The F1 hospitality units lost five million dollars in 2010
The glamour of F1 has always been maintained by its magnificent motorhomes where elites from around the world gather during race weekends across the globe.
However, Beta Holdings, the company that holds the rights for Formula 1 accommodations, recorded a loss of 5.2 million dollars during the 2010 season.
This important issue had a well-known explanation: the economic crisis that has severely affected the majority of businesses worldwide. These companies wanted to reduce their investments to avoid creating controversies during these times of salary constraints at all levels. The Chief Financial Officer of Beta Holdings, Duncan Llowarch, stated to Christian Sylt and Caroline Reid: «The existing economic conditions have created a challenging environment for the sale of hospitality packages.»
It must be said that the VIP services offered come at a certain cost, with the average cost of packages for three days reaching $4,520 per person. However, depending on the race, prices can skyrocket even more. For instance, the Ferrari Club, responsible for the Scuderia’s receptions, offers a two-day package in Monaco for the modest sum of 7,176 euros… Beta Holdings has indeed decided to offset the decrease in the number of people willing to travel by significantly increasing (up to 12% depending on the race) the prices of these services. As a result, the turnover for the entire season has increased by 2.1% compared to what was recorded in 2009.
But at the same time, costs have significantly increased with the addition of new events (Canada and South Korea). These distant destinations compared to European bases represent very significant logistical expenses since, for each event, 40,000 glasses, 30,000 plates, 10,000 cut flowers, 5,500 magnums of champagne, and 200 tons of tents must be transported. Overall, the company’s total expenses have risen by 3.3%, leading to an after-tax loss of five million dollars.
The situation is not expected to improve in 2011 as the revenues from the Bahrain race have already been lost (the May 1 deadline is fast approaching and the political situation in the country does not seem to be improving) and the Indian Grand Prix will present significant new logistical costs. Moreover, the Suzuka event could be threatened by the repercussions of the March earthquake: although the circuit remained intact since it is located more than 600 kilometers from the epicenter, ticket sales could be compromised by the caution of the spectators…
With the participation of RacingBusiness.fr
