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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anon
Guest
We have reached "peak F1" with CVC and Bernie getting out of the sport at the right time. F1 has been in a 'bubble' for the last 20 years with venue after venue and government after government prepared to outbid other venues for the privilege of holding a race no matter the cost. That's how you get to the ridiculous situation where Malaysia is paying nearly $100 million Australian dollars to hold a race in front of 40k people. The Malaysian government must get hosed on that deal considering tickets at Sepang are substantially cheaper than anywhere else in the world. You can get a grandstand ticket if you book in advance for about $100 over three days. Quiet engines, Mercedes snoozefests, drivers that manage tyres not drive on the limit, declining viewing numbers, young demographic not watching, boring personalities (Hamilton isn't interesting he's insufferable) -- yet hosting fees have continued to rise 10% every year. If anything they should have been falling 10% over the last few years. It's a nightmare scenario for Liberty Media to have two circuits look like turning their back on F1. It's unprecedented. Circuits usually beg to have F1 stay. Other governments will look at this and realise they are in a good bargaining position all of a sudden. Hosting fees are going to fall back to earth.
Michael Lamonato
Expert
Yep, absolutely agree. Hosting fees are inflated at the moment, and the fact that the private races, which are pretty much all the European races, are struggling will have to bring the sport back to earth. I know they like to say F1 can survive without this classic race or that classic race, but if they all start falling off, it will definitely start to matter.
woodart
Guest
think you and F1 are grasping at straws if you think that singapore and malaysia will continue with F1. the numbers just dont add up. its just not worth the money and russia and azzerbijan will probably not have a long relationship with F1. as you point out the E formula has done the deal with new york(and london, paris etc) easily and relatively cheaply. the fact that manufacturers are getting on board with the electric formula should be a pointer to the future. if F1 wants to stay relevant and popular, they will have to cut there asking price dramatically.
Michael Lamonato
Expert
It's a difficult balancing act, I suppose. Asia has a huge population that could also be cultivated to support F1. Pay TV and some other television deals, particularly in China, has a lot to do with audience decline in the region, unsurprisingly. But America has suffered for a long time under haphazard scheduling and a lack of willingness on F1's part to give certain races time to grow. An opportunity to add one (or two) races in the USA could have pretty great long-term results.
Jamie
Guest
It appears that the Asian experiment did succeed initially however the failures of Korea and India seem to indicate that outside of China and Japan, the popularity of F1 is decreasing to the point where it is no longer viable to run a race weekend. The exorbitant fees that Mr E charges are now outweighing the benefits that both Malaysia and SIngapore had in their initial runs. It would be sad to see both these go but if both go then that opens up the possibility of Liberty Media bringing F1 to the American market as they want more races in Western countries.
Michael Lamonato
Expert
I wouldn't be so sure. Singapore's contract expires before Malaysia's, so Sepang organisers would know one way or another before they signed their own extension, and considering their last contract, in 2015, was announced after what was to be their last race, it seems unlikely they'd be forced to make a decision so early anyway.
Rodney Gordon
Expert
Singapore is a great race, I feel though Bernie's comments were more a desperate attempt to convince Malaysia to hang in there. With the announcement that Malaysia is planning to pull out after 2018 I'd bet we see Singapore continuing after their current agreement ends.