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End of Malaysian Grand Prix will benefit Singapore in new deal discussions with F1 owners

SINGAPORE - Malaysia’s decision to stop hosting the Malaysian Formula One Grand Prix next year because of ‘lowering returns’ and the high costs involved will definitely be an advantage that Singapore can capitalise on in its ongoing contract extension discussions with the sport’s owners.

SINGAPORE - Malaysia’s decision to stop hosting the Malaysian Formula One Grand Prix next year because of ‘lowering returns’ and the high costs involved will definitely be an advantage that Singapore can capitalise on in its ongoing contract extension discussions with the sport’s owners.

Singapore’s hosting rights to the prestigious race ends this year, and analysts told TODAY that the Republic’s possible position as the only South-east Asian country to host an F1 race with effect from next year, and the fact that F1 owners Liberty Media are keen to grow their sport in Asia may help Singapore’s bid for more favourable terms in a new deal.

It is believed that one of the sticking points in the discussions is an escalated clause in the contract, which means that the fee increases year on year — rumoured to be by 10 per cent.

Indeed, when Malaysia’s tourism and culture minister Nazri Abdul Aziz initially announced last November that the country will stop hosting the Malaysian GP after the current agreement expires in 2018, he cited escalating costs as one of the main reasons.

“F1 attendance is dropping and there is less attraction now. We are spending RM300 million a year (S$94 million),” said Mr Nazri then.

“The cost of hosting F1 has increased 10-fold compared to the first time it was held.”

Experts also told TODAY that global uncertainties and a possible recession in the horizon mean that Singapore will be more wary about committing to a new deal for an event which many Singaporeans appear to have little interest in and regard as a luxury.

When contacted yesterday for updates on the ongoing discussions, race promoter Singapore GP said that it does not comment on ongoing negotiations.

James Walton, the Sports Business Group Leader at Deloitte Singapore & South-east Asia, said that Singapore’s position as F1’s only pitstop in the region could now put pressure on Liberty Media’s desire to grow the sport in Asia.

“F1’s growth plan in recent years have hinged on broadening their base in geography and demographics. In terms of markets, Asia and the Americas are their two key focus areas,” he observed.

“So, not having a race in South-east Asia, seen by many as a key economic power in years to come, would not be a good thing.

“In terms of demographics, F1 has struggled to attract a younger crowd. South-east Asia has a very young population and a burgeoning middle-class, exactly the kind of people that they want to attract and that have propelled other brands in the region, like One Championship in mixed martial arts.”

Mr Walton warned however, that Singapore is far more than “just ‘an Asean race’ for Formula One”.

“It’s one of the most watched races on the calendar, a favourite of the teams and drivers, and very popular with the major advertising sponsors who are targeting the very same High Net-Worth Individual crowd that populate and visit Singapore,” he said.

“Losing Singapore would definitely be more of a blow for F1 than losing Malaysia and there really isn’t a direct replacement city in South-east Asia.”

Corporate lawyer Anthony Indaimo, who is partner and global head of Corporate and Commercial at international commercial law firm Withersworldwide, agreed.

“You’ve got car manufacturers who are owner of teams who see the Asian market as incredibly important,” he said.

“Next year will have 21 races, but just 50 per cent of them are in Europe, and the rest is split in Asia and North America, so there’s still significant weight to Asia.

“Singapore has also done incredibly well since it hosted the night race in 2008. The organisers and the authorities have been continuing to keep it exciting for fans.

“Hopefully, the Liberty Media management team will engage in a slightly different way in Singapore because of the loss of Malaysia.”

Walton also felt that another factor in the Republic’s favour is its increasing ability to bring in other top-class sporting events. Ironically, all this is thanks to the Singapore Grand Prix, which will be held from Sept 15 to 17 this year.

As the Briton explained: “Hosting Formula One really put Singapore on the map in the international sports scene in the early years. It demonstrated that it could host a major world-class event and has played a part in attracting many major sporting brands since.

“When the topic of renewal first came up after the 2016 Singapore GP, there were some questions about what other major sports events could help attract tourists and continue to elevate the Singapore brand.

“The recent unveiling of the International Champions Cup, the supposed Argentina-Singapore match on June 13, and the increasing local popularity of international rugby events have helped answer that.

“It definitely means it is easier for Singapore decision-makers to walk away from the table if the deal is not right – because they know there are enough marquee international sports events coming to Singapore in the coming years to continue to attract tourists and excite Singaporeans.”

Indaimo added: “It says that Singapore does big events in different ways to other cities and countries.

“Singapore, with the way it organises events, punches above its weight on a per capita basis. I think there’s something quite special how Singapore can put on such exciting sporting events, I don’t think any other South-east Asian country is able to do this.”

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