The Grand Prix is cancelled, but no thanks to a quick-thinking Victorian government.
The decision was ultimately made by the race’s corporate backers, raising questions about the government’s reluctance to pull the plug — even as team members expressed an unwillingness to race and were being dragged off for testing for the deadly coronavirus.
Last night, as world champion Lewis Hamilton lashed out at organisers for going ahead, the official line from the government was that there was still no reason to cancel. A spokesperson said in response to Inq’s questions: ‘’The only consideration is the advice of the chief health officer and we will continue to follow his advice.”
But a secret agreement between the Victorian government and Liberty Media, the US company that owns Formula One, could reveal financial motives for trying to stay the course.
It would leave the government on the hook for certain costs should the government cancel the event. It’s possible this includes the payment of a one-off race licence fee, estimated to be worth up to $70 million.
But like much of what goes on at the Grand Prix, the deal with Liberty Media is not public. Therefore it’s impossible to know what the ultimate cost of postponing or cancelling the event is to taxpayers.
The closest thing Inq could find to a cancellation policy was contained in a risk warning to investors, buried in corporate documents filed to the US Securities Exchange Commission earlier this month.
It says that if a race is cancelled due to a force majeure event occurring prior to the Thursday before an event, the race promoter — in this case the Victorian government — is not required to pay Formula One a race promotion fee. In other words, if “the event” — in this case the coronavirus — occurred before Thursday, then the government should have some bargaining power to cancel without paying the promotion fee.
But what this promotion fee is, and whether it is different to the license fee, is unclear.
So why did the government refuse to cancel the event earlier? And did their dawdling cost taxpayers money?
Hamilton, who on Thursday night expressed his shock at the event going ahead, had one brutal response: “Cash is king. I can’t add much more to it. I don’t feel like I should shy away from my opinion.”
The Grand Prix has long been criticised for running at a loss and lacking transparency around even around the most basic things like attendance figures. The government agency in charge of the event, the Australian Grand Prix Corporation (AGPC), was unavailable for comment.
When asked whether Victorian taxpayers would foot the bill for the cancellation, AGPC CEO Andrew Westacott told reporters this morning: “A cancellation of this nature has a lot of consequences and some of those are contractual and financial. We will work those through with the commercial rights holder in the days and weeks.”
Liberty Media is run by US billionaire Chase Carey and makes most of its Formula One revenue through licence fees with governments around the world. With the Chinese Grand Prix postponed and the Bahrain Grand Prix closed to spectators due to the virus, the company has a lot riding on races going ahead. A spate of cancellations would trigger huge losses for the company.
Activist and long-time critic of the event, Peter Goad, says the chaos over this year’s event yet again highlights that Victorians deserve to know what is in the agreement.
“It’s a cancer that eats away at the legitimacy of the Grand Prix,” he told Inq.