Eric Schwartzman | New Media and Social Media Communications

NEW YORK (AdAge.com) — In an unprecedented move, Michelin Tire Co. has decided to offer fans who attended the June 19 Formula One U.S. Grand Prix race in Indianapolis a full refund, the company said.

Photo: AP

On the day of the race, Michelin discovered a design flaw in its tires and deemed them unsafe for drivers to use. Related Story: NEW COMPANY TO PROMOTE FORMULA 1 RACING IN U.S. Exclusive, Domestic TV Rights Acquired; CBS Broadcast Deal Cut

At an average ticket price of $100, the gesture will cost the Paris-based tire company $12 million — plus another $5 million that Michelin has pledged to buy tickets to the 2006 U.S. Grand Prix.

Public relations disaster
The move follows a public relations disaster for both Formula One and the tire company on the day of the race when Michelin discovered a design flaw in its tires and deemed them unsafe. It asked the sports governing body to allow a change in the rules which prohibit teams from changing tires after qualifying, and also asked the Indianapolis Motor Speedway to install a chicane, or curve, that would slow speeds and make the track safer. Both requests were denied, and Michelin advised its teams not to compete.