Why has Singapore quickly become one of F1’s most important and successful races, where events in places like Korea and India have floundered?
Of course the charisma of the night race and the economic location of the event, in the business gateway to Asia are significant factors. But the reason why it works so well is the business model for organising the event. And it’s one other F1 races and aspiring hosts would do well to emulate.
The key to it is a public/private model; a 60-40 split between the Singapore government and a private company owned by entrepreneur Ong Beng Seng, whose property, hotels and lifestyle business also extends to operating Ferrari dealerships in Singapore and Shanghai. Ong was the first to bring Haagen Dazs ice cream to Asia and is one of Singapore’s main concert promoters via his Lushington Entertainments company.
The government takes 60% of the financial risk in return for 60% of the returns, Ong’s company fronts 40% of the costs and gets 40% of the revenues. By doing it this way, the government doesn’t get accused by critics of wasting public money on an F1 race (like Melbourne for example), it can point to a heathly profit. But crucially it makes it worth it for the entrepreneurial promoter.
“It’s a 60-40 split, although a lot of the infrastructure was paid by the government at the outset,” says Syn. “The government takes risk but gets upside. We share the risks. The new Grand Prix venues are looking at it, the Thais (the aspiring Thailand Grand Prix organisers), for example. It’s the best way.
“If you don’t get the government behind you it doesn’t work. The first year we had to submit plans and road closures. The government had given the green light so all our plans were fast tracked.”
Too many promoters are exposed to risk and when they fail to meet financial deadlines, the event collapses. Singapore in contrast is in the first year of a new five year contract with F1 and is almost sold out for spectators and corporate guests. Data issued by the Singapore Tourist Office shows that there is a 12% increase in inbound air traffic this weekend due to the Grand Prix. One of the targets Singapore GP Ltd has to hit is 40% of the spectators coming from outside Singapore, a target they have hit – just – in each of the first five years.
Overall attendance for the Singapore GP last year was around 260,000, an average of just over 80,000 people each day. This year looks set to be an increase on that. Figures from the Singapore Tourist Office claim that the event brings in 150 million Singapore dollars. 17% of the fans come from Australia, with 8% from the UK and 6% from Indonesia.
According to an Insight articleon the website of JA on F1 partner UBS, the idea for a night race was Bernie Ecclestone’s; when the Singapore GP team were waiting for him in his office in London,
“All of a sudden he stretched his hand in and switched off the lights,” says Colin Syn, the event organiser. “Then he opened the door, switched on the lights and said, ‘I want a night race!’ “
It took just 18 months from that point to the F1 cars running on the streets around the Marina Bay circuit for the first race and since then the event has become a blueprint for how a Grand Prix should be run.