By Lou Modestino

When it comes to Formula 1 racing, we’ve always been puzzled at the way that series does business, especially under the strict control of Bernie Eccelstone. We have always had the feeling that the whole series is bizarre. We’re not impressed but instead we’re puzzled at the way it conducts business and the costs associated with the series from top to bottom. All it does is to increase the costs of doing business.

Recently, we get caught up on our reading. After perusing through a late winter of 2012 issue Road and Track Magazine where the Grand Prix of USA at the Circuit of America in Austin,Texas was featured, we thought we heard it all, but the piece was even more enlightening. According to earlier reports over the years, Ferrari was spending a grand total of $500 million a year on F1 and other motorsports programs – such an enormous sum just to standout as the world’s best performance automobile.

It was also revealed that the other three top teams in F1 McLaren, Mercedes and Red Bull Racing are widely believed to spending that same amount of money because that’s the only way they can keep up with Ferrari. Just do the math – it’s $2 billion dollars between all four of the top teams! Why are they doing that? “To sell more cars and/or win races,” they’ll say. What an excessive amount of money just to be competitive which they all tie into necessary R & D.

The teams and drivers are sure well paid for their work! Of course F1 and its proponents boast that this series is the most technically advanced than all of the various world racing sanctions and entities combined. It’s amazing that these four race car builders/teams can continue at this free-for-all spending. It’s all done in the name of research and development, but we think that it’s done more in the name of prestige. We feel that it’s just a lot egos being satisfied just to prove their toys can come out at the top of the chart.

In the same vein, the principals of the COTA spent $450 million well beyond the initial estimate of $200 million to bring the track on line. Doing the math, that’s a $250 million overrun! What could justify all that and why were they not right on the original estimate?

We read with interest about how Road and Track’s scribes Robin Warner and his buddy Jim Lau decided to take in the US Grand Prix last year. They each budgeted $1,500 each for the trip. They bought the cheapest airline tickets for $500 each. They couldn’t afford a hotel room because the prices, which they said, “were obscene”. Both ended up staying with friends or relatives because they only had $680 left over after purchasing race tickets. Most of their meals on that trip consisted of hamburgers in order to stretch their racing travel budgets.

The announced crowd was 117,429 attending that Sunday’s race. It might have been a total of the entire weekend attendance. It just sounded more impressive. Many venues that host major motorsports events announce total attendance for the entire weekend. So we’ll give COTA the benefit of the doubt. At an average of $320 per ticket that comes out to $37,577,280. Obviously the fans all coughed up a lot of money for their racing fix. All that could be beginners luck due to the fact that F1 returned to the USA after pulling out of the Indianapolis road course a few years back.

As time went on with F1 at IMS, the ticket sales ebbed in succeeding years until F1 left when Eccelstone pulled the plug because we think Bernie saw the race attendance continuing to go down and wanted to leave before it looked even worse. Possibly the Englishman’s reasoning at the time was the fact that IMS failed to secure a sponsor for the event, no doubt due to the fact that the TV ratings for F1 in the USA are really flat

While our two subjects, Warner and Lau, enjoyed watching the race, they kept track of their expenses which included a $83 Ferrari polo shirt. They both claim to be “stats geeks” and claim that on that racing trip, they had driven 2908.8 miles, walked 19 miles and took six bus rides to and from the parking areas. With the average shuttle trip taking 23.5 minutes.

Doing more math, selling the same amount of tickets for the next 12 years or so, the length of the contract, will see the owners of the CTOA break even, if everything remains the same. But that’s highly unlikely. Venues hosting the F1 events don’t get a share of the advertising because it’s all split between Eccelstone and the teams.

It seems that Bernie is the only guy making all the money for his efforts as he heads up the Formula One Constructors Assn. (FOCA). He’s said to be a billionaire. We have to say that’s all very nice as long as you can get it. It’s still a mystery to me that Eccelstone has been able to get away with it all of these years? We’ve read that his ex-wife Slavia is now controlling the trust with all of the family money.

Some other facts here: The FIA, the sanctioning body, gets $25 million per race. Consider that owners of the COTA can only count on ticket sales and hospitality as revenue. That’s the deal for all of the venues that host F1 races. At all of other venues on the F1 circuit we’ve seen a significant amount of empty seats.