone, Monza, Monaco and Spa-Francorchamps have all come under increasing pressure in recent years for a variety of reasons, but it is mostly to do with the fact their organisers are not paying anywhere near as much in hosting fees as their counterparts in the Middle East, for example.

The issue is that, for these newer races, money is no object and return on investment, at least in the direct financial sense, is of little or no consequence for them. Fenwick points out that “it’s more about profile for them, and the exposure to the area and the awareness of that region”.

On the flip side, a race like the Belgian Grand Prix has to justify its existence financially, and this has been evidenced through the signing of just a one-year contract for 2023. All signs point to this being an expendable race, although the recent announcement that Spa-Francorchamps will be hosting one of six sprint events in 2023 suggests it is prepared to fight for its place on the calendar.

 

“It’s a very fine balance between commercial reward versus the health of the sport,” explains Fenwick. “One thing that is very important is actually the competitive nature of the racing.”

In Fenwick’s opinion, this is the one thing that could work in favour of races like Spa and Monza, as there are genuine overtaking opportunities for the driver. In contrast, the Monaco Grand Prix provides plenty of glitz and glamour to the Formula One calendar, but little in the way of on-track action. What’s more, the former may be waning in importance with the introduction of similarly high-brow events.

“Monaco, historically, was never going to move off the calendar because it was always seen as the glitzy, glamorous race, and to a degree it still is,” outlines Fenwick. “But there are other races coming through now – the Singapores, the Abu Dhabis, the Miamis – that I would say are arguably as glitzy.

“To a degree, I think there are some corporates that are a little bit scared off by Monaco because of compliance reasons. Monaco is not necessarily a business hub in the way that Singapore or Miami might be, as an example. Therefore, it’s quite difficult to justify travelling down to Monaco just to have a good time.”

With Formula One promoting the new Las Vegas race itself, it’s not beyond the realms of possibility that this becomes the ‘new Monaco’. Fenwick goes as far as to say that he sees “every opportunity for Vegas to take over”.

The American experiment

This view of Monaco as the glitz and glamour event is clearly under threat, but it’s not just the streets of Monte Carlo that face this competition.

When the BlackBook sat down with Bobby Epstein, executive chairman of the Circuit of The Americas (COTA), earlier this year, discussion inevitably turned to how the host of the existing United States Grand Prix would look to compete with newfangled races in Miami and Las Vegas.

Crucially, Brandon Snow, the commercial managing director of Formula One, exclaimed that “Las Vegas will be the home of F1 in the US”. While Epstein responded that COTA would “never have the celebrity or the glitz and glamour” of Miami and Las Vegas, Fenwick goes further in his assessment of the situation.

He explains: “Formula One are doing something they have never done before where they’ve actually purchased land to build in Vegas, where they’re building the paddock areas. They wouldn’t be doing that if they saw Vegas as a flash in the pan or something that was going to be a short-term piece for them.

Formula One will race on the streets of Las Vegas in 2023, having invested an estimated US$500 million into the event so far

“The other thing is Vegas is being promoted by and run by Formula One. Miami is not. Will that be used to Miami’s detriment in the future? It was very important to have Miami on the calendar, but will that be used as leverage to help negotiate with Miami to either get the fees up in the future or perhaps get them to their way of thinking?”

It is fairly well publicised that Miami is not paying the type of fee normally required to host a Formula One race, a departure from the series’ usual approach to new markets. However, this is a clear indication of just how important Formula One views the American market. With the Las Vegas race receiving all the attention, the operational issues that Miami suffered this season could work against it in the long run.

“Miami was a really good start but, just in the way that it was operationally delivered, I think there will probably be some question marks around the value of attending that race versus Vegas,” says Fenwick.

“I think there’s more chance for investment being taken away from Miami with people going to Vegas than there is people moving away from COTA.

“Vegas and COTA could be quite complimentary to each other in many respects. I feel like Miami and Vegas are much more in competition with each other.”

With Formula One having invested a reported US$500 million into the race so far, it is fair to say that the success of the Las Vegas Grand Prix is pivotal to not only the series’ standing in the US, but its reputation worldwide.

Ticking off the continents

While the focus on the United States has been well documented, one expected race for next season never came to fruition. A return to Kyalami in South Africa has been mooted for some time, with seven-time world champion Lewis Hamilton being particularly vocal about the need for Formula One to return to Africa.

However, numerous issues are rumoured to have arisen, which have led to the race being left off next season’s record-breaking calendar. This is also why Kyalami is not being suggested as a possible replacement for the cancelled Chinese Grand Prix; discussions have simply reached an impasse.

Fenwick suggests that there was a difference of tens of millions of dollars between Formula One’s asking price and what the promoters for Kyalami were willing to pay. The financial cost of staging a Grand Prix was too dear for a country struggling with its own economic issues.

Michael Schumacher driving at Kyalami in 1992, the penultimate year the South African Grand Prix was last held

“For a country that is relatively poor, [staging a Grand Prix] is something that is going to be challenged,” Fenwick outlines. “It has to involve multiple stakeholders, which include the government, a number of businesses and other key stakeholders in South Africa. I know that an area of concern has been actually to find the money in order to run the race.”

Currently, other areas are taking priority, but Fenwick still believes that the South African Grand Prix will appear on the calendar sooner rather than later. “I suspect it will be on the calendar for [20]24, it just may require a different promoter to be behind it,” he claims.

Conclusions can certainly be drawn on the current relationship between the promoters and the series’ governing body, but the appetite clearly remains for an expansion into Africa. Like all things in the world of Formula One, it will boil down to how much money South Africa is prepared to pay for the privilege.

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