Only two months ago that this column was describing the passion with which Formula One’s premier Asian race, the Singapore Grand Prix, is embraced by the sport and its fans alike. This week the race is rumoured to be on the brink of an abrupt exit.
Though Singapore’s near decade of Formula One racing has been much celebrated, its presence on the calendar has been perpetually delicate – its current deal was agreed on the eve of the expiry of the previous one, and even that came after protracted negotiations to talk Bernie Ecclestone down from his elevated hosting fee.
Citing total race costs at S$150 million, of which the government pays 60 per cent, Singapore’s Second Minister of Trade and Industry, S Iswaran, said favourable terms with Ecclestone was key to signing the 2012 five-year deal.
“We expect these benefits to be sustained and the costs to go down in the extended term as we optimise existing infrastructure, become more efficient in race organisation, and benefit from revised terms with the race promoter and Formula One Administration,” Singapore’s then Second Minister for Trade Industry told the Parliament in 2012.
With the 2017 expiry looming, Ecclestone, speaking to Germany’s Auto Motor und Sport, suggested Singapore was again assessing the value of its considerable annual payout.
“Look at what we have done for Singapore,” said CEO Ecclestone. “Yes, the grand prix has cost Singapore a lot of money. But it also gave them a lot of money.
“Singapore was suddenly more than just an airport to fly to or from somewhere. Now they believe that they have reached their goal and do not want a grand prix anymore.”
Asia, once seen as fertile new territory for Formula One, is faltering. Experiments in South Korea and India have failed, Malaysia is threatening to cut ties after 2018, and China is only now after more than a decade of expenditure seeing some local interest. Only the Japanese Grand Prix, a stalwart of the sport, remains a fortress.
Singapore, however, represents a unique example among all of its weary regional rivals – the Singapore Grand Prix, the so-called jewel in the crown, is the only race in the region that might be more valuable to Formula One than Formula One is valuable to it.
The economics of a grand prix are as simple as they are expensive. Wielding the power of 2015’s cumulative 400 million worldwide viewers, Ecclestone offers promoters a product that promises enormous international exposure at an equally enormous cost. For this reason new races are often underwritten by governments, which have ready access to the required funds and can write off the cost against massive branding exposure for their city or country.
Bahrain, Azerbaijan, and Russia are three high profile examples of nations using Formula One as such a branding tool, but all hosts do likewise to some extent – the Australian Grand Prix, for example, is one part of Victoria’s tourism-focussed major events strategy.
This model, however, leaves little room for races that bring Formula One value beyond cash alone.
With the exception of the Monaco Grand Prix, which slides with a nominal hosting fee contribution, no other race is given leeway – not the grand prix in Formula One birth country France, which has been absent since 2008; not the historic German Grand Prix, which is clinging to a problematic biennial contract; and not the British Grand Prix, which is kept afloat by Lewis Hamilton’s present success only.
Even the mooted American Grand Prix in New Jersey, which was to fulfil a long-term Formula One dream of racing against the New York City skyline, was subjected to ultimately fatal exorbitant hosting fees. Formula E, meanwhile, has done a deal for two races in Brooklyn next year with apparently little fuss.
A 21-race calendar – or more, according to incoming commercial rights holder Liberty Media – might be the dream, but is there any point if every race exists as a short-term cash injection?
Speaking to Today Online at this year’s Singapore Grand Prix, Second Minister for Trade and Industry, S Iswaran, suggested his city’s negotiation platform would be based on exactly this idea.
“My sense of it is there is a clear appreciation of the value that Singapore brings to F1, not just as a venue but in terms of the larger position of the sport and also as a business,” he said.
For its own sake we can only hope Formula One understands that value for money works both ways.
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