Five more years for F1 Night Race

Lengthy negotiations end with a new deal to keep Formula One here until 2017 at least

By Terrence Voon, The Straits Times, 23 Sep 2012

After months of gridlock, Singapore has finally signed a new Formula One (F1) deal that will give the country more bang for its buck.

The sport's only true night race will carry on until at least 2017 as part of a new five-year contract that was sealed yesterday.

The fate of the Singapore Grand Prix had been hanging in the balance for nearly a year as the Government and race promoters Singapore GP haggled over the reported $50 million licence fee they pay rights holder Formula One Administration (FOA) each edition.

The contract terms remain confidential. "A gentleman should never speak about money and last night!" declared Mr Bernie Ecclestone, the British billionaire who runs F1.

The cost of organising each race has been about $150 million, with the Government co-funding 60 per cent of approved costs.

But Second Minister for Trade and Industry S. Iswaran made it clear that the cost will go down by around 15 to 20 per cent. This will be done by making the most of existing infrastructure, fine-tuning the way the race is organised and after "revised terms" were agreed with Singapore GP and FOA.

"The negotiations have taken some time because all parties had very specific objectives and wanted to arrive at a mutually beneficial outcome," said Mr Iswaran at a joint press conference with Mr Ecclestone yesterday. "Our view is that F1 has been good for Singapore... Equally, we believe that Singapore has also been good for F1."

Figures may not have been given, but it was clear that Singapore drove a much harder bargain this year.

"The most important thing I was trying to explain to the minister is that we don't race for free," quipped Mr Ecclestone. Mr Iswaran responded: "Which, as you can imagine, I found hard to accept."

Singapore staged its first F1 race at the Marina Bay street circuit in 2008 and has since garnered rave reviews for its spectacular setting, slick organisation and popularity with fans and teams.

Over the last four years, the night race has attracted more than 150,000 visitors from overseas. It has also reaped about $140 million to $150 million in incremental tourism receipts annually.

Mr Iswaran expects the numbers to "at least remain at this level".

All 84,317 tickets for this year's race are sold out, cementing the view that this is one of the sport's most prestigious events after the hallowed Monaco Grand Prix.

"All of us, without many exceptions, like being here," said Mr Ecclestone, hours before the qualifying session that saw McLaren's Lewis Hamilton win the right to start today's race from the front.

"This is what made it difficult for me to negotiate with the minister. He's not easy to deal with, and I can't understand why he was complaining about us using the streets and wearing out streets."

Public grievances about congestion and loss of revenue from track-side businesses have dogged the race for years.

Mr Iswaran said there are no specific plans to move the downtown circuit as this would "change the character of the race".

However, it is understood that moving the layout to include the Marina Bay Sands integrated resort is a possibility.

For now, improving the race - and reducing inconvenience to the public - will be a priority.

"Some of those who have a different point of view (about the F1 race)... we need to continue to work with them," said the minister. "We will look hard at what are the underlying reasons for some of the views which are to the contrary, and we'll see how can address them."





[Nightfall]: Singapore and the F1 Night Grand Prix Timelapse from Repro on Vimeo.

S'pore signs with eyes wide open
Negotiations to extend night race were thorough, tough and went to the wire
By Terrence Voon, The Straits Times, 23 Sep 2012

Singapore entered its new Formula One lap with "eyes wide open", and a tough-as-nails approach which earned grudging admiration from a man who knows all about wheeling and dealing.

"Let me tell you how serious the (Singapore) minister is," F1's 81-year-old patriarch Bernie Ecclestone told the international press yesterday, referring to Second Minister for Trade and Industry S.Iswaran.

"You'll be paying for your seat on the way out."

The wisecrack drew laughter, but Ecclestone's point was clear: Singapore meant business when it negotiated its new five-year F1 deal, which will see the race run till at least 2017. And it made sure that business was good before it shook hands with rights holder Formula One Administration.

Experts from the Boston Consulting Group (BCG) were roped in to deliver a comprehensive cost-and-benefit analysis for the Government two years ago. Their conclusion: The race would reap $1billion in "net economic output" for the Republic over 10 years.

Plus, another $1 billion over a decade in terms of increased tourism and investment - benefits that would not have come Singapore's way without the global exposure offered by the race.

The studies were comprehensive, said Jeffrey Chua, BCG's partner and managing director.

It took into account tourism receipts, operating expenses, loss of retail sales around the circuit and productivity costs. It even factored in the cost of traffic congestion and the number of tourists who stay away because of Formula One.

In short, the sums added up before Singapore signed on the dotted line.

But even up till Friday night, MrIswaran - the Government's point man for F1 - was not totally sure the deal for the Singapore Grand Prix would go through.

He said yesterday: "We all kept our eyes wide open. We all had very little sleep the last few days.

"I can tell you if any one of the parties felt that the deal wasn't quite right, we wouldn't have done the announcement."

But it was not about "who blinked first", he stressed.

Singapore's working relationship with Formula One, made possible by the friendship between Singapore GP chief Ong Beng Seng and Ecclestone, needed to be protected too.

Said the minister: "It's not a one-upmanship game. If you win, but the partnership suffers, you lose. The important thing is for everybody to come to the table and say, 'All right, I see your interest, this is mine, let's find some common ground'."

It is understood that over the past year, representatives from various parties involved in the negotiations flew across the globe several times to thrash out a deal.

In the end, they were motivated by wanting to conclude the talks symbolically this week, during the race.

"All of us felt that, emotionally, it would be right if we could come to a closure and announce it whilst the race is in Singapore," said MrIswaran.

Their work is not yet done. Singapore will need to work even harder to maintain its standing as the "Monaco of the East".

Continued success, said Mr Iswaran, is not guaranteed. "The other reason why we were quite deliberate and careful is because after five years, there is a potential for this to lose its shine," he said.

A big threat on the horizon is the appearance of other night races on the F1 calendar. Ecclestone refused to dismiss that possibility yesterday. He said: "The trouble is, Singapore have started something that's so popular worldwide, and I'm sure that other people are going to want to do this."

In true Singapore fashion, even that has been taken into account in the overall analysis. So was the popularity of the race, which at least 70 per cent of Singaporeans support, according to a BCG survey.

The views of the other 30 per cent, said Iswaran, will be taken seriously too.

"It took a bit of a burst of activity over the last couple of days to get to where we are today," he added.

Over the next five years, it will certainly take much more to keep the Singapore GP at the front of the F1 grid.




A Grand Prix for all S'poreans to embrace
Second Minister for Trade and Industry S. Iswaran, the Government's point man for all things F1, reflects on what it means for Singapore to have the race here for another five years.
By Phua Mei Pin, The Straits Times, 29 Sep 2012

Can you take us through the negotiation process?

We started the negotiation process 12 months ago. But we actually had consultants studying this even before that because we wanted to be very clear what the parameters were for us, and we wanted to let the parties we were negotiating with know early what our expectations were.

Our position was always that, if it didn't meet what we aspired for, we would be prepared to walk away, shake hands and remain good friends, but we see out our contractual obligations and then find other ways of doing things.

But equally, we thought that, if there's a way to work out a win-win, then of course we'll be very happy to sign.

We actually concluded the terms on Saturday morning of the race weekend, before we announced it that evening.

Beyond the 40,000 visitors and $150 million of tourism receipts each race weekend, and $1 billion of "additional value-add" over 10 years, what does F1 really do for Singapore?

One important part is global branding of Singapore.

Many decision makers, business and government leaders see F1 as emblematic of what we can do. They see us as an innovative place that is able to execute effectively new and different ideas.

As a result, many of them are keen to then say, look, why don't we also try something different in Singapore.

In the course of this last weekend, I met several CEOs who were here because of F1. Many of them were putting very specific propositions to us, from setting up Asian headquarters to trying out new business ideas in Singapore. F1 has helped to materially shape the way decision makers around the world see Singapore.

At the mass level, many people in some of our non-traditional tourism markets, like Brazil and Germany, are now more aware of Singapore because F1 is keenly followed in those countries. F1 might motivate them to travel or have other kinds of exchanges with us.

The most important aspect, in my view, is the reaction of Singaporeans themselves. Many Singaporeans from diverse walks of life have shared with me how proud they are that we are hosting something like this here. They feel good about it because they see the city being shown off at its best, and their friends from overseas talk about Singapore in glowing terms. These things give them a great sense of pride. I think you can't put a price on that.

There are about 1,000 ITE (Institute of Technical Education) students who get involved in the F1 organisation every year. I met some of them this year. They were sharing with me the operational challenges they faced and the diverse people they met.

The kind of experience they gain from it is immeasurable; they value that. But the other part of it was, they had a real sense of pride to be part of this very significant undertaking.

That sense of pride is the most significant benefit.

How can we keep the Singapore Grand Prix a top race?

There are some very unique elements specific to Singapore which are advantages: we are unique by being a night race; we have a very distinctive skyline that always attracts compliments; we are not just a motorsports race, but have all these lifestyle events adding to the vibrancy; there is a very high level of corporate involvement.

The other aspect is that Singapore is in a region where tourism and related lifestyle activities are rising, because Asia is rising, the middle class is growing, disposable incomes are higher, so people are looking for new and better forms of entertainment. And something like F1 is in sync with some of those aspirations.

But we must never allow ourselves to get complacent.

We already see competition. When we came to this thing, there was no such thing as a night race. Now Abu Dhabi has a twilight race.

We brought in a lot of entertainment. Now a lot of the races around the world have got their own entertainment.

How we continue to differentiate ourselves in these ways will make a big difference.

We were quite cognisant of the fact that, by extending for another five years, we must make sure that Singapore continues to be able to maintain its position as a leading race.

What are the plans to make F1 here a more "Singaporean" race?

We're limited only by our ideas, quite frankly. This is not just about the Government or the race organisers coming out with ways to do this.

F1 is really a platform which all parts of the Singapore community can leverage off. If you're a business, an educator or a community group, how do you leverage off it? We're open to ideas as well about where we can also, from a government or organiser perspective, do more.

Look at the business community. In the first year, there was a more guarded response. If you look at it now, the number of activities that go on around Singapore, purely initiated by private enterprise as part of a larger Singapore Grand Prix season, gives you a sense of how things have evolved.

We can expect the same in the social and community spaces as well. I think it will evolve.

What of the view that F1 is not accessible to everyone?

All of us have got some limits on what we may be able to buy or consume as a consumer. But the important thing is that we are able to create opportunities for people to pursue careers that they find fruitful.

I'll give you an example. By having a five-star hotel which charges top dollar for its rooms, we're able to create a whole set of jobs for Singaporeans who are interested in the hospitality sector.

What do you say to those who remain resistant towards F1?

Based on third-party surveys, 70 per cent of Singaporeans are supportive of the idea that Singapore hosts F1. We know that there are some segments with concerns, and we will do our best to continually address them.

On traffic congestion or disruption, we cannot eliminate it but we can try and mitigate it.

For some pockets in the business community who feel that they have some difficulties with F1, while it may affect business in some periods, there are opportunities to leverage off.

The Singapore Tourism Board has been engaging stakeholders to see what the issues are and how we can work on them. But we've got to keep realistic. We won't be able to eliminate all the hassles, because some of them are an inevitable part of having a street race.