Tuesday, October 16, 2012


So Sepang International Circuit in Malaysia wants to reduce its yearly hosting fees? Asking Bernie to take less? Good luck! It's not impossible though as Singapore has done it. But seriously Malaysia has only until 2015, after that we don't know if we will have the race or not.

Here is an article about this issue, reproduced from The Malaysian Reserve.

Sepang International Circuit Sdn Bhd (SIC) will seek for a reduction in the payment to host the Formula One (F1) race which first came to Malaysia in 1999, following a similar successful move by its Singapore counterpart.

SIC, a Malaysian motorsport race track organisation, will commence the discussion with F1 exclusive rights holder Formula One Management Ltd (FOM) “at an appropriate time’’ before the current contract expires in 2015, an SIC official told The Malaysian Reserve.

The race track company plans to negotiate for a “similar or a better deal’’ than Singapore which is expecting its F1 event to cost less to host in the coming five years and expects expenses to drop about 15% to 20%.

The cost of Singapore F1, the first to stage a night race for the Grand Prix, is about S$150 million (RM372.83 million), with the government co-funding 60% of the amount, said S Iswaran, Singapore’s second trade minister, who’s responsible for developing the tourism industry, according to a Bloomberg report on Sept 24.

“I can safely say that it cost us less than that to host F1 in Malaysia predominantly because we are a permanent circuit,” SIC chairman Datuk Mokhzani Mahathir (picture) said in an email response to The Malaysian Reserve, making reference to the to the cost across the causeway.

However, this assumes that the government is game for the F1 to continue beyond 2015. The cost of hosting F1 events largely consists of royalty/franchise fees payable to FOM, which holds exclusive rights to the popular racing event.

“The government pays the promoters fee via Sepang International Circuit. I’m not at liberty to disclose the figure,” added Mokhzani.

However, a Ministry of Finance (MoF) official, who declined to be named, said the fees were paid and managed by SIC to FOM.

With the contract still valid for another three years, SIC has yet to discuss extending Malaysia’s F1 contract with FOM or the MoF, said an SIC official.

When asked when negotiations will begin for the new F1 contract, Mokhzani told reporters covering the most recent F1 race in Sepang in March that Malaysia would start its negotiations at the end of next year.

At that time, SIC chief executive officer Datuk Ahmad Razlan Ahmad Razali was reported to have said that the company was not under pressure from either FOM or the government to come up with a decision on whether the F1 contract would be continued.

He added that as a business, SIC would ‘‘definitely want the F1 race to stay as it is a source of revenue’’ for the company, but the final say would come from the Cabinet.

The Sepang International Circuit is a motorsport race track located in Sepang, close to the Kuala Lumpur International Airport (KLIA) and is the hub for motor racing activities in the region. The circuit was officially inaugurated by the then Prime Minister Tun Dr Mahathir Mohamad in March 1999, who was present in Sepang during the March F1 race.

The Singapore F1 event will help boost tourists as Singapore forecasts arrivals to rise to 17 million and tourism spending to reach S$30 billion by 2015, the same Bloomberg report said.

On the Malaysian front, one SIC official had said 119,960 spectators had turned up over the weekend for the 2012 edition of the race.

In the Economic Transformation Programme annual report for 2011, it spoke about repackaging F1 and MotoGP events.

In an effort to boost the number of spectators to the F1 and the MotoGP Races in Malaysia, it said that SIC had repackaged the 2011 events for overseas promotions.

As a result of these efforts, it noted that F1 in 2011 recorded a 6.5% increase of spectatorship from 2010 while MotoGP 2011 recorded a 22% increase.

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