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Formula E preparing legal action as Montreal cancels race deal

Formula E preparing legal action as Montreal cancels race deal

By: SportBusiness International team

Posted:
19 Dec 2017
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Formula E is planning legal action after Montreal elected to terminate its deal to host the season-ending event of the electric car-racing series, with Mayor Valérie Plante declaring the contract represented a “financial fiasco”.

The Canadian city still has two years remaining on its three-year contract, but Plante made the announcement yesterday (Monday) after stating her administration had learned taxpayers would be liable for up to C$35m (€23.3m/$27.6m) for the second edition of the event, which was due to take place on July 28-29, 2018.

Plante succeeded Denis Coderre as mayor last month and placed blame for the current situation firmly at the door of the previous administration. “Montrealers have made it clear that we can't waste their money on poorly planned projects that don't serve them,” Plante said, according to Canadian broadcaster CBC. She added: “It was clear as of last May that the organisation was headed straight for a financial fiasco.”

Montréal c’est électrique, the non-profit organisation which operates the race, is said to owe creditors C$6.2m for unpaid bills and is C$9.5m into its line of credit. Meanwhile, the City of Montreal is liable for C$24m over six years.

Plante yesterday said that the city had three options for the Formula E – take it to Circuit Gilles-Villeneuve, which hosts the annual Formula One race; create a new racetrack elsewhere, or postpone the event for a year. Plante said the latter option was settled on, but was rejected by Formula E.

Plante added that the potential cost in damages sought by Formula E would be far outweighed by the financial outlay if it continued with the current deal. Simon Pillarella, general manager of Montréal c’est électrique, told the Montreal Gazette newspaper when asked about a termination fee: “It’s several million dollars, as you can expect. We can say no more than that. Negotiations will take place in due time.

“I think we did a great event which was supported by the people who attended. But ultimately we were created to be the middleman between the city and different contractors who were in charge of delivering the event, one of them being Formula E.”

Montreal’s decision is the latest event blow suffered by Formula E. Earlier this month, the Uruguayan city of Punta del Este was added to the 2017-18 calendar, replacing a postponed event in São Paulo, Brazil.

Punta del Este formed part of the 2014-15 and 2015-16 seasons of the electric car-racing series and will return as a host city on March 17 next year – the date São Paulo had been due to host its maiden event. The inaugural Brazil ePrix was last month postponed for a year due to issues surrounding the ownership of the planned race venue, Anhembi Park.

Commenting on Montreal, a Formula E spokesperson told the Autosport website: “We are very surprised and disappointed by the unilateral decision and announcement of the Mayor of Montreal.

“This is a clear case of a new mayor undoing what the previous mayor did. Whilst there is a contract in place, we will not make further comments at this point as this is now in the hands of our Canadian legal counsel.”

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