The reason for Bernie Ecclestone's hard-nosed approach to negotations with existing and prospective grand prix hosts became abundantly clear when proposals for the possible flotation of F1 revealed that race contracts provide the foundations of the sport's revenue.
The launch of the IPO prospectus and presentation to business analysts at London's Savoy Hotel revealed that, among the $7.1bn of revenue already guaranteed to the F1 Group, comes $4.7bn purely from the fees required to host a race. The figure is boosted by the number of long-term contracts already in place, with Ecclestone usually insisting on a minimum seven-year term, and when, occasionally, the deals do not work out - think Turkey and, potentially, Korea among recent disappointments - there are usually willing replacements set to step up and fill the breach.
America, with two races, Russia and Mexico have either been added to, or remain possibilities for, the F1 schedule in coming years, while the likes of India, Abu Dhabi and Valencia have all appeared over the past few seasons. Meanwhile, F1's industry monitor, Formula Money
, has revealed that the British Grand Prix, which is at the start of a rare 17-year deal - expects to generate an estimated $452m for the F1 Group by the time it is due for renewal in 2026.
The race fees particularly stand out when compared to the much-vaunted television contracts, which the report confirms 'only' account for $1.4bn, although this figure has a lot to do with European Commission regulations limiting the sport to five-year contracts with media companies.
With the next 15 years expected to generate an average of $473.3m in revenue, the analysts were buoyed by F1's business model, as well as the visibility the sport enjoys on a global scale, which will come as a boost for Ecclestone's plans to float a part of the sport for around $10bn. Any flotation has already been mooted for either Hong Kong or Singapore, possibly before the end of the year.
Goldman Sachs, Morgan Stanley and UBS have emerged as the lead bookrunners for the IPO, which will need to be approved by F1 holding company Delta Topco once the prospectus is 'lodged'. Current rights holder CVC will remain the sport's majority owner, although it is expected that as much as 30 per cent could be offered in the flotation. Much of that is understood to be provided by holding currently assigned to bankrup financial institution Lehman Brothers, which owns 15.3pc of Delta Topco.
Of course, hand-in-hand with profits come costs, and F1 is not immune to having to spend money as well as make it. The prospectus reveals that prize money is on the increase, currently taking up to 50 per cent of the F1 group's earnings. On top of that come 'extraordinary' fees payable to certain teams, most notably Ferrari, although others are expected to benefit once the new Concorde Agreement is finalised for 2013.
On top of that, rising interest on debt at the Royal Bank of Scotland and Lehman Brothers, which CVC used to acquire F1 in 2006, means that payments on $2bn of outstanding loans approached $60m in 2010. With payment due by 2014, CVC recently secured a new $2.3bn loan, due by 2018, to refinance the previous debt and make a one-off cash payment of $1.1bn to Delta Topco, which may be paid as a dividend.
Nestle chairman Peter Brabeck-Letmathe has apparently been lined up to oversee F1 should the planned flotation go ahead. The Austrian already sits on the Delta Topco board, although 81-year old Ecclestone is again expected to stay on in his commercial role.