Revenues of Formula One's corporate hospitality provider, Beta Holdings, crashed by 18 per cent last year as blue-chip sponsors cut their spending during the recession.
The news will take some of the shine off the champagne glasses as the cars line up on the grid for today's Turkish Grand Prix in Istanbul. Beta Holdings' accounts for the year ending 31 December 2009 show that turnover plummeted by $33.1m (£23m) to $150.3m. Duncan Llowarch, the company's chief financial officer, attributes the decline to "prevailing economic difficulties" and a reduction in the number of races on the F1 calendar, from 18 to 17.
One hospitality programme that reversed into the pits last year was that of Royal Bank of Scotland, which has strong links with F1, as it is a sponsor of the Williams F1 team and also provided the private equity group CVC with much of the $2.5bn of debt it used to buy a majority stake in Formula One in 2006. RBS was one of the biggest spenders in 2008, when it entertained 400 people at the Singapore Grand Prix, entertainment which included a cocktail party hosted by former F1 champion Sir Jackie Stewart.
Beta Holdings makes 98 per cent of its turnover from Allsport Management, the Swiss-based operator of F1's exclusive Paddock Club hospitality area, which was founded in the 1980s by Paddy McNally, a former boyfriend of the Duchess of York. Allsport was bought for $305m in 2006 by CVC.
Tickets for the Paddock Club cost as much as $4,520 for a three-day pass and guests are treated to perks such as a champagne bar, a manicurist, an on-site hairdresser, and driver appearances. Sponsors use the Paddock Club to entertain clients, but several Allsport customers slashed their hospitality budgets during the downturn.
Two former Allsport clients, ING and BMW, are also believed to have reduced their corporate hospitality spends before they quit F1 altogether during 2009.
However, despite the drop in turnover, operating profit was up by 73 per cent to $8.5m, as costs were reigned in by $36.7m, with a reduction in servicing costs, while the drop in turnover meant license fees to other companies in the F1 empire were also reduced.