Formula 1 News

Korean Grand Prix says new deal agreed

Ecclestone seemed to have bent a litte, but pressure will keep mounting as other tracks are looking for change on their deals like Albert Park, Shanghai, etc.
Monday, March 19, 2012

Seoul, March 19, 2012 (AFP / Lim Chang-Won) - Korean Grand Prix organisers said Monday they have negotiated a cheaper deal with Formula One which will save $20.5 million this year, following a long-running row over costs.

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An official at the South Jeolla provincial government, which has been under fire over its mounting deficit since the first race in 2010, said negotiations were finished although the contract was yet to be signed.

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"Negotiations with Formula One Management (FOM) were successfully completed, and we hope a contract will be signed soon," an official at the provincial government's F1 organising committee told AFP, on condition of anonymity.

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"The new deal will help reduce our deficit and host the race in a more stable manner," he said, adding FOM has agreed to cut its fees by about 23 billion won ($20.5 million).

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Formula One officials were not immediately available for comment. South Jeolla said there would be no change to the timeframe of the original agreement, which runs until 2016 with an option to extend for five more years.

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After the second Korean Grand Prix last October, the organising committee warned it would be forced to drop the event because of losses, although Formula One boss Bernie Ecclestone at the time ruled out a cheaper contract.

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Last year it paid a $55 million fee for hosting and TV rights, according to earlier official data.

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The committee declined to give details of the new deal. But newspapers said organisers would not pay this year's TV fee, estimated at 17.6 billion won, and it would also cut this year's race commission fee by 10 percent.

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The committee last year generated about $23 million while spending $79 million, the Korea Herald newspaper reported, adding this year's losses were expected at more than $26 million. The next event is on October 12-14.

High costs have caused friction for several hosts of Formula One, which has expanded aggressively from its traditional European domain with seven races now in the Asia-Pacific region and Texas holding its first this year.

In 2008, Chinese Grand Prix organisers told AFP they were prepared to walk away from Formula One, before later extending their deal, and there is debate in Singapore over its event's costs.

The Australian Grand Prix, which kicked off the new season on Sunday, has long been the subject of controversy with estimates that it costs local taxpayers Aus$50 million ($53 million) to stage.

Ecclestone is also exerting heavy pressure on Melbourne to hold the race at night to maximise worldwide TV audiences. Contract talks are expected to start late next year or in early 2014.

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