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F1 Grand Prix in Bulgaria

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US, Arab, Canadian Companies to Invest EUR 1 B in Bulgaria's Formula One Project

 

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Companies from Abu Dhabi, the USA, and Canada are to come together to form a consortium for investing in Bulgaria's circuit for Formula One and adjacent venues, Novinite.com (Sofia News Agency) learned.

 

In an exclusive interview for Novinite.com (Sofia News Agency), Bogdan Nikolov, Chairman of the Bulgarian Motorcycling Federation, revealed that the Abu Dhabi company EABG, which first expressed interest in investing in Bulgaria's F1 project in August 2010, will be forming a consortium of Arab, American and Canadian companies for investing in Bulgaria's future Formula One track.

 

Anwar Badwan, an adviser to EABG, who is organizing the consortium, confirmed for Novinite.com (Sofia News Agency) over the phone the information that US and Canadian companies will be participating in it.

 

The expected investment of the consortium in the Bulgarian Formula One track project could surpass EUR 1 B, including not just the circuit but an entire new town north of Sofia with 7000 luxury villa and a number of entertainment and shopping venues.

 

The representatives of the Abu Dhabi companies are said to have spent 20 days in the US negotiating for partnership with American and Canadian firms.

 

The head of the BMF, Bogdan Nikolov, who has been a major figure in initiating the project on Bulgaria's part, and has been involved in talks with FIA for a Bulgarian Formula One Grand Prix, told Novinite.com (Sofia News Agency) that the international consortium, and the Bulgarian government have to finalize their agreement, and then to sign a contract for hosting a Formula One Grand Prix with Bernard Ecclestone, the President and CEO of Formula One management and administration.

 

"Everything is almost ready. We have the project for the racetrack. There are four contracts to be signed – for TV rights, for commercial rights, for advertising, and the main one – for hosting the race. Those have been drafted. The contract for hosting is right here, sent to us by Mr. Ecclestone, we only need to write the name of the other party. So everything depends on whether we will make it. We still have time but it is not much," Nikolov said.

 

He pointed out that according to the talks the Bulgarian government will not contribute any funds but only non-cash assets to the future joint-stock company, namely, the 320-hectare plot of the former military air field at Dobroslavtsi near Sofia. It will also most likely provide a 10-year gratis period of tax exemption for the investors.

 

Nikolov revealed that the potential Bulgarian Formula One track, designed by Belgian specialists, will be absolutely unique in that it will be the only one in the world with heating of the asphalt covering, which should make it very attractive for tire producers to test their tires in various temperatures.

 

If the talks for the forming of the international consortium and the role of the Bulgarian government work out, FIA head Bernard Ecclestone should be expected in Sofia to sign the contract for the Bulgarian Grand Prix as of 2012 between November 15 and December 15, Nikolov said. Bulgaria is also expected to host a Moto GP race on the same track in 2012.

 

"The circuits for Moto GP and Formula One are basically the same with small differences in the safety zones. The safety zones for Moto GP tracks are larger and longer. We have created a project that meets the requirements of both FIA (Fédération Internationale de l'Automobile) and FIM (International Motorcycling Federation) for a circuit for Formula One and Moto GP. If 365 days in the year, the track must be in use 220 days in order to be a profitable investment. The climate in Sofia allows that," the BMF Chair said.

 

He also disclosed that the future Bulgarian Formula One track will be built to fit 100 000 spectators.

 

In August 2010, representatives of the Abu Dhabi consortium EABG (Emirates Associated Business Group), visited Sofia and expressed interest in investing in the project, meeting with the Bulgarian Prime Minister Boyko Borisov and Economy Minister Traicho Traikov.

 

Subsequently, however, the situation unraveled into a scandal as mainstream Bulgarian media confused the title of EABG chair Mohammed Abdul Jalil al Blouki, and EABG official Anwar Badwan received death threats from two Bulgarians living in Chicago, who were exposed, but according to the Interior Minister, were making a joke.

 

Despite the scandal, in September, Badwan made it clear that the Abu Dhabi consortium is still interested in investing into a Formula One track in Bulgaria.

 

According to Nikolov, the entire scandal was invested by "competitive" interests that wanted to hurt Bulgarian Prime Minister Boyko Borisov. However, he refused to comment in detail on who might have engineered the scandal.

 

"If there is Formula One Grand Prix in Sofia, there won't be races on Istanbul Park and Hungaroring. We will be the only Grand Prix in Eastern Europe," Nikolov said.

 

 

BMF Head Bodgan Nikolov: Bulgaria May End Up Hosting the Only Formula One Grand Prix in Eastern Europe

 

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Exclusive interview of Novinite.com (Sofia News Agency) with Bogdan Nikolov, Chairman of the Bulgarian Motorcycling Federation, on the project for the construction of a Formula One circuit in Bulgaria, near Sofia, and for hosting a Bulgarian Formula One Grand Prix.

 

Nikolov has been a major figure in initiating the project on Bulgaria's part, and has been involved in talks with FIA for a Bulgarian Formula One Grand Prix. In August 2010, representatives of the Abu Dhabi consortium EABG (Emirates Associated Business Group), visited Sofia and expressed interest in investing in the project, meeting with the Bulgarian Prime Minister Boyko Borisov and Economy Minister Traicho Traikov.

 

Subsequently, however, the situation unraveled into a scandal as mainstream Bulgarian media confused the title of EABG chair Mohammed Abdul Jalil al Blouki, and EABG official Anwar Badwan received death threats from two Bulgarians living in Chicago, who were exposed, but according to the Interior Minister, were making a joke.

 

Despite the scandal, in September, Badwan made it clear that the Abu Dhabi consortium is still interested in investing into a Formula One track in Bulgaria.

 

 

Where did the idea for hosting a Bulgarian Formula One Grand Prix come from? What have you made on it so far?

 

We have been working on this project for more than 2 years because we signed a preliminary contract with FIM for a Moto GP race in Bulgaria starting in 2012.

 

The circuits for Moto GP and Formula One are basically the same with small differences in the safety zones. The safety zones for Moto GP tracks are larger and longer.

 

That is why when you build a MotoGP track, it works for Formula One races but when you build a track specially for Formula One it cannot be used for Moto GP races because of the safety zones. But it could be modified.

 

We have created a project that meets the requirements of both FIA (Fédération Internationale de l'Automobile) and FIM (International Motorcycling Federation) for a circuit for Formula One and Moto GP.

 

This is natural because every investor is interested in the return on investments, i.e. in the usability of the track so that it could be used more often and the profits could be bigger.

 

That is why a circuit must be fit to host Formula One, Moto GP, Superbike, Supersport, FIA GT2, and whatever other race you can think of.

 

Of 365 days in the year, the track must be in use 220 days in order to be a profitable investment. The climate in Sofia allows that. Some of the tracks in warmer climates are exceptions.

 

Is that the unique thing about the future Bulgarian Formula One track – the design allowing for different races?

 

The great thing about our project for hosting Formula One races is that we will have a kind of a monopoly since the Bulgarian Formula One circuit will be the first in the world with heating of the asphalt layer, sort-of like central heating of the asphalt covering.

 

This means that all companies producing tires will be eager to use our track in order to test their tires. On our track they will not be dependent on the atmospheric conditions to test their tires at various temperatures.

 

This is the great advantage of our project - because everybody who is building something new must aim at making it unique, and different from the others – so that we can attract tests and trainings. This is how the project for the circuit started.

 

Our first meeting with FIA for the project was in Monaco with the help of Mr. Giuseppe Longo, President of Youthstream, who holds the rights for Motocross and Supermoto, during an award ceremony with Prince Albert.

 

After that this idea turned into a project, we had Belgian experts develop it for us. To sum it up, we are moving a bit too slowly in time. Because there can be only 9 Formula One Grands Prix in Europe, and whoever manages to sign first a contract with FIA, will get to host a race.

 

Our draft contract to be signed is for 5 + 5 years, i.e. for 10 years. I think that Russian Prime Minister Putin signed the same kind of contract for the Russian track in Sochi but starting in 2014. Ours is for 2012.

 

So now we have until December 15, 2010, as deadline from Mr. Bernard Ecclestone, President and CEO of Formula One management and administration, to have all contracts signed. He is still expecting the Bulgarian side to tell him a date on which to come to Sofia to sign the contract.

 

As far as the investment is concerned, in preparation for the investment in the Formula One circuit near Sofia, a consortium of Arab, US, and Canadian companies is being built by those who are interested in investing.

 

Then, we have the Bulgarian state which is not providing funds for the project but is to provide the land – a plot of 320 hectares of the former military airport at Dobroslavtsi.

 

The only thing left now is for the consortium – I think its representative or representatives will arrive to Bulgaria in the coming weeks – to strike a deal with the Bulgarian government for the registration of a joint-stock company.

 

This is the idea of the Bulgarian government as a whole – not to make any spending for the project. But it will provide the land, and a gratis period for the investors, most likely 10 years, because this will be a large investment.

 

What is the expected investment by the consortium?

 

About EUR 1 B. Mr. Anwar Badwan, the representative of EABG, who is working on building the consortium, said it could even surpass EUR 1 B.

 

The track itself is the smallest thing here. It will cost about EUR 50 M. The building of the circuit in Qatar, for example, cost EUR 47 M.

 

But the idea of the consortium is to build an entire city, with 7000 VIP villas, an entire VIP quarter, plus all kinds of other entertainment venues. You can see something like that in Istanbul, close to Istanbul Park. Of course, for the time being, these are still just plans that are yet to materialize.

 

What about the consortium - who will take part in it?

 

The consortium will include American, Canadian and Arab companies. I cannot comment on which ones they are. They will announce them when they come over. The Arab representatives spent about 20 days in the USA in negotiations. They will soon be here to meet with the government in order to hammer out the details for the agreement – about a gratis period on the investment, etc. This is what the Prime Minister promised as well. After that, the state will start getting money from the taxes.

 

So at the present moment, how likely would you say it is that Bulgaria will have a Formula One circuit and will host a Grand Prix race?

 

Everything is almost ready. We have the project for the racetrack. There are four contracts to be signed – for TV rights, for commercial rights, for advertising, and the main one – for hosting the race. Those have been drafted.

 

The contract for hosting is right here, sent by Ecclestone, we only need to write the name of the other party. So everything depends on whether we will make it. We still have time but it is not much.

 

What would say about the entire scandal in August with the threats against Mr. Badwan, etc? How did it affect the project? Did it delay it?

 

I think it did indeed delay the project, and repulsed the people. Because it was not clear what Bulgaria wants – I even asked the journalists what Bulgaria really wanted. It seem as though we wanted these people not to invest their money here. They come here with their money and get scandals. After that I got bombarded with questions about what is going on!

 

Where do you think this whole scandal came from?

 

I think there are other competitive interests involved in it but that is not for me to say. I think these were Bulgarian interests directed against the Prime Minister, and with a competitive project but that is really not my business to comment on.

 

With respect to the location of the track – why was Sofia selected? There were ideas for building the circuit near Varna or Pleven in the north?

 

The location of the track was originally supposed to be near Varna, after the Asparuhovo quarter. But the new government decided it is better to build it in Sofia.

 

Why?

 

As the Chief Sofia Architect Petar Dikov said, there is nothing better than this that can happen to Sofia. The Formula One circuit will change the economy of Sofia and the entire country, the infrastructure.

 

Second, the spot near Varna was very complex to build on. Ecclestone's experts visited both locations, geodesy specialists inspected them. The spot near Varna demanded great modifications – at some spots it has a decline of 70 m, and an incline of 50 m - while with the spot in Sofia the main runway is in place from the military air field.

 

They told me the asphalt covering is in a great condition. There is electricity, gas supply, the Sofia beltway is just 2 km away. And it suits the capital city.

 

In Pleven, the spot was good but we could not meet some of the other requirements – to have at least 10 000 beds in four and five star hotels, and to have 2.5 million people living within 250 km.

 

We had a project for Pleven as well, but we had to be realistic. Of course, the investors would build new hotels etc, but the idea is that these should be in operation the entire year.

 

There has been economic woes for the Turkish Grand Prix in Istanbul. Do you think the Formula One Grand Prix in Bulgaria will be profitable?

 

If there is Formula One Grand Prix in Sofia, there won't be races on Istanbul Park and Hungaroring. We will be the only Grand Prix in Eastern Europe.

 

Why? Why would the others drop off? How will the Bulgarian circuit be better?

 

Keep in mind that there can be no more than nine grands prix. There is a secret here. Many people ask me, "How come Ecclestone is going to give you a contract, and you can talk to him?"

 

It does not matter how. What matters is that it is happening. I can only say that the very first time we had talks with FIA, they told us, "We know what you are capable of. You became number one in Motocross, in Supermoto, etc. You've demonstrated it over the years. And what you will do now will be the best."

 

When I told them about the idea for the heating of the asphalt of the racetrack, they said that will be a hit since nobody else has it. What matters is to come up with great ideas on time.

 

It also matters that these people know who we are and what we can in the field of motor sports. We've had the track in Sevlievo for 5 years, it became a top track. The track near Dolna Mitropoliya as well. There is no way this can go unnoticed.

 

Prince Albert himself was wondering during a cocktail in Monaco how come a country like Bulgaria became number one in motor sports.

 

On December 11, we will welcome the entire leadership of FIM, the International Motorcycling Federation, for the official closing of the year. We have top Bulgarian racers in all motorcycling categories for the European cup – from junior to the cup of nations. There is no way they can't respect us for that.

 

Now it all boils down to this – everything depends on the international consortium and its agreement with the Bulgarian government to register a joint stock company. And to send a letter to Mr. Ecclestone to come and sign the contract.

 

We have a letter from him saying that he can come to Bulgaria after the final round of Formula One, the Grand Prix of Abu Dhabi on November 14. This means that we have from November 15 till December 15 to invite him here, to sign the contract, and to get down to work – because after that we will have a lot of work.

 

When would be the first Formula One race for Bulgaria's Grand Prix if everything works out?

 

In 2012. The same goes for Moto GP. We have an year and a half. The circuit is only 5 km long, it is not so complicated to built. The other investments that the foreign companies want to make are a different story but that is their business.

 

But this is a really big deal. This means that Bulgarian companies will be involved as well. Only the direct taxes will be quite large. If we take Singapore's circuit, they got an income of USD 109 M for three days from 40 000 spectators. The Bulgarian track will be for 100 000. We will have enough spectators from the neighboring countries.

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