Why the F1 calendar keeps growing with countries keen to host a Grand Prix
With the calendar getting bigger every other year it seems, why do countries sign up to host a race weekend?
The F1 calendar has many staple races which simply wouldn’t be changed - think Silverstone or Monaco - but there are many slots which change hands when contracts expire or new slots are added altogether. It’s constantly changing.
Recently we’ve seen countries such as Vietnam and Saudi Arabia sign up as new additions to the Formula 1 calendar, although the former hasn’t had much luck in actually getting a race to go ahead. Saudi Arabia however might not have always been seen as a key demographic for a race but nonetheless, it struck a deal with the series. Talks about a Miami race, or any other American race for that matter, have also amped up in recent years with F1 eager to expand in the US with it’s potential earmarked by the sport.
Building a track can cost upwards of £200 million, without accounting for annual maintenance which could be in the region of another £15 million. That’s without the cost of the event itself which includes further staffing costs, and the annual race fee in the region of £20-30 million. Some iconic events like the iconic and popular Silverstone weekend attract amongst the highest visitor numbers - over 140,000 visited in 2019 on race day alone - but the circuit confirmed at the time that it just about broke even. However, a number of Grands Prix are subsidised and pushed for by the host nation’s government.
So if there’s a huge cost associated, and also a chance the circuit itself won’t turn a profit, why would a country pay large sums of money to sign up? Here’s 5 reasons.
1. Put your country on the map
F1 is known for it’s entertainment and glamour. It’s a truly global sport with fans from all corners of the planet, and there are plenty who are willing to get on a plane to see a race. The only sporting events which can compare are World Cups and the Olympics. Looking solely at the 2020 (now 2021) Olympics, the interest and investment in Japan and specifically Tokyo is noticeable. The issue is both a football World Cup and the Olympics only happen once every 4 years. F1 however? A race weekend happens 20 times a year, and all countries have a multi-year contract.
Having your country as the stage for a Grand Prix does wonders for lifting it’s profile as a nation capable of hosting world-class sporting events and piquing the interest of fans. Street races or circuits embedded closely into cities such as the Singapore, Abu Dhabi or Australian GP’s get to show off backdrops of their best cities which will hopefully entice an increase in tourism. Around 60% of Singapore’s race visitors are tourists, and so with that comes a boost to the local businesses, and the chance to convince that person to make a return visit, or give a rave review about the country to their friends, family and colleagues.
F1 estimates that it has 500 million fans across the world, and some races can attract 100 million viewers worldwide. As a country trying to raise its recognition, having a high profile sports event that’s pictures are broadcast across the world is a highly effective method. This is why Saudi Arabia will have been keen to secure a slot on the calendar to raise it’s profile as a tourist destination and has increased the discussion (good and bad) around the country. Saudi Arabia hasn’t just focused on F1, and has hosted popular boxing matches, and is apparently in discussions to sponsor some big names in football at the moment. Whilst being controversial and labelled as ‘sportswashing’, many countries have turned to sport to repair or build a new image.
2. Injection into the local economy
A GP isn’t like a football or tennis match where you visit for a few hours and then leave. You might spend all three days at the event, which means you’ll need travel there, a hotel for your stay, and plenty of food, drink and activities to keep you full and busy. This is often what helps to build the excitement in the community with the pride that they feel firstly from hosting the race, to the increase in footfall and bookings to their businesses. Baku estimated last year that the previous 4 races had raised $300.6m in direct investment in this way. Similarly, the Monaco GP is estimated to bring in about 6% of the principality‘s GDP.
Baku Grand Prix
However, its worth keeping in mind that putting on huge events will always have a roll-on impact on local communities and it’s not always positive. Especially with a street race, blocking off areas, putting up fencing and restricting roads means some small businesses are cut off from their usual trade and it actually ends up being detrimental.
3. Increased jobs
Building a new track, or setting up a street circuit needs people. A lot of them. Maintaining it and running other events throughout the year also needs people. Hosting these events can be great for communities as it provides jobs, and hopefully long term ones.
This is why sometimes the investment by a country’s government can be an even better decision than initially thought. Providing a city with a high quality event that will produce interesting and unique jobs can be a great perk for locals. Aside from roles directly based in the event itself, increased hospitality and travel roles are also be a factor.
4. Direct boost to investment
Aside from just the track, there’s likely to be investment in other areas. The infrastructure around the race itself means transport might also get a boost and this has long lasting impacts on the surrounding area in the form of direct transport jobs, and also providing a way of getting to other locations. Increased levels of infrastructure and government investment to an area can also entice private investors and mean that more companies decide to open offices in the location, or choose to sponsor a specific race which may be key to their marketing strategies.
However, there’s no point in a government spending hundreds of millions on a track if it’s only used once a year, and potentially won’t even renew after the contract runs out so that’s where the long term investment is really important. There’s been too many instances where football stadiums, athletics stadiums or race tracks are left empty and unloved after sporting events and so a bit of the old innovation is needed here.
For example, Silverstones ’Lapland’ initiative over the festive period helped to turn a profit in a season where there isn’t usually too much going on motorsports wise. Monaco also uses economics of scale and hosts more than one street event, Formula E alongside Formula 1, which means a lot of the work done can be used across the two.
5. Exposure to target markets
This works both ways - exposure for F1 and exposure for the country/circuit. For F1, having a race in a key market is a big tool in their kit to boost the fanbase in that area. Miami is being tipped as the next big race in F1’s sights and there has even been rumours that the fee would be reduced to make it happen. The reason for this is that US is relatively untapped in terms of potential, with the American fans tending to watch NASCAR or Indycar instead. Another target for F1 is Africa, with there currently being no race in Africa which again could provide a huge new fanbase.
Austin Grand Prix
On the other hand, having races can prompt a host of investment and business opportunities as mentioned earlier. A large portion of the sponsors within the sport are in the B2B market, rather than having consumer facing products, which means a race weekend provides a great networking opportunity. Zak Brown has previously said that “there are more CEO’s at the Singapore Grand Prix than any other”, making it a key business destination. Coupled with the backdrop of the Marina Bay which is full of financial services skyscrapers, it adds to Singapore’s reputation.
There’s a variety of factors which go into a decision around hosting a race but those were a summary of five of the biggest. Which race do you hope to see in the future?