Come clean on F1 losses
FocusM team | 14 Apr 2017 00:30
THE country’s association with Formula One (F1) Grand Prix comes to an end this season after 19 years. This will be our last year hosting a leg of the premier motorsport event. But the big question remains: Has F1 been worth all the billions spent?
Conventional wisdom says the decision to exit F1 was inevitable, given economic conditions in the last few years. Petroliam Nasional Bhd (Petronas), the title sponsor of the Malaysian F1, has suffered massive drops in revenue since the oil price collapsed in 2015.
The government points to declining ticket sales, viewership and tourism as key reasons to exit F1, which are all fair and valid.
Attendance, the primary source of direct revenue for the organisers, has fallen drastically over the years. Last year’s ticket sales were about 45,000, less than half the capacity of the 120,000-seat Sepang Circuit.
Malaysia is not alone. Even Singapore is reportedly considering axing the event, just nine years after it started hosting night races on the city state’s roads.
But does this mean that we should all shrug collectively and chalk our F1 exit to bad luck or wrong timing?
Most definitely not. The government spends around RM300 mil annually to organise and promote the event, and that does not include Petronas’ sponsorship of the Mercedes team.
When we coveted the F1 two decades ago, the government trumpeted, among other things, the intangible benefits of hosting the high-profile race such as the trickle down effects to our vital tourism sector.
It was a long-term investment, critics of the F1 were told. Well, apparently long-term only lasts less than two decades.
The government needs to disclose how the country has gained from its involvement in F1 over 19 years and provide an estimate of the financial returns of hosting the event. Taxpayers have every right to know how much of their money was spent to host it. The secrecy culture must end.
Transparency and post-mortem are important for another reason. If our F1 investment was indeed a financial misadventure, what are the lessons learnt?
Some quarters cushioned the blow of losing F1, saying it could just be a hiatus, implying that if good times roll again for Petronas, we could return to the F1 fold.
If that happens, we could be doomed to repeat a hugely expensive mistake.
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