Current Issue

Letter from the President

Event of the Month

August in review

Katalin Lévai, Minister for Equal Opportunities

Courting the Balkans

Regional Roundup
A promising harvest?

Wanted: Blue-collar laborers

Hungarian pleasure, Austrian pain

Poverty’s shadows

To the rescue!

Mobile fines

Running out of gas?

Real Estate
The sixty second interview

Real Estate
Bubble Trouble

Real Estate
Trigranit eyes regional expansion

Real Estate
Buy or lease?

Real Estate
Summer review – exclusive!

Car Talk
Take a ride in Porsche’s new SUV

Arts and Leisure:
Steeped in culture

AmCham News

New AmCham Members

AmCham Home




László B. Kiss

Formula one races draw in fewer fans in Europe

Although organizers issued many fervent rebuffs, recession seems to have hit Formula One throughout Europe. This year’s ticket sales were down an average 11% despite more competitive races, an overall hotly contested championship and less predictable final results. This, on the heels of recent modifications made in the sport that leveled the playing field and diminished disadvantages incurred by lower-budget teams. This year was also one of revamps and changes, as here in Hungary, Formula One organizers carried out a HUF 1 billion reconstruction project on Hungaroring prior to the 18th Hungarian Grand Prix.

Even with a low-count in ticket sales, new regulations introduced in early 2003 by FIA (Federation Internationale de l' Automobile) appear to have benefited the Formula One in general, as the dominance of the Ferrari team became less palpable (a fact probably less welcomed by Italian fans), races became more competitive and the battle for points fiercer. The new regulations affected the Grand Prix schedule and the qualification and point system, in that the eighth driver to finish a race is also awarded one point, beginning this year. Organizers announced the gradual introduction of further changes in regulations. The number of qualifying runs was increased to two , to be held on Friday and Saturday before each Grand Prix. Communication between drivers and the pit wall was declared forbidden during the race, and organizers introduced stricter security measures, making the use of the HANS (Head and Neck Support) safety device obligatory for drivers. For the sake of better visibility, teams are forbidden from using any kind of appliance that hinders visitors’ overlook.

This year’s slogan was: “All for fans,” but results remained well behind expectations. The number of ticket sales dropped worldwide, as an increasing number of fans seem to have abandoned live races for television coverage – an estimated 6 billion people watch Formula One annually. Organizers at Magny-Cours claimed 101,300 people attended the French Grand Prix, but two hours after the race it was possible to leave the track and not see any other cars, let alone queues. The Austrian Grand Prix at the Nürburgring announced an attendance of 125,000 people, down 5,000 from the year prior. The San Marino Grand Prix in Imola reported the biggest fallback with 110,000 people showing up, compared to 52,000 last year. Britain’s Silverstone was the only venue to attract the same number of fans – 70,000 – as last year. “Global sport's viewing figures are down generally," said McLaren chairman Ron Dennis in an interview with British daily The Guardian, "but Formula One is suffering less than some and still has an ideal target audience to justify the major sponsorship investments which the teams require."

The Hungarian Grand Prix, held Aug. 24, did not fare better than its European counterparts, as far as ticket sales were concerned. Race organizers Hungaroring Sport Rt. reported a 35% drop in ticket sales in mid-July compared to the same period a year earlier, which decreased to 25% by early August and dropped to 20% by the week of the race. Promoters were looking nervously over their shoulders, hoping for a last-minute surge in ticket sales to meet the 160,000 number of attendees recorded in 2002. The final number, though not dramatically lower than last year, was 140,000. The trend, however, is unfavorable. From a record of 200,000 tickets sold in 1999, sales have been continuously decreasing ever since. “The drop in sales last year occurred for a number of reasons,” said Hungaroring Sport Rt. Deputy CEO Attila Gaál. “The Football World Cup organized in South Korea and Japan drew in a huge number of fans at the expense of F1 (Formula One) races. Also contributing to the drop were the severe floods that hit Germany, Austria and Hungary. The fact that Michael Schumacher had already won the championship before the Hungarian Grand Prix was the final blow,” Gaál explained.

Hungarians account for about 10% of the total fan base in attendance at Mogyoród, with the majority almost entirely made up of German visitors. This year, however, the number of Italians in attendance jumped significantly, while Kimi Raikönnen’s presence in the race secured the return of a sizeable Finnish fan base to the Hungarian Grand Prix. Although statistics were not available at press time, organizers predicted a significant increase in the number of Hungarian fans at Mogyoród this August, since for the first time in the sport’s history a Hungarian driver, Zsolt Baumgartner, was on the starting grid. Replacing Jordan-Ford’s injured pilot, the Irish Ralph Firman, Baumgartner started from the No.19 position but had to abandon the race during the thirty-fifth lap due to a technical problem.

As for how much profit the Hungarian Grand Prix secures, if at all, Gaál could not specify. Government subsidies amounts to HUF 3 billion each year, but this year’s HUF 1 billion extra, for the cost of reconstruction was, provided by Hungaroring Sport Rt. The home stretch became some 400 meters longer, and a new stand, “Gold 4,” was built with the capacity to seat 4,400 people, increasing the total number of available seats to 56,000. Hungarian organizers are hoping that the reconstruction and modernization project increased the future prospects of the Hungarian Grand Prix. If analyzed on a purely financial basis, it cannot be proved that organizing a Hungarian Formula One race is beneficial, said Gaál, adding that the Hungarian Grand Prix has always been more of a promoter event than a profit-raiser in itself. Viewed from a tourism perspective, the Hungarian Grand Prix is highly successful and profitable. According to a survey put together by national tourism office, Magyar Turizmus Rt., Mogyoród ranks third in venues visited by tourists in Hungary, following the Danube Bend-area and Lake Balaton, but before Budapest. “During the coverage of a Hungaroring race, the world talks about Hungary for six hours,” says Gaál. “International media coverage and advertisements that the country receives due to the Grand Prix is worth millions of dollars. In this respect, organizing Formula One races in Hungary is definitely worthwhile,” he added.
Due to increasingly severe European Union (EU) advertisement regulations, the number of Formula One Grand Prix races held in Europe is on the decrease. The main sponsors of Formula One races are still tobacco manufacturers, who spent an average USD 1.5 billion on advertisements this year. Hungaroring’s contract for the Hungarian Grand Prix, organized with the diamond sponsorship of Marlboro, runs until 2006.

The future looks rather smoky, however, as tobacco advertisements will become illegal in the EU as of July 31, 2005. The question facing organizers throughout Europe is a simple one: try to fill the financial gap somehow or take races outside Europe. Bernie Ecclestone, the billionaire who made Formula One a global cash machine, seems to have made his decision already as he announced that he intends to hold Grand Prix races in China and Bahrain in the future. As for Hungary, organizers can rely on a single solid fact: there is going to be a Hungarian Grand Prix each year until 2006. No one seems to be able or willing to guess the future of Formula One in Hungary, or as Gaál puts it: “Nobody dares declare that there is not going to be a Hungarian Grand Prix or that there is going to be one after 2006.”
FIA, the teams and sponsors will have to jointly reach an agreement, with Ecclestone having the final say in the issue. Experts however agree that Europe will host precious few races after the tobacco advertisement restriction comes into effect. Mogyoród’s advantage, hopeful Hungarian organizers say, is that it is one of the very few European Grand Prix venues in the immediate vicinity of a metropolis or capital city.

Baumgartner needs USD 10 million to become regular F-1 driver

Hungarian Formula 3000 driver Zsolt Baumgartner (right) with Jordan-Ford team boss Eddie Jordan At least USD 10 million in sponsorship money is needed if Hungarian driver Zsolt Baumgartner, who took part in this year’s Hungarian Grand Prix, is to drive regularly in Formula One races, Minister for Children, Youth, and Sports Ferenc Gyurcsány told Hungarian daily Napi Gazdaság. Baumgartner drives in Formula 3000 for the Italian team Coloni Motorsport and has been a Jordan-Ford test driver since May 2003. Speaking before Firman's accident, team boss Eddie Jordan said that Baumgartner was good enough to be a test driver for a top team and a race driver for a medium-level team. The Sports Minister said that some of the USD 10 million could come from the government, but expected most of it to come from Hungarian companies aiming for international and regional exposure.