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
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.