Last lap for Singapore F1 Grand Prix?

SINGAPORE - The possibility of Singapore dropping the Formula One night race from its annual calendar has been raised amidst ongoing negotiations to extend the race’s tenure when its five-year deal expires in 2017.

Chief executive of the Formula One Group Bernie Ecclestone raised the prospect in an interview with German magazine Auto Motor Und Sport published on 20 November.

Ecclestone said that the F1 Singapore Grand Prix may not continue beyond 2017, claiming that Singapore is not going to extend the deal.

The sport’s head honcho did not mince his words, stating:

Look at what we have done for Singapore … Yes, the Grand Prix has cost Singapore a lot of money, but we’ve also given them a lot of money. Singapore was suddenly more than just an airport to fly to or from somewhere. Now they believe they have reached their goal and they do not want a Grand Prix anymore.

Speculation over the end of the night race in the Lion City has been rife since the numbers from this year’s edition of the race were released.

Race promoter Singapore GP (SGP) revealed in September that the daily attendance this year was pegged at 73,000, with the three-day total at 219,000 people. The overall ticket take-up was 15 percent lower than the average attendance since 2008.

In comparison, post-global financial crisis in 2009, the event saw crowds of just under 80,000, with close to 240,000 tickets sold for the three-day event.

In a 2013 report, the cost of organising each Formula One race was estimated to be about S$150 million (US$105 million).

Speaking to Campaign Asia-Pacific, Zayn Khan, Southeast Asia CEO at Dragon Rouge, noted that the Singapore government's reservations about committing to another F1 contract period were understandable.

"Amidst uncertain economic times, especially with declining attendance numbers and increasing costs associated with hosting this international event, the immediate ROI argument is questionable,” he said.

Disruption and perception

However, F1’s impact on Singapore is undeniable, with Dan Parr, director of Fast Track Asia, a part of CSM Sport & Entertainment, pointing out that it is one of the flagship F1 events and has become far more than a car race. 

“Singapore has set the standard to which all other cities now strive to reach," he said. "There are more people that travel to the Singapore Grand Prix for the music than for the car racing so it’s much bigger than just the F1."

Parr added that while there is no doubt that it is expensive and disruptive, it has also fundamentally changed perceptions of Singapore and arguably driven the Lion City’s sports tourism strategy.

“For a few days a year Singapore is cool, funky and glamorous, challenging the perception of a rather sanitised, dull city,” he said. “It also provides F1 with an amazing showcase in the critical Asia market.”

Read Campaign Asia-Pacific's 2014 interview with Bernie Ecclestone on F1's future in Asia

Parr believes that neither Singapore nor Formula One Management want to drop the race, and that he will “be amazed” if it comes off the calendar. 

“Most of this discussion is good old fashioned sabre-rattling and negotiating tactics,” he argued.

Parr’s observation could be right on the money. Following his explosive remarks, Ecclestone executed a U-turn of sorts during a recent phone interview with The Straits Times, where he said F1's stand is to “hopefully continue in Singapore.”

“Everybody is happy to be in Singapore and (we) don't want to lose Singapore. Negotiations are ongoing and will be sorted out shortly... before the end of the year, I'm sure. We want to extend long term. We'll see what happens,” he added.

Khan agreed with Parr that the race helps promote a “more audacious, dynamic and cosmopolitan” image of the city-state, adding that “Singapore needs F1 as much as F1 needs Singapore”.

He recalled that it certainly created some ripples among the organisers of Malaysia's Sepang Grand Prix when the race was first announced. In the long-term, continued investment in F1 is a sound way to ensure that Singapore will continue to build its reputation as a global brand.

“Discontinuing F1 sends out the message that Singapore was never really that visionary and that it looked at F1 purely as a business transaction which has run its course," Khan said. "Is this what we want the world to think? To assume that Singapore has ‘arrived’ and no longer needs to invest in major events like F1 is short-sighted, and I am not convinced that is the view of the government anyway.

No material impact

In the event the decision is made to drop the F1 night race, what then?

Parr believes that the Singapore tourism market has evolved and grown to be far more than just the F1 these days. 

“Losing the event would obviously be a huge shame, and there are several thousand people from around the world who make the trip to Singapore each year for the GP, but against the millions who visit throughout the year, it’s not going to make a material impact,” he said.

The impact on commercial partnerships will also be minimal, Parr added, for if any commercial partners have longer-term deals, one would have to assume they have clauses that cover them in the eventuality that the race doesn’t happen past 2017. 

“If they haven’t got this protection, then they have been very careless,” he said. SGP title sponsor Singapore Airlines extended its contract in 2015 until 2017, having been the lead sponsor since 2014.

If anything, Khan believes that instead of just dropping the event, renewed efforts should be made to reinvigorate it.

“I think it's a shame that the government didn't throw a brief into the talented marketing community in Singapore, asking for help to drive the numbers and boost revenue,” he said. “I am sure that if we all put our heads together we could come up with something equally as bold and audacious as the original vision.”

There’s no doubt F1 faces some headwinds in a changing media and consumer marketplace, Parr said.

Malaysia too?

In fact, Singapore is not the only F1 host in Asia rethinking its commitment. On 21 November, the Malaysian government announced that it would not be renewing its contract when it expires in 2018.

In a Bernama report, Tourism and Culture Minister Mohamed Nazri Aziz said the government spends RM300 million (US$67.93 million) per year for the F1 race, but the financial returns were less than the amount spent.

"We spend RM300 million per year but are not getting RM300 million back,” he added. “There are no returns on the F1 Grand Prix. The current contract is from 2016 to 2018. The F1 attendance has declined over the years, probably because there is less attraction.”

However Parr noted that the event still commands big TV audiences, significant commercial investment and a loyal fanbase. 

In September, US firm Liberty Media confirmed that it was buying Formula 1 for US$4.4 billion from private equity firm CVC Capital.

“It will be very interesting to see how the new ownership at Liberty Media evolves the product and drives Formula 1 forward,” he added. “It certainly needs to adapt, but it's still a hugely powerful and popular platform for business and fans alike.”

Editor's note: We have updated this story since its initial publication yesterday afternoon, adding Malaysia's decision to not renew its F1 contract and additional comments from Bernie Ecclestone.