Is it economically viable to continue hosting the F1 Grand Prix?

epa05565113 German Formula One driver Nico Hulkenberg of Sahara Force India F1 Team steers his car in front of a Malaysian national flag during the qualifying session for the Malaysian Formula One Grand Prix in Sepang, Malaysia, 1 October 2016. The 2016 Formula One Grand Prix of Malaysia will take place from 30 September till 02 October 2016. EPA/AHMAD YUSNI

GIVEN the current economic climate, it is understandable that there are calls for Malaysia to stop hosting the Formula One Grand Prix “for a while”.

But what if the GP is gone for good?

Sepang International Circuit (SIC) chief executive officer Datuk Razlan Razali had said on Monday that only 60% of the tickets were sold for the recent Formula One Malaysia Grand Prix. This is despite the race being moved to the second half of the year.

This is also in contrast to this weekend’s MotoGP event, which has been sold out.

“It is no longer an exciting sport and it will do Malaysia good to take a break,” Razlan said on Monday.

Youth and Sports Minister Khairy Jamaluddin also chipped in, saying that Malaysia should instead focus on the MotoGP.

“I think we should stop hosting the F1 ... at least for a while. Cost too high, returns limited.

“When we first hosted the F1 (in 1999), it was a big deal. First in Asia outside Japan. Now so many venues. No first mover advantage. Not a novelty.

“For the record, I still think we should host MotoGP: cheaper fee and cost; sellout crowd; and we have riders in Moto2 and Moto3,” said Khairy.

The circuit has a contract to host the F1 Malaysia GP until 2018, but SIC, through owners Khazanah Nasional Berhad, have been forking out a handsome sum each year to the rights holders – F1 Group – with no returns.

The sport’s business model is unlike that of any other sports series. Race tracks generally do not get any revenue from the television broadcasts of a GP or from F1’s corporate hospitality and track side advertising.

Money from these revenue streams goes to the F1 Group and the tracks are left to survive on ticket sales alone, which is not enough.

It is believed that this year’s annual race-hosting fee cost nothing less than US$33mil (RM135.30mil). Perhaps that explains why traditional circuits in France, Germany and Canada have struggled to raise the money.

The F1 Group is lucky that governments of developing countries – like Russia and Azerbaijan – have stepped in in recent years.

Malaysia is now going through a challenging economic climate and the government is running its ship on a tight budget. So, it makes sense to let go of the hosting rights.

The MotoGP, on the other hand, has seen a rise in ticket sales over the last three years – primarily due to the strong local participation.

This weekend’s MotoGP will have four local riders – Hafizh Syahrin Abdullah (Moto2), Ramdan Rosli (Moto2), Khairul Idham Pawi (Moto3) and Adam Norrodin (Moto3).   

The various stakeholders will have to carefully mull whether it is worth giving up the hosting rights. 

Formula One is still among the top five world’s most-watched annual sports series, with 525 million television viewers tuning in last year alone.

Hosting an F1 race puts a country on the sporting map and with that comes tremendous visibility, which then leads to increased tourism potential.

If we give up the hosting rights, it might not be easy to get it back.

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