Formula 1 in the States; More Risk Than Reward?

There is perhaps no more costly undertaking that the traveling sports “circuit,” which needs to recreate infrastructure wherever it goes. Those huge out of pocket costs are what do in event the biggest of events…from the defunct AVP to tennis tournaments to even large scale events like the Ironman or the X Games and the Dew Tour or the U.S. Surfing Championships, in some places. Big costs for building structures, big permit fees and in the case of first-time events, but learning curves with little margin for error. Take the event to an urban area, and the potential for problems escalates even further. The Super Bowl in New Jersey? Sure there is some rick but you have the most important element…the venue…established and well used before and after the event.

Such is the issue with the proposed Formula One race in New Jersey, which is now on life support for 2013. Yes it would be a mega attraction, with perhaps no greater backdrop than the New York skyline. Yes it would bring in ancillary dollars to towns like West New York, that need the dollars and the work. But the cost, especially for a sport that is well established globally but has little to no footprint in the United States? Devastating.

While promoters talk about millions to flow into the economy, they sometimes gloss over the millions it takes to re-route traffic, build stands, and important all those needed to stage the race to an area where there is no given that people would spend a very high ticket to turn out. A reasonable cost, sure. But thousands for the best seats? Hard to say. The organizers of Formula One are amongst the most savvy, and the most wealthy promoters in the world. They fully understand the value of bringing the sport back to Madison Avenue. It is an idea that every acing sport has chased for years since the Meadowlands Grand Prix departed in the early 1980’s. There are fans of racing in the New York area, but they go to places like Pocono to see NASCAR and Watkins Glen to see open road racing. The track in the New York area just doesn’t exist. So can the spectacle work in the area? Maybe, but you need to have someone assume very great risk to get it done. That is what the organizers in Baltimore did to bring Indy Car there two years in a row. The first race happened with great pomp and circumstance and ended with great financial loss. This year’s was scaled back on the extras and went a bit better, but the large scale issues of managing a race of such proportions in an urban area not used to such disruptions remain very high.

Racing is all about passion and the involvement of brands to activate and support the event. In NASCAR and Indy car to a large extent, the circuit drives sponsors. Yes there are local event sponsors but many of the big dollars come from activation constantly across the country with drivers and their teams. That the beauty of NASCAR’s marketing engagement. Formula One? Big brands for sure. Big TV and technology for sure. But with just one race in the States (Austin) and a few others on this side of the Atlantic, the ability for brands to constantly engage is lost. As great as it is around the world, here Formula One today is what soccer was ten years ago. Lost in a sea of sports choices for the casual fan.

Maybe it is still too soon for F1 to return to the States. Maybe it needs other places with a little more established infrastructure first before it takes a shot at Gotham. Maybe, like Ironman, Surfing and even the AVP, the X Games and even the Red Bull Air Race the costs of being in New York far outweigh the benefits. Organizers will point to events like the New York City Marathon that have success, but they don’t take the same type of dollar commitment to stage and they are repeat community events far different from the big business of racing.

F1 is a spectacular experiential event that will win fans when it is done right. Whether it can be done right on the streets in the shadows of Manhattan is another issue. It’s not cheap, and it certainly has a huge long term cost for those who try to buy in to the staging and have little precedence for return, but big precedence for failure.  Maybe the organizers will rally and find the dollars and the structure to stage what would be a spectacular event, but in today’s challenged economy, it may be a long and risky ride to the finish line.