Let’s pretend, for a moment, that you created a widget or service and it cost you $300 to make or provide. You determine that you could make a really good widget or provide a really good service and a few other folks believed you so they invested money in your company to do just that.
Now in order to provide a return on investment (ROI), you decide that the price people should pay for your widget or service is $1,200. Sure, it’s a 75% margin but you think people will like it and a there is a history of people paying for it so off you go. Start the negotiating.
Over time you find that some markets stop paying or aren’t capable of paying that much for your widget or service. However, you discover that there are other markets you have not been to that are willing to pay $1,200 for your widget or service and you take your product or services there instead.
I give you Azerbaijan.
Today it was announced that Formula 1 boss Bernie Ecclestone may have agreed to a deal for a possible race there in 2015 or 2016. Ecclestone said:
“We’re going to Azerbaijan,” Ecclestone told the Daily Mail. “The people out there are talking about holding a race in 2015. That may be a bit soon – unless it’s at the end of the season; that’s a possibility. But 2016 is more likely.”
Sure, it isn’t the only new market for Formula 1 and working from my horrible analogy above, Korea, China, Malaysia, Singapore, Sochi Russia, Austin Texas, are all contributory to the new market, new opportunities scenario that Azerbaijan is apparently taking part in.
While many fans raise their arms in befuddlement, you have to remember that taking F1 to markets willing and capable of paying for the races either on their own merit or through government subsidies is and has been going on for some time now. Like India and South Korea, time will tell if Azerbaijan can continue to foot the bill for a F1 race. Also, like New Jersey, saying you’re doing it and actually cutting a check to Formula 1 are two different things.