Formula 1 could expand Miami's novel 'risk-sharing' model

The potential arrival of a Miami Grand Prix on the F1 schedule in 2020 will also introduce a new risk-sharing model for the sport and its promoters, a concept Formula 1 could expand in the future.

Historically, agreements between the sport and race organisers has followed a fixed franchise fee structure, usually based on multi-year and long term contracts.

However, F1's prospective deal with billionaire Stephen Ross' South Florida Racing, the company behind the Miami GP, includes a risk-sharing scheme, imagined mainly for the purpose of facilitating the event's materialization which caters to F1's ambition to expand its presence in the US.

Needless to say, current F1 promoters tied to the sport through onerous fixed-fee long-term contracts have been unsettled by the new approach and the terms put in place with Miami.

Questioned on Wednesday during a conference call with investors about Formula 1's appetite for risk sharing agreements in the future, F1 CEO Chase Carey woudln't rule out an expansion of the concept.

"Realistically every race is unique," said Carey.

"I think each one we’d look at in the specific terms. I think people don’t realise that frequently these events have a lot more moving parts than just a fee, there are hospitality components, sponsorship components, other components around it.

"But you look at each on their merits. What are the direct economic benefits and certainties? We’re not afraid of risk, if we believe there’s an upside to the risk. We obviously can afford that."

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For Carey, a promoter with a vested interest in an event is viewed as a positive, while F1 itself should not be adverse to risk under certain conditions.

"We like having our promoters have skin in the game, it’s important to us for them to have that skin in the game and stand behind it," said the American executive.

“But if we think there are opportunities to have upside both in the event itself, as well as upside to us on a much broader level, we’d evaluate it on the merits.

"We're not going to turn the model upside down, but if the returns justify the risks, I think we’d look at it.

"We’d look at that conservatively, so we’d want to be comfortable, and again I think we’re not looking to transform our model, but we’d look at each one based on the unique characteristics of that event."

Assessing the future, Chase Carey also said the sport was already focused on the 2020 calendar while next year's schedule should be published in the coming weeks.

"We expect to finalise our 2019 calendar, which we expect to look a lot like our 2018 calendar, in the next few weeks, as we successfully finish off renewal agreements," he said.

"We’re already turning our energies to the 2020 calendar, and we’re particular excited about a number of opportunities to add new events that we believe will really capture fans’ imagination and be widely supported.

"In fact we are actively discussing opportunities on four continents. A potential race in Miami is one of those."

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