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Uncertain Times As Iconic Singapore F1 Race Reaches Crossroads
F1 first practice session on Sept 16, 2016, shot from Swissôtel The Stamford, Singapore. Photo: Nuria Ling/TODAY
January 6th, 2017 | 09:55 AM | 888 views
Experts, analysts have mixed views on whether the Republic should renew its deal, which expires this year
It has been hailed as the crown jewel in Formula One (F1) by the sport’s supremo Bernie Ecclestone, and praised by teams, fans and experts alike. But as the Singapore Grand Prix (SGP) enters the final year of its current five-year deal, will this jewel remain in the heart of Marina Bay or be cast aside?
Contract talks between F1 and the Singapore Government are apparently ongoing, but in an interview with German magazine Auto Motor Und Sport last November, Mr Ecclestone suggested that Singapore might not be keen on an extension.
“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,” he let fly.
“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.”
In a subsequent U-turn and sounding more meek, Mr Ecclestone said he hoped Singapore will continue to host the race. “F1’s stand is to hopefully continue in Singapore. Everybody is happy to be in Singapore and (we) don’t want to lose Singapore.”
When asked about the status of discussions, both the Ministry of Trade and Industry and race organiser Singapore GP declined comment.
Nevertheless, the episode has generated debate on whether there is still value in hosting the race, which was first staged here in 2008.
Singapore’s association with F1 has definitely turned it into a recognisable brand. The skyline, featuring the Marina Bay Sands resort and the Singapore Flyer, has become easily identified worldwide, while the Singapore Tourism Board (STB) says over 350,000 visitors have flocked to the Republic’s shores over the eight races up until 2015.
And although it costs around S$150 million to organise each edition of the race, with the Government co-funding 60 per cent of approved costs, this is offset by the nearly S$150 million of incremental tourism receipts annually.
“With a broadcast coverage reaching more than 640 million international viewers over the last eight races, the race has helped showcase Singapore as a beautiful, vibrant and attractive destination to a global audience,” STB director of sports Jean Ng told TODAY.
Local businesses benefit as well, says the STB.
“Our small- and medium-sized enterprises (SMEs) have also been actively involved in race preparations and operations, such as circuit set-up, ticketing and security services, with over 80 per cent of Singapore GP’s race organisation being sub-contracted annually to these SMEs,” said Ms Ng.
The SGP also appeals strongly to the business world because of its glamour, and its unique setting of being the only night-time F1 race.
While ticket sales last year were the worst in its nine-year history, with overall take-up 15 per cent lower than average attendance since 2008, Singapore GP said that numbers for the premium hospitality suites and Paddock Club remained healthy.
Corporate lawyer Anthony Indaimo, who is partner and global head of Corporate and Commercial at international commercial law firm Withersworldwide, said corporate high-fliers are still drawn here to mingle and conduct business.
“Singapore is successful because it marries music, food, technology, business, sport and entertainment around something that is new and exciting: A night-time race. Everybody wants to go there,” Mr Indaimo, a leading adviser to motorsports teams, sponsors and investors, told TODAY over the phone from his Milan office.
Mr Indaimo described Singapore as the “Switzerland of Asia” but added that it is “more dynamic, outward-facing and open to business”, which account for its allure. “It is probably the country that deals with more successful and wealthy business men and women on the planet apart from Switzerland,” he said.
POOR ECONOMY, MORE PRUDENCE?
In 2012, the Boston Consulting Group reported that the SGP would reap S$1 billion in net economic output for Singapore over a 10-year period, with an additional S$1 billion from increased tourism and investment.
But experts tell TODAY that global uncertainties and a possible recession in the horizon mean that Singapore will be more wary about committing to a new deal on an event which many Singaporeans appear to have little interest in and regard as a luxury.
There is also an escalated clause in the contract, which means the fee increases year on year — rumoured to be by 10 per cent — and analyst James Walton, head of the Sports Business service line at Deloitte Singapore and South-east Asia, observed that “with Brexit, Donald Trump and the Trans-Pacific Partnership, everyone is waiting to see what happens”.
Another business analyst, who declined to be named due to potential sensitivity issues, believes Singapore has the upper hand in negotiations, after building a reputation as one of the circuit’s “most recognisable and popular GPs”.
While global F1 television viewership has declined from 600 million in 2008 to 400 million last year, average international viewership for the SGP remains around the 80.7 million mark.
“With the threat of any potential economic slowdown and the branding position they feel they have, I think the Singapore Government is taking that opportunity to play a bit of hardball,” the analyst told TODAY.
“They would also want to know what the new owners’ plans are … to make sure the SGP will be a viable product five, 10 years out.”
NEW CARDS ON DECK
The analyst was referring to American media and telecommunications firm Liberty Media, which acquired F1 for S$5.91 billion last year.
New F1 chairman Chase Carey was spotted talking to the various teams and sponsors at the SGP paddock, and Mr Indaimo believes the takeover could result in a “more dynamic, entertaining and fairer” F1, especially after the dominance of Mercedes and Red Bull in recent years.
New changes to technical and sporting regulations next year — involving bodywork design, power unit restrictions and grid penalties — should also give teams a more level racing platform.
World champion Nico Rosberg’s shock retirement also allows younger drivers such as Max Verstappen to shine and fight to fill his shoes. Other potential changes could involve increased and more equitable prize money distribution.
“I’ve been in and around F1 for 30 years and I think it’s a very interesting time,” Mr Indaimo said. “I’ve spoken to drivers, team principals, owners — all of them are very excited about the changes.
“Carey was really interested in understanding what makes Singapore special and I think that is a very good sign for Singapore.”
Mr Indaimo believes Liberty could adopt a more “pragmatic” approach towards hosting costs in negotiations with Singapore. “I do think Singapore is well-positioned … to not take a hardline view,” he explained.
“Singapore should … (adopt) a more partnership-like approach as to how it can contribute to a more successful GP, while Liberty (in turn) helps to increase TV viewership and subsidise some of the costs.”
Mr Ajay Sunder, vice-president of telecoms at market research firm Frost & Sullivan, said Liberty’s involvement could positively affect investment in F1 by Asian investors in general.
“Investment in sports, especially the sports services business, has been lower compared to other sectors (in recent times),” he said.
“Liberty’s network in media and entertainment would mean they can ensure the maximum revenue stream from advertisements as well as F1 events (which would appeal to these investors).”
Singapore may also consider Liberty’s expertise in new and social media that could help attract more fans.
“New media and digital, social media, interactive content are very popular in Asia,” said Mr Tommaso Volpe, global motorsport director of Infiniti Motor Company.
“When they start to activate more properly, the ‘live’ content distribution in new platforms, innovative platforms ... it will have a huge impact.”
Liberty also owns 34 per cent of Live Nation Entertainment, the world’s largest live entertainment company which represents global superstars such as Beyonce, Kanye West and Justin Bieber.
Mr Walton, who felt that last year’s headline acts — Kylie Minogue, Queen with Adam Lambert and Imagine Dragons — were lacklustre compared to previous years, said it will be “interesting” to see what this means to bringing in big-name acts for the SGP’s track-side entertainment.
“The ticket price is high for a non-fan ... so it is important for the SGP to make good decisions concerning the track-side entertainment to maintain and increase its attractiveness to a larger audience.”
F1 concert fan Patricia Poh, who has attended the past five editions, agreed. “I think most people who didn’t like the line-up this year were the younger crowd,” said Ms Poh, 24. “But if an entertainment company like Live Nation was to get involved, I am sure the slate of acts will be better.”
Still, the possibility that no new deal will be struck remains real.
Experts, however, disagree on the potential impact should that happen.
The sports analyst who declined to be named, told TODAY it will “not be a huge loss”, as Singapore has proven its capability in staging world-class sporting events. Singapore also has facilities like the Sports Hub and Marina Bay Sands resort, which did not exist during the first staging of the SGP, he said.
Possible replacement events to fill the void include the Women’s Tennis Association (WTA) Finals and the Premier League Asia Trophy, last held here in 2015.
“If you can get something like the Association of Tennis Professionals (to stage a tournament) here, that would get a bigger crowd than even the WTA,” he said.
“If F1 is not willing to give us a price that makes sense, I have enough confidence in the Singapore brand to say it would not be a disaster.”
But Mr Indaimo disagreed, explaining that Singapore’s reputation as being forward-looking and business-friendly could be affected and, in turn, have a knock-on effect on any replacement events it wants to bid for.
He believes F1 is at an unprecedented “tipping point” due to new ownership and urged Singapore to take advantage and help bring the SGP to greater heights instead.
“They (Liberty) are at the moment doing what is called a listening tour,” he opined.
“I am optimistic there’s never been a better opportunity to actually contribute views and for those views to be listened to and acted upon.
“So there is potential for real engagement to get views on how to make the sport, particularly in Singapore, more relevant and more successful.”
Mr Ecclestone said in his Auto Motor Und Sport interview that “negotiations are ongoing” and added that all “will be sorted out shortly”.
However, based on past practices, it is likely that the final decision will only be announced during this year’s race.
courtesy of TODAY
by Teo Teng Kiat
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