FOR­MULA GONE?

The In­dian Grand Prix has been struck off the 2014 F1 cal­en­dar. The fu­ture of F1 in In­dia and its pro­moter looks bleak. With no mass sup­port or Gov­ern­ment back­ing, what will be the fate of the multi-mil­lion-dol­lar fa­cil­ity once held as the com­ing of age o

India Today - - GRAND PRIX SPECIAL - By Va­roon P. Anand

The tri-coloured grand­stand seats of the Buddh In­ter­na­tional Cir­cuit ( BIC) sit heavy with the dust that rolls in off the bar­ren sur­round­ings. The much-her­alded Sports City that was to rise around the cir­cuit re­sem­bles an aban­doned fron­tier from the old Amer­i­can West as tum­ble­weeds float by. The third In­dian Grand Prix ( IGP) is just two weeks away and it could be the last one. The first in­di­ca­tion that all was not well came on July 29 on the side­lines of the Hun­gar­ian Grand Prix, when F1 supremo Bernie Ec­cle­stone told re­porters, “Is In­dia go­ing to hap­pen next year? Prob­a­bly not.” Soon af­ter, the 2014 race was re­moved from the F1 cal­en­dar and the fu­ture of the sport at BIC seemed to trail off into a ques­tion mark. Just in its third year, the fu­ture of the much-hyped event seems more un­cer­tain than ever be­fore.

When the Jaypee Group’s Gaurs brought the sport to In­dia in 2011, there was hope it would gen­er­ate rev­enues to the tune of $100 mil­lion and em­ploy 100,000 peo­ple. A $450 mil­lion world class F1 cir­cuit de­signed by Her­mann Til­lke was built in four years and an en­tire com­plex, Jaypee Greens Sports City, was planned around the track. It would have a world-class hockey and cricket sta­dium, train­ing fa­cil­i­ties for ath­letes and, most im­por­tantly, prime res­i­den­tial prop­er­ties. The project would not only bring In­dia greater promi­nence, but, cou­pled with the ac­ces­si­bil­ity pro­vided by

the new Agra Ex­press­way, would make the far-flung Greater Noida a cen­tre of ac­tiv­ity. That was the plan. But some­where down the line, F1 has not gained the ac­cep­tance one hoped it would. The land around the track is be­ing sold, with the Gov­ern­ment un­will­ing to ac­cord it the sta­tus of a sport.

For­mer sports min­is­ter M.S. Gill once re­ferred to F1 as “ex­pen­sive en­ter­tain­ment”. While the Min­istry of Sports charges pro­mot­ers Jaypee Sports In­ter­na­tional Lim­ited ( JPSI) Rs 10 crore an­nu­ally to is­sue an NOC for the event, it still deems it as en­ter­tain­ment. JPSI also fronts close to Rs 600 crore to cover the bill for im­port­ing all equip­ment that teams bring in, in­clud­ing fuel, lu­bri­cants and fil­ters. Since 2007, it has in­vested more than US$ 600 mil­lion on track con­struc­tion and li­cens­ing fees to For­mula One Ad­min­is­tra­tion ( FIA). The li­cens­ing fee has been ris­ing in­cre­men­tally ev­ery year and at cur­rent ru­pee rates, is es­ti­mated at US$ 40-45 mil­lion. To add to Jaypee’s woes, Air­tel’s five-year deal as ti­tle spon­sor is worth just Rs 34 crore. That, along with all ad­ver­tis­ing and mer­chan­dise rev­enue also goes to For­mula One Man­age­ment ( FOM). This leaves JPSI to cover its costs al­most en­tirely from ticket sales, on which it pays en­ter­tain­ment tax, leav­ing lit­tle room for profit.

Given the hefty cap­i­tal in­vested in the project over the last six years, JG has found that re­turns have been far from what had ini­tially been fore­cast. Ex­perts are quick to point out that from the out­set, F1 was a los­ing propo­si­tion for JPSI, to the tune of US $35 mil­lion a year, a lit­tle less than the F1 li­cens­ing fee.

What is dif­fer­ent in In­dia? The sport, which takes place across 19 lo­ca­tions world­wide, has al­ways been sup­ported by lo­cal gov­ern­ments. In 16 of the 19 venues, the gov­ern­ment has shoul­dered part of the li­cens­ing fee and has cre­ated in­cen­tives for FIA to host a race. It has also been in­volved in promotional ac­tiv­i­ties. “If F1 has to be in In­dia on a long-term ba­sis, the Gov­ern­ment should own the event as if it is their own, not only look at it as a Jaypee event,” says JPSI MD Sameer Gaur. The Bri­tish and Ja­panese Grands Prix are the only other races that don’t get any state sup­port. In­dian tax au­thor­i­ties are now seek­ing to tax 1/19th of team rev­enues, pur­port­edly as in­dica­tive of in­comes dur­ing IGP. Be­fore re­tir­ing last month, sports sec­re­tary Prakash Ku­mar Deb put the state’s viewpoint across. “Why don’t you ask Bernie to wave off the huge fees he’s charg­ing? It doesn’t mat­ter if the race stays in In­dia,” he said.

F1 In­dia is off next year’s cal­en­dar now,

but the Pres­i­dent of the Fed­er­a­tion of Mo­tor Sports Clubs of In­dia ( FMSCI), Vicky Chand­hok, has en­tered ne­go­ti­a­tions to bring F1 back in 2015 and 2016, in an ef­fort to com­plete the re­main­ing two races on JPSI’S five-year con­tract. FIA has al­ways sought to move IGP to the first part of year, in line with other races in Asia, while JPSI has been keen to hold the race dur­ing peak fes­ti­val sea­son in Oc­to­ber. This makes it dif­fi­cult to ac­com­mo­date BIC in the 2014 cal­en­dar. The only way back is to skip 2014 and host again in March or April 2015. The loss of a race is likely to cause a se­ri­ous dent in JPSI’S pro­jected rev­enues, and the only way out will be in­sti­tu­tional sup­port. Chand­hok says: “A per­cent­age of host­ing rights fee goes to Na­tional Sports De­vel­op­ment Fund ( NSDF). Now, NSDF should also be spend­ing on mo­tor­sport and not only on other sports.”

But with lit­tle mass ap­peal for the sport, crit­ics are ask­ing whether bring­ing F1 to In­dia was ever a good idea. At­ten­dance at IGP fell from al­most 100,000 in 2011 to 65,000 in 2012. This year the num­bers are ex­pected to fall fur­ther. Ticket prices have been slashed by 60 per cent. A grand­stand ticket cost Rs 35,000 in 2011; now you can buy one for Rs 12,000.

And yet, the mood on the track is not pes­simistic. Thou­sands de­scended on BIC for the 16th JK Tyre Rac­ing Cham­pi­onship in endSeptem­ber. Ear­lier, the MMSC-FMSCI na­tional mo­tor­cy­cle cham­pi­onship drew at­ten­tion. The track will re­main the go-to venue for test drives for In­dia’s bur­geon­ing lux­ury car mar­ket with Audi, BMW, and Mercedes just a few of the names who pay the daily Rs 10 lakh rental fee. And there’s still hope of host­ing a round of the World Su­per­Bike cham­pi­onship, even though it was post­poned twice, in Septem­ber 2015. But is it enough to off­set the ex­pense of build­ing and run­ning the track? As In­dia gets ready to wel­come teams for the F1 GP be­tween Oc­to­ber 25 and 27, or­gan­is­ers are con­fi­dent of a suc­cess­ful third out­ing for the race. JPSI in­sists that the prob­lems are lo­gis­ti­cal, un­en­cum­bered by fi­nances or pol­i­tics. Al­though no of­fi­cial dates have been an­nounced they are sure F1 will be back in In­dia in March 2015.

The or­gan­is­ers are hop­ing that as long as speed thrills, there will be re­wards at the fin­ish­ing line.

AT­TEN­DANCE AT IGP FELL FROM AL­MOST 100,000 IN 2011 TO 65,000 IN 2012 AND IS EX­PECTED TO DE­CLINE FUR­THER THIS YEAR.

Www.in­di­a­to­day­im­ages.com

QA­MAR SIB­TAIN/

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