THE excitement after the spectacular race at Sepang is understandable, but before Malaysia welcomes Formula 1 back on a permanent basis, we need to know whether the numbers add up.
The roar of the engines, the excitement of the crowd and the sight of the world’s best drivers battling it out at Sepang brought back wonderful memories for Malaysians.
The race delivered a spectacle, drew an unprecedented crowd, reportedly over 200,000, and reminded us why this circuit remains one of the finest in the region.
There is little doubt that F1 has not lost its appeal among Malaysians. The atmosphere was electric, and the sight of fans filling the grandstands was encouraging for everyone who wants to see Sepang retake its place on the international sporting stage.
But before we allow ourselves to be swept away by the euphoria, we need to take a deep breath.
A successful race weekend does not automatically make a commercially viable annual event. That is the distinction we must make as discussions gather pace over the possibility of bringing F1 back to Malaysia permanently.
After witnessing the enthusiasm at Sepang, it is easy to conclude that Malaysia should seize the opportunity before it disappears.
The temptation is understandable but let’s not let our euphoria affect our thinking.
A major sporting event is not simply about the excitement it generates over three days. It is also about the financial commitments that come with it, year after year.
And F1 is an expensive business.
Sepang International Circuit chief executive officer Azhan Shafriman Hanif has estimated that Malaysia would need to spend at least RM300mil annually to secure a permanent place on the F1 calendar, including hosting rights and local preparations.
That is a substantial sum, particularly when the government must balance competing demands on public finances at a time it is cutting its spending.
Malaysia’s previous experience should also serve as a reminder.
The country hosted the Malay-sian Grand Prix from 1999 until 2017, when the race was dropped because the costs had become difficult to justify against the returns.
We have been down this road before. We should not assume that the economics have suddenly changed simply because the crowds returned for a weekend.
There is, of course, an important difference between the recent Bahrain Grand Prix and a regular Malaysian Grand Prix. Bahrain bore the hosting rights fees for the Oct 2-4 event, while Malaysia paid for local preparations, estimated at between RM10mil and RM16mil.
In other words, this was not a test of whether Malaysia can bear the full financial burden of hosting an annual F1 race.
It was an opportunity to demonstrate that Sepang could deliver a major international event at short notice, attract fans, and provide a venue capable of meeting the sport’s demanding requirements.
It was a valuable achievement. But it is not the same as proving that a permanent return would pay for itself.
The distinction matters because the headline figures can be misleading. Estimates that a race could generate more than RM1bil in economic activity are certainly encouraging. Hong Leong Investment Bank Research has put the potential economic output of the October event at between RM1.1bil and RM1.3bil.
However, economic output is not the same as revenue collected by the government, or profit earned by the circuit.
A hotel room booked by a foreign visitor, a meal purchased at a restaurant, and a taxi ride taken during race weekend all contribute to economic activity.
But the government does not receive the entire value of those transactions. Businesses incur their own costs, while some of the spending would have taken place in Malaysia even without the race.
We need to distinguish between gross economic impact, direct commercial revenue, tax receipts, and the actual financial return on public expenditure. These are not interchangeable figures.
Malaysian Investment Develop-ment Authority chairman and senior political adviser to the Prime Minister Tengku Datuk Seri Zafrul Abdul Aziz rightly said that while Sepang remains a world-class circuit, a return cannot rely on prestige alone.
He asked for the government to carefully weigh the high hosting costs against the actual economic return on investment.
“Can we make F1 profitable enough for Malaysia?” he said, asking everyone to look at the broader economic returns.
Perhaps the burden of hosting an F1 race in Malaysia should not just be shouldered by the government but also by corporate and private entities who can support the event.
A proper cost-benefit analysis must therefore go beyond the number of spectators or the estimated value of tourism spending.
It must establish how much money Malaysia can realistically earn, how much it must spend, and who ultimately benefits.
Ticket sales, corporate hospitality, sponsorship, broadcasting, and commercial partnerships must all be examined.
So must hotel occupancy, airline bookings, visitor spending, and the number of tourists who come to Malaysia specifically because of the race.
Just as importantly, the analysis must identify how much of that spending represents genuinely additional economic activity rather than expenditure that would have occurred anyway.
There are also costs that may not be immediately obvious to the public.
These include circuit upgrades, safety requirements, transport arrangements, traffic management, security, staffing, logistics, and other operational expenses. We must also consider the cost of tying up public funds that could be used for other priorities.
A five-year hosting commitment at RM300mil annually would amount to RM1.5bil before allowing for any additional costs or changes in expenditure. That is not a small undertaking.
The government must be satisfied that the benefits justify such a commitment, rather than relying on optimistic projections or the assumption that a prestigious event will inevitably bring prosperity.
None of this means that Malaysia should abandon its ambition to host world-class sporting events. F1 offers international exposure, attracts a global audience, and can help promote Malaysia as a destination for tourism, business, and investment.
The event can also support local businesses, create employment, and inspire a new generation of motorsport enthusiasts. Sepang has an established reputation, and the recent race has shown that there remains considerable interest in the sport in Malaysia.
We must also be realistic about the extraordinary circumstances surrounding the Bahrain Grand Prix in Malaysia. The event was a one-off arrangement following the cancellation of the original race in Bahrain amid the conflict in the Middle East.
The novelty of seeing F1 back at Sepang after nine years, coupled with the unusual circumstances of the event helped generate considerable interest.
Can the same attendance figures be sustained every year?
Will international visitors continue to arrive in similar numbers once the novelty wears off?
We should also examine the practical lessons from the race. The large crowds demonstrated the circuit’s appeal, but reports of transport difficulties highlighted the need to improve the overall spectator experience.
A successful event must be judged not only by what happens on the track, but also by how efficiently people can get there, move around, and return home.
If Malaysia is serious about hosting F1 again, these issues must be addressed as part of a comprehensive business plan.
There is another consideration: competition.
Malaysia is not the only country interested in hosting F1. Other venues are competing for places on a crowded calendar, and any return of the race in Malaysia would depend on securing a slot as well as negotiating acceptable commercial terms.
We cannot assume that the opportunity will automatically be available, nor should we agree to unfavourable terms simply because we fear losing out to another country.
An independent assessment would help separate genuine returns from promotional claims. It would also provide a sound basis for comparing F1 with other major sporting and tourism events that Malaysia could host with the same resources.
But we should not confuse caution with a lack of ambition.
A country can be proud of its sporting achievements while remaining disciplined about public expenditure.
Ultimately, the question is not whether Malaysians want F1 back. The recent race has shown that many clearly do.
The question is whether Malaysia can afford to host it year after year, whether the returns justify the costs, and whether the benefits will reach the wider economy and the public.
Let us enjoy the spectacle, celebrate Sepang’s success and welcome the renewed international attention. But before we sign a long-term contract, let us make sure the numbers add up.
When it comes to spending public money, enthusiasm is welcome. Euphoria, however, must never replace sound judgement.
National Journalism Laureate Datuk Seri Wong Chun Wai is the chairman of Bernama. The views expressed here are solely the writer’s own.
Wong Chun Wai
Wong Chun Wai began his career as a journalist in Penang and served Star Media Group for nearly four decades in various capacities and roles. He was group editorial and corporate affairs adviser to the group, after having served as group managing director/chief executive officer. "On The Beat" debuted on Feb 23, 1997. Chun Wai has penned the column weekly without a break, except for occasional press holidays when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star. He is now chairman of national news agency Bernama.
