Commentary: Ecclestone playing a high-stakes poker game with Singapore GP

Commentary: Ecclestone playing a high-stakes poker game with Singapore GP

Sports Editor Philip Goh sees irony in F1 supremo Bernie Ecclestone's latest comments on the future of the Singapore Grand Prix.

SINGAPORE: So the man who pronounced Singapore “the jewel in the Formula One crown” is upset.

Not long after being told by Malaysia that the two-wheeled MotoGP attracts more fans to the Sepang Circuit than the ultra-glamorous four-wheeled championships he promotes, Bernie Ecclestone now faces the prospect of losing the sport’s one true night race across the border.

It’s a race he loves, and a shining example of how an F1 race should be hosted. The intricate logistics of putting up a world class street circuit, complete with lights and safety barriers, have been reduced to a systematic process that hardly disrupts the lives of ordinary Singaporeans. And the innovative add-ons introduced by Singapore GP that enrich the race weekend experience have been unashamedly replicated by organisers of other GPs around the world.

What Singapore did by bringing Mariah Carey, Maroon 5, Justin Bieber, Katy Perry, and this year, Kylie Minogue to be part of the F1 weekend, organisers of the United States Grand Prix in Texas emulated by having Taylor Swift show up, adding 20,000 more spectators in one fell swoop.

But that’s not enough to make Ecclestone happier or more accommodating. What he loves above all else is the reported US$65 million licence fee that Singapore pays every year, apparently the third highest after Malaysia and Abu Dhabi.

The current five-year agreement runs out after next year’s race, and negotiations for a new extension are ongoing. And it’s no secret Singapore wants to pay less. A lot less.

The island state feels it has done much to elevate the image of the sport in the nine editions held here. Despite its short history, the Singapore Grand Prix has become arguably Formula One’s most successful race in Asia, living up to its “jewel in the crown” tag year after year.

But Formula One’s 86-year-old supremo is not one for budging. If the money isn’t right, it’s adios amigos.

Since the inaugural Singapore Grand Prix in 2008, the sport has seen races come and go in India and South Korea, making white elephants of purpose-built race tracks in Buddh and Yeong-am. Races in F1’s traditional European homes have not been spared, with Valencia hosting five editions from 2008 to 2012 before being booted out, and the German Grand Prix continuing to bounce between Hockenheim and Nurburgring, or oblivion, due to financial constraints.

Even with attendance for Formula One races continuing to fall across the board, in tandem with declining TV viewership numbers, Ecclestone holds firm to the belief that the product he has helped developed for more than 40 years is worth a lot more.

And the Englishman has just upped the ante in the negotiations to extend F1’s stay in Singapore, much like one would in a high-stakes poker game.

Speaking like a spurned lover to German magazine Auto Motor Und Sport, Ecclestone said Singapore may not extend the deal because it had achieved what it wanted with the Grand Prix.

The F1 supremo added: "Look at what we have done for Singapore. Yes, the Grand Prix has cost Singapore a lot of money, but we’ve also given them a lot of money.

“Singapore was suddenly more than just an airport to fly to or from somewhere. Now they believe they have reached their goal and they do not want a Grand Prix anymore.”

"MUTUAL BENEFITS"

The prospect of Singapore dropping out of Formula One is not new, with Minister for Trade and Industry (Industry) S Iswaran sounding a cautious note in September when he said that any new agreement must be “anchored on clear mutual benefits, and also on terms that are mutually acceptable.”

Mr Iswaran also wanted to give new F1 owners Liberty Media the time to settle in, even if the Americans chose to keep Ecclestone on as chief executive officer for three more years. With Ecclestone continuing to wield some power, he would carry on squeezing every race organising country for every dollar that they can afford, and be damned if it meant those races are hosted at a loss.

Australia is one country that dares to declare the cost of hosting Formula One, with the 2015 edition losing a record A$61.7 million (US$45.3 million) despite an attendance of nearly 300,000 for the Melbourne event. This followed annual losses of A$50 million (US$36.7 million) in the preceding years, and taxpayers in the state of Victoria are set to bear the brunt until the latest contract runs out in 2023.

The Singapore Grand Prix declared a 15 per cent drop in attendance for the 2016 edition, with a cumulative 219,000 spectators for the three-day event, while not disclosing profit-loss numbers.

In 2013, Mr Iswaran told Parliament that it costs around S$150 million a year to host the race, of which 60 per cent is co-funded by the Government, while generating S$150 million in incremental tourism receipts for each edition.

Any financial analyst would tell you these are hardly break-even figures, even if one factors in the millions of eyeballs that follow the race on TV each year, and never fail to marvel at the wonderful sight of the Singapore skyline at night, generating incalculable PR value. That too is under threat, with official figures showing that Formula One has shed 200 million TV viewers worldwide since 2008.

Undoubtedly, the predictability of the races has turned fans off Formula One. There’s only that many times you can watch Lewis Hamilton or Nico Rosberg topping the qualifying time charts and going on to win, or the four seasons when Sebastian Vettel dominated proceedings.

Fans have resorted to praying for rain, which came and enlivened the last race in Interlagos, Brazil, even if it also ended in a predictable Mercedes 1-2. That is another concern Ecclestone brought up in the same interview, as he speculated at Mercedes’ departure in the next few years, and labelled those who leave as “ungrateful”.

F1 WOBBLY

Veteran F1 writer Luis Vasconcelos noted last month that only “state-funded Grand Prix have the means to stay in the calendar for the long term”. These include races in Australia, Azerbaijan, Abu Dhabi, Bahrain, Canada, China, Hungary, Russia, Malaysia and Singapore. Races in Belgium, Brazil, Germany, Italy, Mexico, Spain and the United States only take place courtesy of huge government subsidies. Only four races – in Austria, Britain, Monaco and Japan – are funded by private investors. Monaco reportedly pays little or no sanction fees for their annual F1 carnival.

Malaysia's tourism minister on Monday (Nov 21) told reporters that his country will not continue hosting races at Sepang after 2018. Already there is talk of Brazil and Canada dropping out, which Ecclestone acknowledged. Russia has hinted at pulling out after next year, and Azerbaijan may not renew after 2018, despite just hosting their inaugural race this year and declaring it wanted at least 10 years of F1 in Baku.

Seen in this light, one could not be faulted for concluding that the wheels are starting to fall off the F1 machine. Liberty Media priced Formula One at US$8 billion in their September buyout, and must surely be aware measures have to be put in place to arrest the trend of decline across the board.

Speaking to Formula One experts after this year’s Singapore Grand Prix, the common refrain was that Singapore is in a position of strength in the current negotiations, and the contract would eventually be renewed. The message to Bernie Ecclestone, they believed, was: “You need Singapore more than Singapore needs you.”

These F1 watchers also think the Singapore negotiating team are represented by very clever men who could match wits with Ecclestone and would not settle for anything less than the best deal.

The fact Ecclestone saw the need to fire the first salvo hints at his weakening position. And I’m sure Singapore would know how and when to call his bluff.

Source: CNA/pg