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McLaren Mercedes driver Jenson Button navigates through a puddle during the morning practice session at the Canadian Grand Prix in Montreal on Friday. (Graham Hughes/THE CANADIAN PRESS)
McLaren Mercedes driver Jenson Button navigates through a puddle during the morning practice session at the Canadian Grand Prix in Montreal on Friday. (Graham Hughes/THE CANADIAN PRESS)

Formula one

Future of Canadian Grand Prix clouded in uncertainty Add to ...

Some analysts suggest the event rakes in as much in consumption tax revenues as the various levels of governments pour into the weekend.

Though ticket sales in Formula One can fluctuate, it’s expected this year’s Canadian Grand Prix will have attendance bounce back to regular levels from last season’s 285,000 – which Dumontier has blamed on student protests and strife for lagging sales.

Measuring economic spin-offs isn’t an exact science, however.

Montreal’s tourism authority has pegged the overall economic impact of Grand Prix week at $90-million, although that figure was questioned by several fiscal experts this week in light of a more formal accounting conducted in Melbourne, site of the Australian Grand Prix.

That study found the race – similar in scale and scope to Montreal’s – brought in closer to $32-million.

Beyond the direct benefits and sales tax spillovers, there’s no question F1, with a global television audience in the hundreds of millions, raises Montreal’s global visibility.

Formula Money, a publication that tracks the business side of F1, estimated the value of “brand exposure” at the 2012 Canadian Grand Prix at $142.9-million, the third highest among all races last year.

There’s value, it appears, in advertising in F1, but you have to pay to play.

And there will be a cost if Montreal wants to keep the cachet of being an F1 stop.

Ecclestone wants improvements to the creaking infrastructure at Circuit Gilles-Villeneuve – it’s broadly considered among F1 watchers as a basic condition to a long-term deal.

The public estimate for the costs of revamping the mould-infested paddocks and the aging control tower is roughly $27-million, although sources who have seen the plans suggest that’s a decidedly conservative figure.

That the cost could be spread over a decade is sure to work in Dumontier’s favour as he tries to drum up the funds.

So while Ecclestone may be willing to accept a slight increase on his annual allotment of public money – F1 is exceedingly adept at obtaining money from governments, which has the advantage of being guaranteed – the true cost of extending the deal could conceivably require a total investment of $200-million or more over the next 10 years.

It’s a lot of money, but if Ecclestone can’t find it in Canada, he won’t hesitate to look elsewhere.

“If Montreal cannot pay the required fee, then its popularity among the teams will count for little. Previously, the race was strategically significant as the only Grand Prix in North America, but with the introduction of the United States GP in Austin [Tex.] in 2012, it has lost that … its $15-million fee is considerably lower than the average $27-million in 2011, and is lower even than other historic races such as Silverstone [England]. In that context, its popularity alone may not be enough to save it,” Caroline Reid, the editor of Formula Money, said in an e-mail interview.

Then, there’s the looming presence of a Grand Prix event slated for New Jersey.

The race – long a dream of Ecclestone’s – was originally supposed to debut in 2013, but has since been pushed back.

Significant hurdles remain in staging the event, but the fact the F1 Group has decided to put some of its own money into setting up the race suggests the doubts over its viability could soon be put to rest.

In any case, there’s a strong impetus behind it: The circuit’s strategy to increase its footprint in Asia has seen it go from two to eight races in the last decade, while North America, a market F1 is keen to conquer on a large scale, is stuck at two.

“Ecclestone has suggested he wants four races in North America, and it would make sense for one of these to be Canada. However, if a New York race did go ahead, it could make things difficult for Montreal by eating into its spectators thus reducing ticket revenues and compromising the race’s financial viability,” Reid said.

While there’s a strong business case to be made for holding races in Montreal and the New York area on consecutive weekends, recent experience has shown Ecclestone has no qualms about playing hardball in negotiations, and pitting local race organizers against each other.

“It’s a tactic [Ecclestone] has used again and again,” Wilson said. “He’s not afraid to pull the race for a year in order to get the terms he wants, as he’s shown here.”

In practical terms, Dumontier and his public-sector partners need to reach a deal before next year’s race.

It’s clear that Formula One – which has had a toehold in Canada for all but three of the past 45 years – will have to be wooed if the event is to endure.

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