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Will Melbourne backers get better deal from season-opener?

The cancellation - or postponement - of the Bahrain Grand Prix might have thrust Melbourne unexpectedly into the spotlight as the new F1 2011 curtain-raiser, but could there be headaches to follow Down Under..?
With the Australian Grand Prix inadvertently being promoted to the role of season-opener in the 2011 F1 campaign, the legal aspect of supporting the race could become clouded, according to experts.

The cancellation of the Bahrain Grand Prix due to the recent outbreak of civil unrest sweeping the Middle East has already raised questions over the wording of future event contracts [see story here], but the change of status for both that race and the Australian round could cause further headaches when it comes to negotiating with existing and potential sponsors, according to legal motorsport law firm Collyer Bristow.

“With the delay to the start of the season after the cancellation of the GP in Bahrain, all attention has now been turned to Melbourne – and its traditional place on the calendar as the opening race,” partner Charles Braithwaite acknowledges. “While the move up the billing will be good news for the [Australian] track – the opening race always tends to draw increased international media attention and greater attendance from spectators – it raises some interesting points on sponsorship.

“Will sponsors at the track be required, under their contracts, to pay more now that the race is the prestigious first on the calendar? This is where the wording of contracts is so important.”

While the Bahrain race fails to take place as scheduled in mid-March, and calls into question the clause surrounding force majeure, as claimed by the national motorsport authorities when cancelling the event, the change of roles for both of the first two grands prix on the original schedule could have more far-reaching implications.

“We'd expect many of the sponsors to have in their contracts with teams, clauses that entitle them to a reduction in their sponsorship fee – or a refund – if a race is cancelled,” Braithwaite continues. “But do their contracts also cover the possibility of a race being rescheduled?

“Who knows whether Bahrain will take place later in the year, but whether it does or not could have significant financial ramifications, especially for teams and circuits as they will likely have to compensate sponsors if it does not. And, even if it does get rescheduled, sponsors at the circuit will no doubt be looking at their contracts to see whether they can potentially opt out with a full refund or, if not – or if the sponsor wishes to continue with its sponsorship on the rescheduled date – whether they have a contractual right to pay less given the race would no longer have the cachet and media value of being the first race.”

With questions already surrounding the quandary of GP2 Series teams facing similar problems regarding potential driver and sponsor refunds, should the remaining double-headers scheduled for Bahrain not be run elsewhere, Braithwaite muses on the future of agreements between participants and those who fund them.

“It will be interesting to see the changes that are made to sponsorship contracts – circuit and team – following on from the cancellation of the Bahrain GP,” he concludes, “and it will be even more interesting if Bahrain makes it back onto the calendar at the end of the season...”

Thanks to our colleagues at Collyer Bristow. For more information, click on the following link: Motorsport Law

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stuart - Unregistered

March 06, 2011 10:41 AM

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