‘For F1 to retain its annual host position in England for the Grand Prix in 2010, it relies heavily on the UK government agreeing to fund some other the increasing costs predicted over the next year. The question is, should the government bail-out this rich-sport?’
As you may have realized, the Formula 1 season came to an end in Abu Dhabi on the $250 million race track which is funded by their government. With the new season launching in England next year, will the UK government save F1 in 2010 by funding our Donington track?
What’s going on?
Since 1987, Silverstone has been hosting the British Formula 1, however with this contract ending earlier this year, F1 chief executive Bernie Ecclestone was set to sign a 17-year contract with Donington Ventures Leisure Ltd for their Donington track. However, in order for the new track to live up to the standards of Silverstone, it is currently undergoing a F1 required re-vamp. This week it became apparent that Donnington Ventures Leisure Ltd couldn’t raise the £135m renovation funds due to an issue with bonds. Owing to this there have been reports that England will axe F1 next year. This has put enormous pressure on F1 and has alarmed UK economists, who know just how important it is for the economy. Business Secretary Lord Mandelson commented, “This is a very British institution and every effort must be made to keep the race in the UK”.
How will it effect the UK economy?
‘The Telegraph’ reports that the Grand Prix contributes $60million to the UK economy every year. If funds are not located or if the government fails to financially support F1 in England, the UK could lose out on $1 billion dollars over the next 17 years. Furthermore this could result in huge loss of jobs, which are currently filled by the British Grand Prix. There are an estimated 25,000 engineer jobs created from solely the Grand Prix (Google News, 2009). Would it be worth the UK government paying the £135m renovation costs rather than losing out on the long-term income from F1 in England? Tourism and Merchandise sales will also be affected as places such as Silverstone in Kent, are so highly dependent on the F1 season each year.
Journalist Will Gray argues that other governments around the world help fund their motor sport industry and so he believes it would be only natural for the UK government to step-in a save F1 for England. Unfortunately for UK fans and Bernie Ecclestone and his team, the UK government refuses for the motor industry to be ‘state sponsored’. Furthermore Google News quotes Lord Mandelson, who strongly argues that the UK will, “not use taxpayers money to bail-out such a wealthy sport”.
Will we see a Grand Prix in England next year?
The BBC refers to the Donnington deal with F1 as ‘dead in the water’. Alternative solutions are being pursued by Bernie Ecclestone in desperate strive to save F1 in England. A recent report from ‘The Telegraph’ is that Bernie Ecclestone has proposed an extension contract with Silverstone, who will simply not accept his offer. Reason being that Silverstone fears the estimated annual cost of $25million. In a recession this would only be expected. Although Gray, for Google Sport, puts pressure and blame on the government, it would seem that the problem is deeper than the initial renovation cost. With reference to the information shared by ‘The Telegraph’, race track hosts such as Silverstone, are being crushed by the annual costs that are mounting up with F1. So is the UK government right not to ‘bail-out’ Donnington track? Do they foresee the underlying annual costs?
In my opinion the Grand Prix holds too much history and reputation for England, especially with rising stars such as Lewis Hamilton and Jenson Button. Thinking from a financial point of view, I would agree that for the government to fund F1 in England, it would become a regular payment and not a one-off ‘bail-out’ which would cause a media frenzy, not too mention a public uproar. This is especially most likely when there are UK non-government funded sports such as football. Therefore, one may argue that it’s only fair that this rich-sport remains a private affair. On the other hand, F1 contributes so highly to the UK economy, and this is something that the government should possibly strive to keep, whether it does mean bailing Donnington track out…
http://www.google.com/hostednews/afp/article/ALeqM5jX4_En5vxiA_SSIKCJmUDFvX_t_A
http://www.telegraph.co.uk/finance/economics/6480991/Loss-of-British-Grand-Prix-could-cost-economy-1bn.html
http://news.bbc.co.uk/sport1/hi/motorsport/formula_one/8332525.stm
http://uk.eurosport.yahoo.com/formula-1/will-gray/article/1123/
V good 7.5/10
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