South Korea wants to renegotiate its contract with Bernie Ecclestone

This is what Won-Hwa Park, the leader appointed to rectify the mistakes of the previous organization, states in an interview with Autosport. When asked if long-term profitability is linked to the price of their contract with the F1’s chief financial officer, the Korean leader responds clearly: “That’s correct. That’s why we want to have in-depth discussions with Mr. Ecclestone. We need his cooperation.” He believes that the initial contract was set at too high a price: “In a sense, yes.”

Indeed, the bill amounts to nearly 60 million euros, including more than 40 solely for organization rights and television rights. The goal of Won-Hwa Park’s team has therefore been to clearly limit its expenses as much as possible to avoid too much discontent from the local population: « My main objective is to reduce expenses as much as possible. This is the biggest issue. Some people in the area are against the race because it represents a significant financial loss to host and organize the event. These citizens, who are poor farmers, want the funds to be distributed to other projects rather than used for this currently unpopular event. »

But this is an endless process: if promoters do not communicate about the race, few Koreans will be interested in F1. This will result in a low-paying audience at the circuit, thereby increasing the event’s deficit. That’s why it is necessary to communicate about the event, but this represents a cost for an uncertain return on investment: « At the same time, I have to increase the awareness of motorsports so that people and citizens understand what we are doing. This would indirectly convince the national government. Motorsports are not yet as well known here as they are in other developed countries.»

Beyond the F1 event itself, it is also important to make the circuit profitable, which represents a very significant investment. To do this, the solution is to host other events but also to bring in automakers and manufacturers for development testing. The circuit is helped in this by the fact that Korea has a world-class automotive group, Hyundai-Kia: We want to try to use the circuit as much as possible, to use it for national and international races. We plan to host at least two international events next year (the Asian Festival of Speed, F3, and the Japanese Super GT) and maybe one or two more. But primarily, it will be used for national races, to rent it to major car brands like Porsche and Hyundai and to test tires. We need more demand for the circuit, both national and international interests.

The Yeongam circuit is part of a larger development plan, of which it will only be a part at the heart of the Automotive Valley that the region wants to establish in order to move away from its current rural economy. It is therefore a real city that is planned to be built around the circuit, as Abu Dhabi was able to do with its Yas Marina circuit. But the development plans for this second phase are currently on hold: « It’s on pause at the moment. But we are trying to revive this plan. We now call it the second development plan of this project. We hope it will be funded by the provincial government, but the provincial government can’t do everything at once. So we are looking for investors. If they were foreign, it would be much better.»

There is therefore a strong local desire to keep this event, which is normally guaranteed by the current contract that ends in 2016. The remaining challenge is to resolve the economic equation…

With the participation of RacingBusiness.fr