This weekend’s Formula One (F1) night race marks Singapore’s fourth year of playing host to this sporting event that is proving to be lucrative for both organizers and sponsors alike.
The Singapore Tourism Board (STB) told CNBC on Friday that the annual event costs S$150 million ($115 million) to stage. The company Singapore Grand Prix, set up by local entrepreneur Ong Beng Seng, has the rights to run the race for five years. Singapore GP along with the government share the cost of the event, with the government footing 60 percent of the bill, according to the STB.
Beyond the floodlights, race cars, A-list crowds and glamorous parties, the sporting event has turned into a business opportunity for hotels and retailers attracting tourists that make up about 40 percent of the spectators.
“Every year, for the last 3 or 4 years, (Singapore GP) adds over S$100 million on top of the overall tourist receipts,” Song Seng Wun, Regional Economist of CIMB, told CNBC.
Tourists coming for the three-day event are forecast to spend around S$100 million this year, according to the Singapore Tourism Board. The total expected revenue of S$200 million offers a sizable return on the S$150 million spent.
In addition to the economic benefits, Song says the “spillover effects” of hosting the F1 play an equally important role. “(It) enhances Singapore, not just as a place to work in, but as a place to play in as well.”
While it remains unknown whether Singapore Grand Prix will extend its 5-year contract to host the night race beyond 2012, members of the racing community, including Graeme Lowdon, CEO of the Virgin Racing team hope they are able to return to the city’s challenging, 5.1-kilometer street track for many years to come.
“If Singapore was taken out of the F1 circuit we would lose two things, we would lose an important location in terms of commercial partners but also we would lose a really great, fun place to come to as well that everyone in the team thoroughly enjoys,” said Lowdon.
Among the commercial partners for the event are local telecom giant Singtel , luxury retailer Hugo Boss and Johnnie Walker maker Diageo.
The spirits maker, which has spent over 30 million pounds ($46 million) on its partnership with Vodafone McLaren Mercedes since 2005, says the racing event in Singapore is an important arena for building Johnnie Walker’s brand equity.
“Singapore is really big for us. Singapore Formula One Grand Prix has become one of the most important social events on the Singapore calendar…it really delivers strongly for us,” Mark Sandys, Category Director, Whisky and Reserve, Diageo Asia Pacific, said.
“(From the sponsorship), we’ve seen really significant increases in our brand awareness and also in the affinity that consumers have for our brand,” Sandys said.