SEOUL (AFP) - Organisers of the axed South Korean grand prix are facing breach-of-contract demands from Formula One's commercial operators that could run into tens of millions of dollars.
The organising committee, comprised of officials from the South Jeolla provincial government and others, failed to host the race in 2014 and backed out of the 2015 calendar, citing financial problems.
A senior committee official said Formula One Management (FOM) had sent a formal notification that failure to open a banking letter of credit needed to host the 2015 event had constituted a grave breach of contract.
"We plan to visit London for talks with the FOM," the official said.
According to media reports, the contractual penalty for not holding the 2015 event involves payment of twice the annual US$43 million (S$58 million) licence fee.
"We cannot reveal the amount of compensation demanded by FOM," the official said, while adding that it was only a "fraction" of the US$86 million maximum.
The first Korean Grand Prix was staged at the southern town of Yeongnam in 2010 under a deal that lasted until 2016 with a five-year renewal option.
But the annual event haemorrhaged money from the outset, with losses of around US$170 million from the four races that were held.
The official said the organising committee, which had signed the original contract, was almost "broke" - with no further financial support likely from the South Jeolla provincial government.