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Why do Cities Want to Host Formula 1 Races?

Written by Isha Reshmi Mohan, Edited by Vyas Ponnuri

Credit - Mark Thompson/Getty Images

Formula 1 is an extremely expensive sport for both drivers and spectators, and hosting an event is equally expensive, due to various factors to be considered. These factors include ensuring safety, accommodating large crowds, and ensuring the event goes on without a hitch, to avoid broadcasting delays. Additionally, maintaining tracks to sustain their quality, and to meet the numerous standards and requirements is another testing task. Given these challenges, why do participants and organisers continue to engage in Formula 1?


Putting themselves ‘out’ there

Hosting Formula 1 races provides host cities the opportunity to position themselves as potential hosts for other major sporting events. It demonstrates a country's commitment to meeting the necessary conditions, and going above and beyond to ensure successful events. This aspect is evident for cities such as Abu Dhabi, who continue to pay a premium to host the final race of the season, despite the FIA's new plan to organise races according to continents. The ‘hype’ of a season finale generates significant excitement, and the host city doesn't want to miss out on the potential opportunities associated with such a prestigious event.


Is it a good investment?

Similar to other forms of investment, hosting a Formula 1 race carries inherent risks, particularly when significant financial resources are involved, in the hope of substantial returns. Countries such as Monaco, Singapore, Japan, Brazil, the UK, and the United States are already well-established, and frequently visited, making them more likely to witness consistent tourism. However, for other countries, it remains unclear whether hosting an F1 event leads to a notable increase in tourism. While some middle-eastern countries have ventured into newer pastures, such as hosting football world cups, their involvement in Formula 1 remains limited at present.


Regarding unavoidable factors, ticket prices for attending Formula One races tend to be considerably on the expensive side. It has been reported that only around 1% of Formula 1 fans actually attend races in person. Consequently, investing a substantial amount of money in hosting a race does not guarantee significant returns. Fans often prioritise attending races at well-known tracks, or those situated near their location. On the other hand, fans of other sports are more inclined to travel internationally to support their favourite teams during major games. This preference for familiar or convenient race locations can influence the overall attendance figures, and financial outcomes for hosting countries.

Melbourne has always seen record crowds and exposure, despite financial hardships. Credit - Aston Martin F1

The Curious case of Melbourne and the Australian Grand Prix

A well-known headliner that can help understand the situation is the Albert Park Circuit in Melbourne, Australia. While the circuit is a popular tourist destination, there have been concerns about the financial implications of hosting the grand prix, dating back to 2011. Reports have indicated that the country has faced substantial losses and has had to allocate millions of taxpayer dollars to support the event. This situation has understandably caused significant discontent among some Victorians.


On the other hand, the governor at the time has been actively defending the decision to host the grand prix, viewing it as an 'investment' rather than a financial burden. The governor believed that the exposure the country gained from broadcasting the event and the opportunity to welcome fans from around the world are invaluable. Additionally, the governor maintains that the benefits derived from hosting the Grand Prix outweigh the associated costs, and they have strived to minimise expenses wherever possible.


“I don’t think you can buy that sort of exposure,” Richard Wynne, Government frontbencher


Last year, the Albert Park Circuit signed a long-term deal, guaranteeing its presence until 2035. The circuit will also open its doors to the feeder series Formula 2 and Formula 3, while retaining the Supercars and hosting a minimum of five opening races in the upcoming years.


“It’s an Australian icon, and the fact that we’ll be here until at least 2035 is something that all motor racing fans, all major event fans and hopefully all Victorians can be very, very excited about.” - Pakula, Minister for Tourism, Sports and other major events


Tourism and Locals

Additionally, hosting a Formula 1 race positively impacts tourism. Despite races typically lasting only a weekend compared to longer events like the World Cup, the host city's hospitality sector can still experience significant benefits. The influx of visitors for the race contributes to increased revenue for local businesses, particularly those located near the track, as most spectators tend to be concentrated in that area. The financial impact extends beyond the race itself, reaching various sectors within the local economy.


However, certain host cities have faced concerns raised by local residents, regarding issues such as noise, pollution, and, in extreme cases, forced displacement from their homes to make way for a track utilised only once a year. These concerns highlight the potential negative impacts on the host communities when hosting a Formula 1 race. It is crucial for organisers and stakeholders to engage in careful dialogue, and consider the well-being and interests of the local residents while planning and executing such events. Balancing the economic benefits with the social and environmental considerations is vital to ensure a positive and sustainable relationship between a host city and the Formula 1 race.


Street vs Track

While it is challenging to definitively ascertain individual fan preferences, a study has shown that street circuit locations experience an 8.6% boost in attendance compared to traditional tracks, which usually see an increase of 5.5%. These figures suggest fans are attracted to the idea of combining their race weekend with exploring the city more conveniently. However, it's important to note that factors such as ticket prices, seat locations, and personal fan preferences can also influence attendance figures. Ultimately, the appeal of street circuits lies in their ability to provide a unique and immersive experience for fans.


Sportswashing

It is not uncommon for Formula 1, like many other international sporting events, to serve as a means for countries to divert attention from other matters, and enhance their reputation. When concerns are raised regarding this aspect, the FIA (Fédération Internationale de l'Automobile) has stated: "The FIA, as is the case with international sporting federations, cannot interfere in the internal affairs of a sovereign state.”


Hopes of bringing in new fans

The presence of a Formula 1 circuit in a particular country can spark conversations among locals, and contribute to increased viewership. While hosting a race involves some level of risk for both the host country and the FIA, engaging the local community can have a positive impact. Even if individuals are unable to attend races in person, their participation through subscribing to F1TV, or streaming the races through available channels can help grow the sport. This increased viewership is crucial for the development and sustainability of Formula 1, as it expands the fan base, and generates greater interest in the sport.



In conclusion, by hosting an F1 race, countries aim to attract more visitors, enhance their reputation, and create a positive perception of their nation. The economic impact is substantial, as tourists spend money on hotels, local businesses, and other services, which in turn stimulates the economy.


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