Cape Town F1: Lessons from Singapore and Shanghai

Singapore Grand Prix PTE Ltd.

The main purpose of the visits to the Singapore F1 Grand Prix and the Shanghai F1 Grand Prix was to gain a thorough understanding into how the City of Cape Town could respond to the numerous proposals it had received over the last five years, requesting it to host a Formula One GP in Cape Town.

There are currently more than two proposals from interested parties, and these proposals fall into two main categories.

The first category relates to the construction of a F1 Grand Prix circuit that will require significant upfront investment and may become a catalyst for further industrial and economic development in the immediate surrounding location.

The other category of proposals relates to the creation of a street race event on existing road infrastructure within the central city that will require relatively low upfront capital expenditure.

The Singapore Grand Prix PTE Ltd is the event organiser for the Singapore Grand Prix. The company is, in essence, a public private partnership that is owned by the government and the private sector tourism industry.

The discussions with the management of Fl GP revealed that the City of Cape Town need to think carefully about the benefit it would like to extract from hosting the F1 Grand Prix.

There are two types of benefit, namely Legacy and Destination Marketing.

Legacy refers to F1 infrastructure that can be used for many years after the event and even act as a catalyst for development (such as an Airport, Free Trade Zone, Motor Industry Clusters, etc). Destination marketing refers to the showcasing of Cape Town as a leisure and business destination. It relates to a visitor·centred approach to the economic and cultural development of a location, which balances and integrates the interests of visitors and the local community.

The benefits of Destination Marketing will be realised under both categories of proposals but the Legacy benefits will not be as prevalent in a street race circuit event where the entire infrastructure is temporarily erected.

The Singapore GP is a night race on a street circuit. The entire event is constructed with temporary infrastructure and dismantled afterwards. The street circuit has been designed around the Marina Bay area and provides for spectacular images of Singapore. The benefits of Destination Marketing are clearly evident and hotels in Singapore have, as a result of the F1 GP, experienced much higher occupancies.

Singapore GP did not disclose its profits or losses to the Mayoral delegation.

Shanghai Grand Prix Circuit

The Shanghai Grand Prix circuit is located 45 minutes outside the central city of Shanghai. T

The cost to construct the Shanghai GP circuit is estimated at R1 billion.

In contrast to the Singapore GP, the immediate surrounding location of the Shanghai Circuit does not provide for good destination marketing material. The Shanghai GP was meant to be a catalyst for the surrounding area to be developed but this also did not materialise, ostensibly due to lack of private sector investment appetite.

It is also not clear whether the Shanghai Grand Prix is making losses or profits.

There are benefits of hosting an F1 GP. lt is important that the City of Cape Town understand the full cost of obtaining the benefits under the various alternatives.

Therefore it is recommended that a comprehensive cost benefit analyses of the alternatives is undertaken. It is recommended that EMT identify and propose the administrative resources (cash for consultants and officials’ time) to evaluate the cost and benefit of hosting a F1 event, including whether a street race VS. a stadium race option should be pursued.

Source: City of Cape Town. Report on Study Tour to Asia