Over a billion pesos of the Mexican treasury, the portfolio of the sport fans, the multi-sectorial commerce and the cheap refurbishment of the circuit gave sevenfold profits if CIE with the return of the Formula 1 in Mexico.
Mauricio Romero, @mauricio_contra
For Corporación Interamericana de Entretenimiento (CIE), this is an all-round business: for the organizer of the Mexican Grand Prix of Formula 1 (F1), the gross utilities increased by 768.8 per cent, the consolidated income during the period of the racetracks grow by 93.4 per cent compared with the last trimester of last year, the sales grew by 40 per cent and the operational influx doubled.
Over 1 billion pesos of public funds plus the savings of the fans fueled the company in order to multiply sevenfold the benefit during 2015.
2015, the golden year of CIE
“México vuelve a estar de F1esta” (sic, roughly translated as “Mexico is back in the party”, with the intentional misspelling), assured the promotional of the Mexican Grand Prix of 2016. Referring to the Mercedes Team (current twice-champion in the category), tricolor confetti descending on the silver vehicle that celebrates making circles in the middle of the area of the Hermanos Rodriguez Racetrack.
The name of the country-brand is exhibited as the winner. Euphorically with the flags waving in the background, Mexico is celebrating. The excitement fills both the pilots and the public. The framework is concluded with the invitation to get indebted for 6 months, “interest-free”, to be part of the “party”.
The advertisement does not mention that whatever shall happened CIE already won; it does not point out that before the sale of tickets for the race started on the 30th of October 2016, and even before having run the 2015 edition, they were celebrating already: 85 billion 164 million dollars of the public treasury had oiled the machinery to ensure that F1 would be a success for the company.
And so it was. Its own report submitted to the Mexican Stock Exchange says so:
The gross income in this year were 8 billion 893 million 780 thousand pesos; 2 billion 532.9 million, roughly 40 per cent more than in 2014. In the last trimester of 2015 it rose by 93 per cent in comparison to the same period of the last year.
The gross utilities grew sevenfold: the 102.7 million of 2014 turned to 718.3 million pesos, of which more than half of it (416.8 million) was made it to this account in the same racing trimester.
Its total assets went from 7 billion 923.7 million pesos to 10 billion 82 million pesos, and its equity accounts close the year at 3 billion 754 million pesos.
On the other side the Consultancy 414 entitled its independent report on the 29th of February 2016 as the “Results 4T15 [Fourth trimester 2015]: The Grand Prix of CIE” (before, in the period after the signature of the contract between the federal government and CIE, the analysts had marked the communiqué as “Results 3T14: positive results heat the motors up”).
The study underlines the importance that had the commercialization of the race for the firm led by Alejandro Soberón: “CIE Commercial had an income of 1 billion 862 million pesos”, 250 per cent above the number reported the year before. “This growth is essentially due to the Mexican Grand Prix of Formula 1”, he sentences.
Public funds, the motor of CIE
In the midst of the World Cup in Brazil, precisely the day in which the Mexican team won over the Croats by 3 to 1 at Recife, CIE and the federal government, represented by Claudia Ruiz Massieu celebrated a contract by which the transnational assured, at least, 213 million dollars of the public treasury for the organization of the grand prix of F1 until 2019.
The big event had not even packed for Mexico for the race of the return, as the accounts of CIE had already been recharged with 85 million 164 through the Council for the Touristic Promotion of Mexico (response to the information request 2135500013915 presented by Contralínea in September 2015).
The contract 36/2014 this had been settled: all payments would be in advance. Moreover the more the Mexican currency would be devaluated the more the transnational would receive, as the amount are adjusted to the “exchange rate published in the Official Gazette of the Federation at the corresponding date of payment”.
Thus according to the agreement –of which Contralinea possesses a copy-, on top of the equivalent to 85.2 million dollars for the championship of 2015 and 2016, the CPTM committed to delivering 40 million 987 thousand pesos for the 2017 event; 43 million 564 thousand for the last race under the administration of Enrique Peña, in 2018, the amount that the Council will repeat in 2019.
In total the federal government promised 213.3 million dollars. However to this quantity could be added another power unit in favor of the racing team CIE: the CPTM could “agree the increase of the amount of the contract” up to 20 per cent; i.e., 42 million dollars more.
Attached to the payments, the body of the Secretariat of Tourism has to deliver annually “credit cards”, endorsed by a bank within the United Kingdom-homeland of Bernard Ecclestone, owner of the rights of F1-, to ensure the financing of the events. These warranties are of 30 million dollars for the big events of 2015, 2016 and 2017, while for the ones of 2018 and 2019 will be of 32 million.
If this was not enough, under contract the same Council “is compelled also to include within its financial planning for the fiscal years of 2014 the necessary funds to make way for every single one of its commitments”, as well as “to take every action necessary to rely on the financial means required to ensure the fulfillment of the aforementioned obligations, and to keep them valid, available and in sufficient quantity to meet with the latter obligations” a credit line in the National Bank of Foreign Trade (Bancomext, one of the entities of the Bank of Development of the Mexican State), of which Enrique de la Madrid was Director-General in the moment of signing the agreement that he takes care of as Secretary of Tourism.
The payment confirmed by the own government of Mexico, Bernie Ecclestone seals the deal with CIE
The first week of F1 happened. The racetrack was full. The race was transmitted by Televisa, for whom the advertising on open television was made exclusive.
Standing by flags and wrapped by a dozen of big national, middle and small racing teams with the legend “Mexico Government of the Republic”, Alejandro Soberón, executive president and director-general of CCIE; Enrique de la Madrid, secretary of Tourism, and Eduardo Sánchez, spokesman of the presidency, celebrated the public-private alliance as he presented the economic results of the Formula 1 that has returned to the country.
Over 336 thousand entries were sold and collected by the same company, whose prices ranged between 2 thousand 500 and 18 thousand pesos; 321 thousand pesos for the hotel sector; 295 million in various expenses of the visitors; “Formula 1 Mexican Grand Prix 2015 contributed to the economy of the country with 3 billion 944 million pesos”, assured the advertisers, “that summed up to the 4 billion 705 million pesos, value of the global media exposition gives as a result 8 billion 649 million pesos”.
The participants praised the private triumphs, presenting them as a synonym of social wellbeing. The investment of 575 million 406 thousand 425 pesos for the “promotion service of Mexico” –as the contract specifies- was more than settled, it became a bargain, as the “the brand Mexico was exhibited at the track became the second one of major presence in television in all the championship, which represents for our country a total of 767 million pesos in media exposition”.
The event that took place at the Navy Casino of the National Navy was to show the data provided by the contracted companies by CIE with that purpose, not to report the gains of the company led by Soberón Kuri.
On the racetrack, the Mexican Grand Prix was won by Nico Rosberg; but outside of it, in the accounts, besides of its television associate, the winner was CIE, thanks to the fuel that the federal government gave, with the tank full of public funds.
“Today we are pleased to verify that these accomplishments come along with results that really benefit our country, not only in the image, but also economically”, said in a solemn, bureaucratic tone Alejandro Soberón, and concluded:
“The challenge for the next 4 years is important, but we are currently working arduously to continue bringing positive results for Mexico.”
For the realization of this work the version of CIE was solicited, through Ulises Albores, director of the Consultancy in Public Relations P&L Profesionales en Logística y Servicios, a company in charge of the relations of CIE with the media outlets. Up to the closing of edition there was no positive response.
Also Rodolfo José López Negrete Coppel, director-general of CPTM was requested an interview, through the Communication Manager Jocelyn Soria Meza. Nevertheless, there still has been no response.
Mauricio Romero, @mauricio_contra
(Translated by: Axel Plasa)
Contralínea 481 / del 28 de Marzo al 02 de Abril, 2016