A purpose-built super-circuit will run through the so-called coastal cluster of the Olympic park. It will use some of the existing infrastructure and a new track will be built around some of the venues. The first races are scheduled for the end of 2014 – when the Olympics will be over, giving organizers a chance to arrange accommodation and sort out the logistics.

Building a circuit in Russia should be a real crowd pleaser, especially with some home grown talent like Vitaly Petrov taking part, says Eddie Irvine, a former Formula One driver.

“It will be great for Formula One to be there and great for Russia to have Formula One in a place like Sochi. And now with Petrov in the race, I think it will be a nice synergy,” he told RT.

The local administration and sponsors are planning to spend somewhere between one and two hundred million dollars on the circuit and pay another $40 million annually to use the F1 brand. But with hundreds of thousands of Formula One fans in the country, as Russians say, ‘the game is surely worth the candle’.

The project will only bring benefits and not just in terms of image, insisted Dmitry Peskov, the Prime Minister’s Press Attaché. “People will spend money and small and medium-sized businesses will be paying taxes,” he said.

Last year Sochi hosted an F1 demo competition on its central streets, drawing thousands of spectators from all over the region.

The signing of the deal follows a series of F1 promotional events in the Russian capital over the last few years and the emergence of Renault’s Vitaly Petrov as the first Russian driver in Formula One.