In The Pitlane: Mexican Standoff

Could the Mexican Grand Prix become a permanent casualty due to the COVID-19 pandemic?

The Formula 1 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 to 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 $5.2-billion.

Worryingly for F1 — who convince governments around the world that financing a F1 race brings tourism benefits — Obrador also closed the tourist board.

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”.

Last year he used $21m in federal funds usually set aside for the Formula 1 race on a rail project in Mexico’s poor south instead, raising the alarm bells even more.

Now with COVID-19, the situation becomes grim as Mexico is the eleventh-largest producer of oil and in the world and oil revenues still generate over 10% of Mexico’s export earnings and 30% of domestic revenues.

Demand for oil and its products has crashed by as much as 30% as governments around the world introduce lockdowns. The result is the world remains awash with oil supplies, but prices have fallen to historic lows wreaking havoc on Mexico’s finances.

Even though the race organizers argue that the Grand Prix returns double the amount that the government invests this will undoubtedly fall on deaf ears.

So, there is a high probability the Mexican government will stop funding the race leaving the organizers OCESA a subsidiary of Corporación Interamericana de Entretenimiento (CIE) with serious problems.

Is there a solution?

Well, hopefully the richest person in Latin America and the fifth richest person in the world will step up to the plate. Carlos Slim Helu, worth $70 billion and his son are well known in the paddock as sponsors to Sergio Perez.

Could he decide to save the day?

Well, Slim owns 40% of all listings on the Mexican Stock exchange which equates to 6% of Mexico’s gross domestic product so it is in his interests to stimulate the Mexican economy, especially tourism, also there is national pride to consider.

Hopefully, Mexico will remain on the calendar from 2022 onwards with its rich racing heritage and magnificent Foro Sol grandstands.

Yes, before you ask Slim owns the obligatory F1 billionaires’ superyacht, the 170 ft, 40 million dollar Ostar.

 


Note: Garry Sloan is the author of “In the pit lane – F1 exposed” details at inthepitlane.com
Copyright ©2020 Garry Sloan

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