From his office on the 45th floor of the IBM Tower in downtown Montreal, Normand Legault can take in all of Montreal. His work table is surrounded on three sides by immense windows. “From here, I could give traffic reports. I can see all the bridges from the Mercier Bridge to the LaFontaine Tunnel,” he jokes.
From this remarkable glass room perched between earth and sky, one can also see the Circuit Gilles Villeneuve, where the former promoter of the Canadian Grand Prix, also recently retired as NASCAR promoter, was a regular presence during three decades. “During thirty years in the business of sports, you acquire a lot of experience, and, I hope, a little bit of wisdom,” he says. You remain a passionate fan, but at the same time, you view things in a little more detached and clinical fashion. You view the same reality, but instead of being at ground level, you see things from the 10,000 foot level of altitude.”
On the occasion of the opening of the 2009 F1 season in Australia, La Presse talked with Normand Legault about the challenges awaiting the Big Circus – and the turmoil that could disrupt it.
Q: Is there a risk that the ongoing economic crisis could disrupt the world of F1?
A: Yes. F1 depends more on the automobile manufacturers than 10 or 20 years ago. Six out of 10 teams last year (now five with the withdrawal of Honda) were financed by car companies. These companies are not in trouble like GM or Chrysler, but they are facing significant financial constraints. In the world of luxury cars, sales have dropped about 25%. The BMWs and Mercedes of the world have been seriously affected.
Q: More so since new sponsors are not lining up at the door.
A: The F1 teams have been hit from two sides. During the last five years, they have all replaced tobacco sponsors with financial institutions, some of which are in serious difficulty. RBS, which was a Williams sponsor and had an important presence at the circuits, now more or less belongs to the British government. ING, a Renault sponsor, received $10 billion from the Dutch government. Crédit Suisse withdrew as a BMW sponsor. Banco Santander is not in trouble, but still it lost $4 billion in the Madoff affair. And so on. Now, when you ask the state to save you, it’s normal that you will be asked to be fiscally prudent. You don’t want to be seen drinking champagne in the Paddock Club and blowing 100 million on an F1 team!
Q: What do you think about the movement that has been taking shape in favor of cost reductions in F1?
A: Cost control measures are necessary. Extreme performance doesn’t mean anything. You have to remember that we do this for the fan. And the fan doesn’t care whether the engine revs to 18 or 19,000 RPMs. He would rather see two guys cross the finish line one meter apart at 17,000 RPMs than to see Michael Schumacher finish one and a half laps in front of everyone at 19,000 RPMS. Who gives a damn if it’s 19,000! Is it really important that they lap the Circuit Gille-Villeneuve in 1:21.430 instead of 1:21.628? I don’t think so. What fans want is a close race, some passing and that the result of a 70-lap race not be decided by the 43rd lap. Are economic circumstances forcing us to review the rules of the game? Let’s take advantage of that to make the spectacle more interesting – not for the engineers, but for the fans.
Q: What do you think about the FOTA (Formula One Teams Association), that the teams formed last year to defend their interests against the Fédération Internationale de l’Automobile (FIA) and against Formula One Management (FOM), the holder of the commercial rights?
A: It’s an interesting initiative. A few weeks before the meeting in Maranello where the FOTA was created, I made a presentation to the team bosses at the Montreal Grand Prix. I said to them, why don’t you reorganize yourselves like a North American sports league? When the [Montreal] Canadiens play the Boston Bruins, they don’t ask the International Hockey Federation to referee the match. In the world of North American pro sports, each league has a board of governors, a commissioner and vice presidents who manage the business. The owners of the sport manage themselves. The National Hockey League doesn’t have to ask anyone if it wants to increase the size of the net by six inches!
Q: Can the FOTA really become a vehicle for change?
A: I believe so. They seem to want to. A test of strength is taking place between the FOTA and Max (Mosley, president of the FIA) and Bernie. You can see that with the disagreements about awarding medals and the awarding of points. (Note to readers: Due to the objections of the FOTA, the FIA put aside the idea of crowning as world champion the driver who won the most races, rather than the one who had amassed the most points.) But I hope that the FOTA will go further than just worrying about the technical or sporting regulations. I would hope that they will concern themselves with the business model of F1. You must rise above the level of minor disputes to see what you would like F1 to become. It’s fine to think about whether the tire size should be 17 or 18 inches, but if you look up and the stands are empty, then the question of tire size becomes academic.
Q: Do the teams have the will to do it?
A: I don’t know if there is a will, but there is an inevitability.
Q: Why?
A: Because the financial structure of F1 is problematic and raises certain questions. Does the sport need an intermediary like FOM? What the teams object to is the 50-50 split of revenues between them and FOM. To go back to the model of the NHL, if the league administrative costs are $50 million, and overall revenues are $1.8 billion, then that amounts to 3%. In F1, the guy who manages the business costs you 50% of your revenues. You have to ask this kind of question.
Q: Is it possible to imagine F1 without Bernie Ecclestone?
A: As of December 31, 2007, there is no more Concorde Agreement. The teams could leave tomorrow morning. (…
They could call it the Grand Prix Championship of the World. If you have Ferrari, BMW, Williams, if you have Lewis Hamilton, that seems pretty much like the real thing. They would undoubtedly be free to do that.
Q: And what does your crystal ball say?
A: It’s an eventuality, but I don’t know if they’re there yet.
Q: Could you see yourself as commissioner?
A: I don’t know if they would see me as commissioner. Up to now, they’ve talked with me a lot about the concept, but I don’t know.
Q: But you’re not closing the door?
A: There is no door yet! (laughs)
Q: Does the uncertain future of F1 explain in part why the government refused to agree to the demands of Bernie Ecclestone in the bid to save the Canadian Grand Prix?
A: Yes. It’s fine to have a five-year agreement, but do you really know what product you will have to sell? What happens if the next Hamilton, Massa and Kubica are taking part in another championship? What are you buying for $30 million a year? What does that guarantee? It’s a little like if you signed a contract with Vincent Lecavalier [famous French-Canadian hockey player]. In the second year of the contract, you wouldn’t like it if he decided to send his brother-in-law to play in his place!
Q: What are the chances of seeing F1 return to Montreal?
A: I remain pretty optimistic. Over the 30 years during which Montreal hosted the Grand Prix, the United States GP took place in seven different locations without ever really succeeding. I feel that by 2001 (NOTE BY CIRO: ? It must be 2010 or 2011) at the latest, the Canadian Grand Prix can return to the calendar. Montreal remains an excellent place for F1. It would cost 50 million to construct even a temporary circuit in cities like Philadelphia, Washington or New York. In Montreal, the investment is already there. It’s an easy destination for the teams. The time difference means that the race is on during prime time in Europe. And there is a fan base that really knows auto racing.
Q: Except that right now it seems that having fans in the stands is not a priority in F1.
A: F1 has gone to Asia and the Gulf, it’s a little like the National Hockey League trying to put a team in Nashville. I read somewhere that the Bahrain Grand Prix generated revenue of $354 million. The Super Bowl generates $250 million and Bahrain, where the stands are empty, makes more than that? In Montreal, there were more people on Friday than some GP have on Sunday. And the spectators were not soldiers dressed in civilian clothes like in several countries that I won’t mention!
Q: Why this shift towards new markets like China, Singapore and Abu Dhabi?
A: When CVC Capital Partners bought Bernie Ecclestone’s company two years ago it took on debt of almost $3 billion. It still owes about $2 billion. That means interest payments of $240 million per year, plus principal payments of $300 million. That’s more than $500 million annually. To reach that, you need $50 million races. At that price, it can’t be profitable (for an organizer), no matter how the profitability is calculated. Australia has accumulated losses of $100 million during the last three years. The Australians know sport, they like to have a good time, but the organizers, who know what they’re doing, are losing $40 million per year. How long can that go on? Someone from the opposition or the population is finally going to ask if it’s all worth it. You have to wonder about the business model. If it costs too much, then you kill the goose that lays the golden eggs.
Q: Is that what’s happening?
A: You can already see the house of cards falling down. The French automobile federation dropped the 2009 GP. Hockenheim won’t have a race in 2010, Nuerburgring is in trouble. The Chinese have put in doubt their participation after 2010. If the economic crisis continues in Europe, that’s going to affect a lot of people.
👍
