The proposals received by the city are confidential, but the word is that was one bid from the Grand Prix Association of Long Beach, to host an IndyCar race; and one from the World Automobile Championship of California (WACC), to host a Formula 1 event. WACC is led by former Long Beach Grand Prix executive Chris Pook and last year bid to run Laguna Seca. The two bids are now being examined by an Evaluation Committee, an independent body of representatives of the City, which will select a promoter.
What is interesting are the terms of the RFP, as these are very different to the suggestions made by Kalkhoven. The City said that no proposal would be accepted unless the race is "monetarily self-supporting and provides opportunities for the city to participate and share in revenue generation". The promoter is expected to pay for all costs for city services, permit fees, and administrative fees, even down to lost revenues from the city's parking lots.
The fees paid to the city are very small, with the original contract in 2008 requiring just $520,000, plus indemnities and insurances. This figure was index-linked and so will have gone up since then, but it means that the race was an incredibly good deal for the Grand Prix Association of Long Beach, which is believed to charge IndyCar around $1.5 million, in addition to collecting all the other revenues. This explains why the ticket prices are so low.
Among the other requirements are that the name "Long Beach" is in the title of the race; that there be very restricted set-up and take-down periods for the race infrastructure; and that there be planned activities through the seven-day pre-race period, in order to create a Race Week. The promoters can change the circuit, within the boundaries of the site, but this requires 11 months of notice to the City and all costs must be covered by the promoter.
Three years ago Chris Pook, the man who established the Long Beach race in 1975, proposed a F1 return to Long Beach. Pook is famously tight-lipped about his plans, but said at the time that an event would cost the city nothing and that work required to improve the circuit for F1 would be $9.2 million and this would be paid by the promoter. He said that the City would not have to pay race fees and would even be reimbursed for all expenses. All that would be required would be for the city to allow the construction of a new two-storey pit building on Shoreline Drive, which would then be available for the city to use for other events.
The key point, however, is that Long Beach has yet to decide what to do.
The City's Traci Fitzharris says that "they have not made a decision yet. The city Evaluation Committee would have to look at it, and then the city council if the costs involved are beyond a threshold of $200,000."
Given the terms of the RFP this should not be required.
What is also clear is that if Pook is pushing forward with a plan, he has the backing of the Formula One group. In F1 circles there is now a widespread belief that the current race fee model is unsustainable because race promoters cannot make a profit from their event. There are some governments which are happy to pay the high fees demanded and to make a loss because a Grand Prix drives economic activity and the city gains a better image through its F1 link. But this means that F1 can only go where money is available, rather than going to markets which are strategically important. If there were no fees, F1
Source: JSNL
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