Mexican standoff

Large Mexican flag waiving over circuit

As race organizers face up to the prospect of closed-door events in 2020 and the potential withdrawal of Government support on hosting fees it is interesting to look at the situation Mexico’s race organizers found themselves in last year.

The race is held at the Autódromo Hermanos Rodríguez in Mexico City and the circuit is owned by the Government of the City.

Mexico City which is home to 20% of Mexico’s population is, unfortunately, one of the most traffic-congested cities on the planet. The United Nations as far back as the 90’s stated the skies to be the most polluted on the planet and Mexico City the most dangerous city in the world for children in terms of air pollution.

So too many observers it was a surprise the carbon-emitting fossil fuel burning race became a fixture again in 2015.

Then in 2019 the left-wing politician Andres Manuel Lopez Obrador was elected president promising to achieve growth rates of 4% per year. This was quickly placed into doubt as in early 2019 the Mexican economy entered a mild recession promoting Obrador to claim that the poorer parts of Mexico have benefited more from his policies.

So Obrador an outspoken critic of privilege went on the offensive and cancelled the building of the new Mexico City airport saving an estimated $5.2bn.

Using his man of the people persona he announced he would stop wasteful spending in order to “transfer money to the people so there is development, work and wellbeing”.

Then he used $21m in federal funds usually set aside for the Formula 1 race on a rail project in Mexico’s poor south and announced it would no longer subsidize the Grand Prix once the existing contract expired at the end of the year.

Without government funding the organizers OCESA a subsidiary of Corporación Interamericana de Entretenimiento (CIE) were faced with the prospect of withdrawing from F1.

Then the mayor of Mexico City Claudia Sheinbaum Pardo and a group of business owners forged a partnership. The Mexico City Government acting as an intermediary created a trust that raised the private investment required to stage the Grand Prix thus relieving the city government of the burden.

A new three-year deal was signed ensuring the future of the race until at least 2020 with the name of the race changed from the Mexico Grand Prix to the Mexico City Grand Prix.

Claudia Sheinbaum Pardo said: “The presence of Formula 1 in the city for further three more years, was achieved for the first time through a new financing model, in which public resources are not used.”

So, for the race organizers this has turned about to be fortuitous given the devastating effect the Covid-19 crisis is having on Mexico’s economy. Irrespective of who is in Government they may well have decided to stop funding the race given the harsh new economic realities.

So, in this new world are hosting fees paid by private sources the way forward?

Well I am not so sure as no one has explained how the new investors make any return on their investment or are they paying the hosting fee as an act of altruism!

The good news is Mexico with its racing heritage and magnificent Foro Sol grandstands stays on the calendar, well for the time being.

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