Saturday, 18 December 2010

Sepang F 1 racing: view from the grandstand

I wrote an article on the F1 racing in Malaysia. It drew a respectable number of comments. Clearly, there are more people out there who are more knowledgeable about this industry than I. Since then, my interest in the subject has increased.

I am not the only one paranoid over possibilities of people using some grandiose ideas as means to make us suckers. I am beginning to see, this is another scheme of skimming money from the kitty. Does Sepang make money or does MAHB who owns the circuit cares?

I once asked a former very senior UMNO leader and a senior minister at that, about the F1 racing. Since he is also a racing enthusiast, I asked him whether the Sepang circuit makes money. He answers flatly no.

Then how can it survive? No one he says hosts a racing event makes money nowadays. So how does it survive I pressed on? We don't see Sepang merchandise all around do we? Do they make money?

They do, by asking money from the government. They get all sorts of subsidies. Maybe deferred tax on earnings, reduced tax, no tax, and services in kind, grants etc. we can never know. We don't have audited reports. They spend like it's their father's money.

The government sometimes allows Sepang to have rights over special lottery draws. Oh.. itu macam. Saya pun boleh buat ini business and after that I too can drive around in my Bentleys, hummers, or Cayenne. No big deal. We have been hailing certain personalities as being proven entrepreneurs. In reality they are a bunch of bullshits. Fcuk bananas. Fcuk Sepang.

We haven't been told how much it cost the government to build the circuit? Or was it the MAHB who fully shouldered the cost and how much is that? What's the annual hosting fee? USD 20 million?

The government should stop backing these people with money. MAHB who owns the Sepang circuit must find its own ways to make money. It should build better airports and collect from whoever owes it money. Air Asia who is making tons of money must pay for using the airport. If not, why are you people in MAHB sitting on your backsides?

How much money was actually spent in building the circuit? How mucxh money has it paid Formula One Organizers to hold the races? How much money has it collected? How much tourism was attributed to people coming over to see people having fun in the ultimate phallic symbols? It's said the adrenalin surges in drivers are substitute for the surges achieved at sexual orgasms. I don't know that. But I certainly know of one personality in the multinational company I once worked with, was said to be impotent but compensated his inadequacy there by taking up crazy racing on weekends.

Sporting events such as F1 racing has become a major business industry and perceived as tool for improving the economies of host countries, regions or cities. It's nice if MAHB or the government can show us some economic impact analyses. How many jobs were created? Spillover businesses? Bumiputera businesses? Tourism revenue. Nyonya Ng Yen Yen- lu takde bikin a-na-li-sa ka? Bulapa manyak olang mali wo.

Bernie Ecclestone and the bankers with him are laughing at our antics. If people fight over who gets to use the Lotus name, he doesn't give a tinker's cuss. Eventually one of the suckers will come to negotiate with him on the rights to participate. The whole grand prix thing, since Bernie turned it into some commercial behemoth, has generated bidding wars amongst prospective host countries.

But at what price and what wonderful stories were told to us? Paying the price has commonly involved event organizers inducing governments to provide public funding, telling stories about indirect economic benefits that the event will generate. Where are the results though? The stories are seldom accompanied by a detailed and independent economic impact assessment, to substantiate the claimed benefits. Khazanah, EPU, Pemandu- lu orang semua bikin lah. So that we armchair critics can counter your arguments. Come on, don't be bashful; we aren't as good as those Mckinsey boys.

Why do people go see the races?

Those adrenalin junkies or those who want to be seen and see are all addicted to the high speeds, spectacular overtaking moves, horrific crashes, superman drivers, super-fast pit stops, team tactics and not forgetting the beautiful women. Yes sir, those clad in tight micro skirts. People can memorize those racing for Ferrari (Italian), British-American Racing Honda (British), Renault (French), Williams F1 (British), West McLaren Mercedes (British), BMW Sauber BMW (German), Toyota F1 (Japanese), Red Bull Racing (American), Midland (Russian), Torro Rosso (American), and Super Aguri (Japanese). We can even mesmerize people with our knowledge of engine manufacturers: - Fait - Ferrari (Italian), Honda (Japanese), BMW (German), Mercedes Benz (German), Toyota (Japanese), and Cosworth Ford (American).

Don't forget the Tyre Manufacturers: - Bridgestone (Japanese) and Michelin (French). Then there are the fuel and Oil Suppliers: - British Petroleum, Elf, Esso, Mobil, Petrobras and Shell, PETRONAS.

Why are we enamored with F1 racing? Of course it started with our grey eminence- that man who can walk on water- Tun Dr Mahathir. He wanted to bring motorsports here in Malaysia. F1 Teams are brought here to entertain billions of spectators across the world. The teams vie for the prestige and the honor of being crowned the best constructor (cars, tyres and fuel) and /or driver in the world. We the Sponsors are over the moon to be associated with the best motorsport and /or F1 team in the world and to enjoy global exposure.

But let us pause for a moment and analyze how much it cost is to host a grand prix? A racing circuit must obtain a T1-licence to qualify to host a F1 GP testing session. However to host an actual F1 GP the circuit must receive a Grade Circuit License and such license is only obtainable from the FIA.

Since 1999 F1 GP has been brought to Malaysia, USA, Bahrain and China. This was however at very high monetary costs, the major cost requirement being circuit construction and annual hosting cost. In the cases of the USA, China and Malaysia the government not only played a role in the construction costs of the circuit but also contribute to the annual hosting cost.

Does hosting the F1 race and sponsoring 3 teams to race beneficial to our economy or rather does it benefit a selective group of individuals actually?

15 comments:

Richard Cranium 18 December 2010 at 10:14  

Does anyone still watch the F1 on TV?

I've stopped watching this boring side-show. Just because one car overtakes another, and Steve Slater goes all "who says there is no excitement in Formula 1". Borrrring.

KL BOYZ 18 December 2010 at 10:25  

Salam Dato'Mohd Ariff...Harap dapat dilink blog KL BOYZ disini...
Terima Kasih...
http://klboyzwangsa.blogspot.com

Anonymous,  18 December 2010 at 11:03  

What about Monsoon Cup?

Does it bring benefits to our economy or rather does it benefit a selective group of individuals actually?

All projects/events that are supported by the government brings benefits to selective groups of well connected individuals only. It does not give tangible benefits to the people on the streets despite spending millions.

Pls do some analysis on the Monsoon Cup as well as well.

Anonymous,  18 December 2010 at 11:58  

Yesterday I met a retired policeman and he was cursing the government like hell.
His grouse was the poor people are suffering because of soaring food prices and the government leaders are spending money like water and enriching themselves using the peoples money.

But does that matter to the poor Malays?
All that matters is that they are the Tuans of this land and their religion is the most superior of all religions.

They can feed on that pride and survive.
That's what UMNO wants them to believe.
And to believe that without UMNO the Malays are doomed and the country taken over by Chinese.

Anonymous,  18 December 2010 at 13:06  

Dato', why do people go see the races?
Dapat tiket free la... just ask your friendly contractors that have bisnes with gomen-though they are cursing that they have to pay for the tickets but what to do as the mug up prices of their trading bisnes is 100%.
Hehehe... lu tolong gua, gua tolong sama lu....
It all makes your favorite TDM feels great! and Jibby ? you know ma!!!

ed199 18 December 2010 at 13:12  

what saddened me is, the inaccessibility of the track to local enthusiasts who cant afford to pay even when once in a while it's opened to public on weekends especially for the younger generations.

time and time again we've heard them talking c**k about promoting motor sports but we see the sepang official charging exhobirant fees even for a local rider who rides a kapcai.

SIC should not only be about F1..it should be about giving access to likes of ahmad, ah chung or rajan to foster good spirit in motorsport that could really produce a positive outcome on being a Malaysian

Wenger J Khairy 18 December 2010 at 13:13  

Dato',

For the benefits of those who do not know.

MAHB's revenues are from landing fees, leases on commercial premises in the airports and duty free shopping. Their revenue a year is around RM 1.7 billion of which the EBIDTA is around RM 600+ million i.e Cash Cow (McKinseh spik)

Gomen directly subsidizes MAHB to the tune of RM 31.70 per second or RM 1,000,000,000 a year by paying off KLIA. Its recorded in our Gomen books as a SUSBIDIH!.
Clik here.

Their tax rate is about 25% average. For them losing money on F1 is ok, cos they can claim a tax deduction etc, and F1 does bring in additional cargo, passengers, etc which translates to revenue.

The error in this discussion is to assume that MAHB if a capitalist organization in the truest sense i.e. it has limited resources and seeks to maximize return. Its not. Its a state funded organization by virtue of the RM 15 billion that you, me and 30 million other citizens pay for because thats the cost of KLIA.

So MAHB has the luxury of throwing some money at F1 for marginal gains in revenue via increased passenger and cargo load and tourism benefit. They had no cost to bear for building KLIA or Senator Senator Datuk Syed Ali Al-Habshee would want it, LT Tun Dr. Mahathir.

Btw, MAHB is so rich they can even invest RM 280 million in an airport in Turkey.

All of this however will come at a cost. Portugal, Greece, Ireland and Spain sort of disaster.

Anonymous,  18 December 2010 at 14:45  

If I can recall Tony launched his F1 outfit as 1Msia Lotus...roped in Naza ( he got greenlight for Matrade soon after)..and later 1Msia slowly disappeared.And Tune became more prominent.

Air Asia Asean HQ is in Jakarta.

Dato...TF is a businessman.He knows what he wants to achieve.At same time he is doing us all a favor by giving competition to MAS.

MAS inder DSIJ/Tg Azmil is a disaster.The way they are moving mow..they will be extinct in 5 years.They just don't get it..its about competition n competing.And throwing FireFly as your attacking force is just so weak.

Back to LOTUS issue...guess with TF strategy of leveraging the Tune brand on Lotus goodwill,the guys at Proton moved in to protect their asset.So thats where we are.

Petronas has been in F1 so long..and good or bad no one knows.Branding?access to the rich n famous decision makers?Giving umphhh to the third world leaders they deal with?

In a nutshell..TF is an Asian brand (eventually) n linkages with Msia will slowly reduce..
Petronas is history that no one wants to unravel.

The real new kid and Msian is Proton/Lotus.And surely it will end in tears.

Anonymous,  18 December 2010 at 15:03  

"It's nice if MAHB or the government can show us some economic impact analyses. How many jobs were created? Spillover businesses? Bumiputera businesses? Tourism revenue. Nyonya Ng Yen Yen- lu takde bikin a-na-li-sa ka? Bulapa manyak olang mali wo."

It is not nice but an obligation for the gomen to show the Rakyat, i.e. their Boss.

Oh, i forgot , these leaders air unconsciously incompetent aka CERTIFIED IDIOTS!!!

But we are bigger idiots for condoning and allowing these leakages.

To the non idiots, we must expose all these pekungs.

Proud memeber of MCLM

OneMalaysian,  18 December 2010 at 16:14  

Dear Sakmongkol

“Does hosting the F1 race and sponsoring 3 teams to race beneficial to our economy or rather does it benefit a selective group of individuals actually?”

For that answer, you have 3 guesses. A small country struggling to reach middle-income status sponsors not one but three teams out of 20! The total cost to Malaysia is at least USD300 million a year, excluding the Sepang races. So we are talking about RM1 billion a year of wasted money to entertain some foreigners. Let’s cut out all this bull-shit and spend the money in really worthwhile projects – better district hospitals, better rural roads, better rural schools – so that the 40% of our fellow Malaysians and their children can have a brighter future and we can all move forward as a nation.

But the people who run this government only pay lip service to helping the poor. They much prefer to hobnob with the jet-setting class. The poor, they are to be visited once every 5 years when it is election time, gathered in dewans to be told that only UMNO can guarantee their future by the every same set of people who sponsor F1 and the Monsoon Cup (the poor folks in Kuala Trengganu can’t even catch a glimpse of the sleek boats at sea) rumoured to cost a couple of million Ringgit to host. But you have to give it to the UMNO spin-doctors who can keep the humble folks fooled for so long.

You mentioned cost/benefit studies. But who ever dares question decisions that have already been taken by the PM himself? If you any smarts and want a long career in government service then just do the clever thing by coming up with a “study” to justify those white elephant projects. None other than Dr Mahathir himself started this culture. I cannot imagine anyone contradicting him and survived.

vinnan,  18 December 2010 at 18:25  

Melayu miskin kerana mereka bodoh. Jangan harap bangsa yang telah diperbodohkan selama 50 tahun boleh jadi pandai atau waras dalam satu atau dua tahun. Hanya apabila orang Melayu jadi miskin merana secara berleluasa baru mereka akan sedar tentang kebodohan meraka. Pahit tapi benar.

Anonymous,  18 December 2010 at 19:31  

There is a sucker born every minute in Bolehland my dearest dato.
You know why? because it works in line with the law of attraction.SUCKERS ATTRACT SUCKERS!
So why are you whinning ?

Anonymous,  18 December 2010 at 21:21  

There is a country down under that had F-1 racing long before us. When the 10 year contract was up they incurred a debt of US350 million after declaring annual profits every year. In the end the US 350 million was written off as Goddwill earned for the country. Everything goes with Sovereign Funding.

Quiet Despair,  18 December 2010 at 22:25  

Vinnan

You must be a Vivikenanda School drop-out to have such simplistic notions.
How come you and the Indians are still poor when Ananda Krishnan, A.K. Nathan and Tony Fernandes are getting richer by the day.
Does it jar your nerves that your race still herd cows or get drunk on toddy and fell by the road-side?
I see your hate Malay posts being splattered in other blogs too.
What did the Malays do to you to harbor such hatred?
At least we are poor but we are no ass-lickers or currying favor others like the Indians.
I see Kamalanathan perfecting the art during the suspension of Anwar and his gang in the House.
Tumpang sekaki when KJ was saying his piece on the issue.

Anonymous,  18 December 2010 at 22:42  

Sak,

1Malaysia Boleh lah. Apa apa pun boleh sebab kami ada lah 1Malaysia. 1Malaysia should now submit the bid to hold the 2024 Fifa World Cup to show to the world our enormous capabilities (or stupidity) which can truly reflect our Ketuanan supremacy. After all we have shown the world we have our national Potong car, Twin Towers, SMART tunnel, F1 racing track, 3 F1 racing teams, biggest roti canai, larget ketupat, longest satay, RM43 billion LRT system, etc, etc. That would surely sent shivers down the spine of our tiny insignificant little red dot neighbour not to mess with our 1government and our 1ministers.

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