A $40m fee does not make business sense

There have been whispers and rumours for quite a while now that all is not well with the Indian GP. Unless announced by the current owners of the F1 circus in India it would seem to be conjecture but the reality is that the event is motoring on a very bumpy road. This can be gauged by the fact that last year the GP at the BIC managed to fill about 65 percent of its stands after an outflow in excess of 200 big Cs.
The Indian government, instead of supporting the internationally watched festival of speed, did worse by demanding and collecting 10 crore as a legitimate extortion fee towards the NSDF (National Sports Development Fund). Where is the rationale behind this? Not supporting the F1 initiative like many nations globally do is bad enough!
China must be approaching the one billion dollar loss mark by now and South Korea is most probably on its way out of the fast lane in a year or so due to unsustainable losses. China has the muscle to take the negatives in its stride but not all nations do. Even a prosperous EU nation such as Germany is unwilling to support F1 and has left it to the cities of Nurburgring (the circuit itself was supposed to be up for sale) and Hochenheim to sponsor the mega-event.
As a result the former almost gave up its F1 foray after suffering losses but now seems to have a breather by partnering with the latter to alternative hosting of its events. This way they pay half and at least allow the locals their dose of speed every now and then.
Perhaps the FOM should have reconsidered the annual race fee that they charge the Indian GP. A $40 million fee with an escalation of 10 percent every year does not make any business sense even to the most prosperous nations. It is a possibility that the asking price may drop to $30 million but even that’s not going to bring spectators to the circuit. We just do not have the required numbers that will flock to Greater Noida to watch a sport they don’t and probably never will understand.
And let me assure you that this is not just a local problem. There is also the F1 enthusiast who likes to watch this hectic sport with its pit stops and tyre changes from the comfort of the giant screen in his room while he sucks on a cold beer. In short, F1 is not dead. It is just that going to witness it live is getting too expensive and in many cases way out of physical reach.
The hosting fees vary from $10 million for the Monaco GP (here Bernie and company however get to pocket the berthing rights that are collected from the uber rich who land up in their mega billion dollar yachts) to $50 million for the Abu Dhabi chapter.
No matter what the end result of the ‘F One or the F None’ debate in India, I don’t think the promoters have had much to lose. They did get the land (and more) for this venture which has subsidised generously and this real estate has also escalated in value. I love this Formula where all are in the red and yet no one really loses!