A race has taken place at the Baku City Circuit since 2016, the year after the city hosted the first European Games, although it missed out in 2020 due to the COVID-19 pandemic.

The existing contract was due to expire after this year's event before the recent deal signed between the sport and local organisers.

"The Baku City Circuit has become a hugely popular venue for Formula One," said President and chief executive of Formula One Stefano Domenicali.

"It is an incredible circuit which always delivers huge drama, and has played host to some of the most exciting races in recent memory.

"We are delighted to extend our relationship with the country of Azerbaijan and look forward to continuing our growth together."

Traditionally the Azerbaijan Grand Prix has been held in late April or early June but it is unclear where it will fit into future calendars.

The track, designed by Hermann Tilke, is just over six kilometres, features 20 corners and the longest straight in Formula One. 

The inaugural event, then known as the European Grand Prix, was won by German Nico Rosberg before Australia's Daniel Ricciardo, Lewis Hamilton of Britain, Finn Valtteri Bottas, Mexico's Sergio Pérez, and Dutchman Max Verstappen.

Yesterday, the Baku City Circuit staged the first of six sprint events this season and saw Pérez take the win before he aims to become the first two-time winner of the Grand Prix.

"We are thrilled to confirm our continued partnership with Formula One," said Azerbaijan's Sports Minister Farid Gayibov.

"Ever since we first hosted this event in 2016, the economic, social, and cultural impact of the sport on our city and country has been remarkable.

"The Formula One Azerbaijan Grand Prix is a source of great pride for the whole country and will now continue to inspire and excite our fans for a further three years.

"The past six races have been some of the best and most dramatic in the sport's long history and we look forward to creating more magical moments for F1 fans at home and abroad over the next three years – starting with this weekend.

"Moreover, today's agreement has come during a weekend which sees us hosting a record number of fans from over 100 countries, which only serves to make this moment even more special."

Gayibov makes no mistake when he mentions the economic impact that Formula One has had on Baku and Azerbaijan.

A study from Big Four accounting firm PricewaterhouseCoopers (PwC) has found that in the first four years of the event the capital city has experienced a financial boost of $506.3 million (£402.6 million/€459.2 million).

The figure is a combination of the direct and indirect results of operational spending on race weekends across sectors including accommodation, catering, and transport.

The event has also created more than 7,500 medium-term jobs to help its delivery.

A focus of the Baku City Circuit's hiring policy was to give young Azerbaijani's the chance to work on a major international event, thus providing them with valuable work experience.

Infrastructure requirements for the Grand Prix helped to boost the domestic construction industry and resulted in an economic impact of $181.4 million (£144.2 million/€164.5 million) in the sector.