Does Formula 1 really benefit Singapore?

The Grand Prix rolls into town next month and among the clouds of smoke will be one of uncertainty over the sport’s future presence in the city.

In a few weeks’ time we will witness the fifth race of a five-year deal and there has been no extension of this contract as yet. While Formula 1 supremo Bernie Ecclestone jumped the gun in stating another five years had been agreed the government hasn’t been so eager to put pen to paper.

It has until June 2013 to decide how “economically viable” the race is for Singapore. Even if decides to wave goodbye to Bernie and the F1 fanfare, the Grand Prix will still run for a further two years as part of the existing deal – seven years in total.

For some the race is a no brainer; it brings in tourists, millions of dollars in revenue and helps improve Singapore’s global profile. It may cost around $150 million to stage each year but it adds around $160 million in tourist receipts.

Of the costs, these are split between private outfit Singapore GP and the government, with the latter picking up around 60 per cent of the bill.

But just looking at the financial benefit can be misleading, despite being the most tangible way to assess the benefit of the race. Evaluating the social pros and cons muddies the waters but is an important part of the debate.

Some think road closures, disruption to shopping trade and the pollution outweigh the social buzz and glamour of having famous racing car drivers in town along with their glitzy entourages and followers.

But the social debate could be the sticking point for the government which led it to state last month that “the process has taken somewhat longer than we expected.” If it was looking at the revenues alone it would have signed up for another five-years without hesitation.

This was what 81-year-old Bernie Ecclestone was banking on when he said that all the obstacles had been cleared for another five years of the Singapore Grand Prix.

But he was wrong. There are plenty of roadblocks still in the way which could see the night race disappear from the city state. One of them is in fact Ecclestone himself.

Many question marks hang over how long he will be remain the helm of Formula 1 given his age and the growing unrest from the car manufacturers looking for a more structured management set-up.

When the government makes it decision next year it could be working with an Ecclestone-free franchise. A bit like playing for Manchester United without Sir Alex in charge.

What may help is if Formula 1’s plans to list on the Singapore Exchange were put back on track. Like Manchester United, it stalled its plans due to market turmoil.

While United went on to list on Wall Street, Formula 1’s listing plans are still on hold.

Many big corporations use the Singapore Grand Prix to entertain clients and contacts over the three-day festival. In fact a few M&A deals are believed to have taken shape in its hospitality tents and boxes.

Maybe this time it will be Ecclestone and his cronies finally committing to Singapore, the way it wants Singapore to commit to them.