F1 bubble in Spain has burst

In 2007, close to 130 000 people attended the Spanish Formula 1 Grand Prix in Barcelona, with television audiences in the country beating records and Valencia joining in. Now, five years later, the Formula 1 bubble has burst in Spain, a country with serious financial problems and with a public sector that is in dire need of saving every euro in a scenario of empty treasuries. The current crisis and past excesses are taking their toll. "It will be good to have another grand prix to see how Formula 1 is developing in Spain, where a few years ago there wasn't even any TV coverage," Spanish driver Fernando Alonso said in May 2007, on the day when Valencia was confirmed to be joining the sport. The Mediterranean city featured an urban circuit through the port that had been restored ahead of the 2007 America's Cup. Everything was Monaco-style, without heeding the fact that there was a perfectly apt track just 30 kilometres away. As France lost its race, Spain became in 2008 the only country with two grands prix, to emulate Germany which had Hockenheim and Nuerburgring running together for some years. It was a major milestone in a calendar that was increasingly turning to Asia. Nowadays, Barcelona, the traditional seat of the Spanish Grand Prix since 1991, and Valencia are working on a deal to alternate, to cut costs and return Spain to the more down-to-earth scenario of having just one Formula 1 race. Formula One CEO Bernie Ecclestone told dpa there would be one race in Spain from 2013. "Next year we'll alternate between the two," he said. This year Barcelona will hold the Spanish Grand Prix on 13 May and Valencia the European Grand Prix on 24 June. Under pressure because of the worsening crisis, which even led the central government of Spanish Prime Minister Mariano Rajoy to come to its aid, Valencia appears to be willing now to share a grand prix with Barcelona, an option it rejected only a year ago. "The new Valencian government is willing to evaluate a proposal," Germa Gordo, a top Catalan government official, told dpa in a telephone interview. "Formula 1 is not what we are most worried about," Alberto Fabra, head of the Valencia regional government, recently admitted. Indeed, Fabra's cabinet is suffocated by debt and it is trying to renegotiate - downwards, of course - the 20 million euros (USD26.4 million) a year it has to pay Ecclestone. "The situation of the economy is not the same now as it was a year ago," sources in the Valencian government told dpa. "We have already said publicly that the policy for major events is being reviewed, and alternating would be a good proposal for Formula 1." The financial crisis that is shaking Spain to the core is leading to drastic cuts at all levels of government, both central and regional. According to official estimates, the country's GDP is to contract by 1.7 per cent this year, and its unemployment rate currently stands at 22.85 per cent, the highest in the European Union. "We are at a moment of economic crisis. Organising Formula 1 has major costs and the fact that we can share them between two different countries (sic) is better for everyone from a budgetary and treasury point of view," said Gordo. Gerard Lopez, chairman of the Lotus Team, told dpa that having one race and alternating between Barcelona and Valencia "is better than having none, which would be a pity." Spanish driver Pedro de la Rosa also agrees that alternating would be the "normal" thing to do. "Having two is what is not normal. Turning to a normal scenario means following on the tracks of countries like Germany and Italy," the veteran HRT driver told dpa. The bursting bubble has also affected adjacent businesses, including television. Alonso has not won the world championship since 2006, and interest has waned in a sport whose TV performance was only beaten in 2008 by the Olympic Games: even football's European Championship, which Spain won, fell short. This explains why the private television channel La Sexta paid an estimated 200 million euros (close to USD263 million) for the TV rights to Formula 1 in Spain over five years starting in 2009. However, three seasons later, La Sexta can no longer pay up. The right to broadcast Formula 1 is to go in 2012 and 2013 to another channel, Antena 3, which will seek to make viable what is clearly a shrinking business.