SINGAPORE’S BLAZING TRAIL
The more you look at the way F1 is developing, especially the way that the owners Liberty Media approach race promotion, the more you realise what a great job the Singapore Grand Prix organisers have done over the past decade.
In many ways they are the pioneers of the new F1 race experience – not only by hosting the first night race, but by introducing so many elements that make going to an F1 race a true ‘experience’. They have combined motorsport and music; not just a single well-known band, but essentially a mini music festival every year, as well as layers of other entertainment, food and other activities.
Singapore is the blueprint for how Liberty would like F1 events to be in the future, stretching out for a week of activity, with seminars and business conferences as well as fan-engagement events. This is not surprising considering that the people behind the Singapore race are entrepreneurs, led by Ong Beng Seng, who have long promoted the larger-scale music events in the region as well as building businesses.
They also take all kinds of initiatives around interactions with teams. For example, Red Bull or Mercedes ‘superfans’ can get a seat in the stand opposite their favourite team’s garages and have an evening with the team during the race weekend.
The business model of the Singapore GP is also interesting and one that can be used as a blueprint for a sustainable event. The government, through the tourist office, takes 60 per cent of the financial risk on the race and Ong’s team take 40 per cent. The rewards in the form of profits are shared in equal proportion. It helps that Singapore is run like a company as much as a country. They can make quick decisions on infrastructure projects and get things done in a way that would be very difficult in many other countries.
The race costs around £78million a year to stage including the hosting fee, and the minister responsible for the race said last year that the receipts to Singapore from associated tourism net the country around £700m. It also positions Singapore as a hub, not just as a stopover for Europeans and Americans heading for Australia.
The government has also made sure that around 90 per cent of the set-up work around the Grand Prix goes to small businesses in Singapore. This not only boosts their revenues, but also builds up competences in new areas that they can then use to gain more international business. So the event has turbocharged the cottage industry around it. But as Chase Carey and his team look to drive growth in F1, they will need more strong promoter partners like Singapore to expand the calendar.
The discussions around a Miami GP – a final decision on which is due shortly after this issue of F1 Racing is published – reflect the potential willingness of Liberty to share some of the financial risk. This got onto the radar of some of the financially strapped events in key F1 heartlands such as the UK and Italy, and it will be interesting to see whether Liberty takes the step of mirroring to some extent the business model of Singapore with a shared risk/reward model with some promoters. I don’t believe that’s on the table with Silverstone currently as it looks to renegotiate its deal after 2019.
Projected revenue from race-hosting fees for 2018 is £477 million, slightly up on last year’s figure thanks to the German GP making a re-appearance. A deal has been agreed for that event to return in 2019, having been a biennial fixture in recent seasons, opening the possibility for it to return to annual status. Negotiations are also taking place on four continents, and the frontrunners for future events include Buenos Aires, Copenhagen and Hanoi.
Last season F1 renewed its contract with Singapore for another four years. Liberty took a small haircut on the deal, since the Singapore organisers were able to drive a hard bargain, knowing their value to F1.
Renewing the Singapore deal was an important move because that race has become the one most of the F1 business community attends. After the financial crisis of 2008/9 it was noticeable that the top execs of companies sponsoring F1 stayed away from Monaco, not wanting to be seen as ‘fat cats’ while workers were being laid off. It’s taken a while for those people to come back in numbers to Monaco. But even at the height of the crisis, they were still attending Singapore because it could be painted as a must-go, the gateway to new markets.
Another factor in Singapore’s favour is how it looks. The night race on the streets makes the cars look great and it is noticeable that TV companies and sponsors use clips from Singapore in their ‘sizzle reels’ showcasing F1. This small island has made itself indelibly associated with all that is good about the sport.