Does hosting Formula 1 kill the profitability and potential of a race circuit?Before the recent Daytona 500, the folk in Florida announced plans to upgrade the spectator facilities at Daytona International Speedway. It is the biggest of the NASCAR tracks and has a seating capacity of nearly 170,000. The problem is that it has not been upgraded for a long time.
The primary goal of the work will be to improve the fan experience. Already almost the entire circuit can be seen from any of the seats, but these are rather old and not very comfortable. The plan is also to add an additional tier of seating on top of the existing grandstands, which are a mile long. There will be new VIP suites.
In addition the speedway asked Rossetti Architects of Southfield, Michigan, to develop public spaces into destinations and by doing so encourage visitors to come earlier and stay longer (and thus spend more money). The result is an interesting series of what are called neighbourhoods inside the grandstands.
There will be 11 of them, including a central one which will be a historical exhibition. The other 10 will provide space for fans to meet, eat, shop and visit the rest rooms. Each of these areas will have large video screens so that the spectators do not miss any of the action. The plan also includes the installation of 40 escalators in five injector zones, which will make it much easier for the fans to get to their seats and to the various concourses.
Contrast this with the recent announcement at Silverstone that the track is not going to use the expensive new pit and paddock complex, called The Wing for this years British GP MotoGP event because the fans prefer the older facilities.
Until we have the funds to build a bridge or tunnel connecting the outside of the circuit with The Wing, the old paddock is a more accessible facility for fans, explained Richard Phillips, the managing director of Silverstone.
The two announcements highlight the differences between the racing circuits in the United States and in Europe. The US facilities have money; the Europeans do not. The primary problem is that while tracks can be nice little earners that stops if they want to run Formula 1 races. The problem is the annual fee demanded by the Formula One group for the right to hold an event, coupled with the rights than must be signed away.
This means that in a lot of cases the only source of revenue left to the promoter is the sale of tickets, and if they cost too much or access is difficult and facilities poor, people will not pay. So unless a government will help out, there is no money to make the experience better for the fans. Nor is there cash to build such multi-use facilities,§ such as exhibition and convention centres, concert halls, shopping malls, museums and so on.
So Silverstone has a plan, Daytona has a project.
The Formula One group says it is just doing business, but almost half the money that the sport generates is disappearing back to the financial institutions and private equity people, who do not care if they damage the sport in the long-term or not. They are there to make a quick buck.
Over in America the sport has a better structure. There are still investors involved, but they are not killing the cash cow. They are feeding it, to make sure it continues to produce for many years to come…
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