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Designs on Track Part 2: Getting your sums right

The main grandstand of the Shanghai International Circuit Glitzy stands at mega-bucks circuits like Shanghai look nice - but do they ultimately cost too much?Picture: Toyota F1
 Neil Tipton
 Wednesday, February 18, 2015

Imagine the scenario: you have a 300-acre plot of land, all of the appropriate planning permissions, a pot of gold and a long-held desire to create a motor racing circuit.

But do you create the next Sepang or Shanghai or aim for a more modest club circuit? The answer, says designer Tom Barnard, depends on whether you want to make a small fortune - by starting with a large one...

Get the finances wrong and you could land yourself with a very costly white elephant. Recent years have seen mega-bucks tracks spring up all around the world, but in the cold light of day, once the lofty ambitions gave way to cold financial reality, the figures simply didn't add up.

A view of Autopolis Circuit, Oita, JapanEver heard of Autopolis in Japan? It opened to great fanfare in the early 1990s, hailed by all who visited it as the future of motor racing. It was even advertised on the sidepods of the Benetton F1 cars. Created to host the Pacific Grand Prix, the balance sheets soon went into freefall when the F1 circus failed to show.

It survived - just - but only after years of near inactivity. To date, its greatest events have been a round of the now-defunct World Sportscar series and Japanese domestic racing.

More recently, tracks such as EuroSpeedway Lausitz and Hockenheimring in Germany have both seen massive investment - only to go to near financial ruin when the crowds couldn't fill the stands to capacity year after year.

So how do you avoid the financial pitfalls and ensure that your track is a success in the bank manager's eyes, as well as the racing drivers'?

Gold (under)mine

"The big mistake that is probably made - and you can understand it - is that people go for 'gold-plated' buildings," says Tom. "Although they look very spectacular, it is quite difficult to make a building costing £10-15 million pay for itself.

"Very often now with the bigger circuits they accept the fact that the track runs at a loss because of the amount of money that is ploughed into it, but the benefit to the locality - the state, the province, whatever it happens to be - is such that it is economically worth it.The grandstand at Sepang Circuit, Malaysia

"But if you go for vast grandstands, huge buildings with special suites and very expensive layouts, you've got to be very sure that you are going to be packing the people in in order to justify it. You get cases like Malaysia, which everybody says is state of the art - and it is - but it lost money for three years running and finally fell back into the hands of the government.

"You have to balance your desire to produce something fantastic with its ability to actually earn its keep," warns Tom.

"The staging of a major race meeting may cost you so much that you make a loss. For example, a Grand Prix now can cost at least £10.5 million. I believe the Chinese have just paid £38 million to put on a race, and how many people have you got to get coming in even at £100 a head to justify that?" he concludes.

Feet on the ground

So while the Sepangs of this world think big but fail to reap massive rewards, circuits closer to home may well hold the answer.

"I don't know the actual figures, but I've always thought that Donington Park was quite well run," admits Tom. "I think they've got a good range of facilities there, they put on a very good range of meetings, their prices are quite reasonable, they do a lot of corporate business and they are very well located.

"The problem in this country is there are so many events going on. When we had the CART meeting at Rockingham, there were seven other race meetings going on in England the same day. In this country we are rather over-developed.

"I feel that where I am working at the moment in Sweden (at Viking Motor Park), we have exactly the opposite situation. Where we are, there is practically no motorsport available within a reasonable distance. It's pretty much virgin territory. The same is true of driving schools, which are very beneficial to the overall income. Anything that goes on during the week tends to be very manageable and makes a profit."

So the key, it seems, is to follow good business practice and understand your target market before sending in the diggers. If only we all had that pot of gold!

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