Hopes for economic boon as Hanoi nears F1 starting line

17:00 | 08/02/2020
Sporting fans in Vietnam are being treated to a new extravaganza in the form of Hanoi’s Formula One Grand Prix but will the event, which sees the rich and famous get together to hob-nob in the limelight and seek out new business contacts, bring real tangible benefits to the city? Quang Bao reports.
hopes for economic boon as hanoi nears f1 starting line
The streets of My Dinh in Hanoi will play host to Vietnam’s first-ever F1 Grand PrixPhoto: Duc Thanh

With only a couple of months until the green light signals the start of the first-ever F1 race in Vietnam, promotion of the Grand Prix is beginning to jump to a new level. The race, which will take place on April 5 and with qualifying the day before, will mark Vietnam as the 34th country to host an F1 Grand Prix.

The brand new Hanoi Street Circuit is only the fourth street race ever on the F1 calendar, with the 23-turn track comprised of traditional roads in Hanoi’s My Dinh area as well as those laid especially for the event. Throughout January, construction workers were busy laying the tarmac itself along with the final asphalt layers, the material of which was sourced in the northeastern province of Quang Ninh.

At the end of January, event organisers revealed photographs through social media of the newly-completed pit building, saying, “We are delighted to confirm the completion of the Hanoi Circuit Pit Building – a 300m long, three-storey structure overlooking the starting grid. The design is inspired by Hanoi’s Imperial Citadel of Thang Long, and the Pavilion of the Constellation of Literature – a symbol of Hanoi.”

F1 superstar Lewis Hamilton will be looking to add to his impressive six world titles by taking part in the Hanoi race, which will be the third in the 2020 competition, coming after the Bahrain edition and before the race in Shanghai. With 22 races for the whole season, the competition is longer than ever – and while some of the drivers believe that number is too much for one year, it does provide the chance for countries not accustomed to such events to throw their name into the hat and play host for the sport’s greatest drivers.

And it is not only the drivers and their teams that will descend upon Hanoi in April. While general tickets have been reasonably priced in order for locals to grab a taste, F1 has predominantly been seen as an upper-class sport frequented by petrol-heads, champagne quaffers, elite car owners, tech boffins, business leaders, and straight-up international celebrities.

In fact, a two-day ticket for the VIP experience known as the Paddock Club costs an eye-watering VND122 million ($5,304). But with privileges such as trackside viewing above the team garages, gourmet luncheons, fine wines and open champagne bars, pit lane walks, driving tours of the track, live entertainment, and appearances by the F1 drivers themselves, the cost is perhaps no surprise.

At the other end of the scale, an analysis of F1 ticket prices globally before the introduction of Vietnam shows that the Hanoi edition should feature favourably when it comes to the entry fee. Last year, the cheapest tickets were offered in countries such as China, Russia, and Hungary, while the most expensive could be found in Monaco and Abu Dhabi. The average cost of a general admission ticket which covers three days sat at $163, with the cheapest in China at $70 and the priciest in Abu Dhabi at $272.

Spiralling running costs

Race-goers will have to take other factors into consideration, however. Famous F1 spots are known to see ramped-up hotel costs in the area and destinations like Hanoi may be no different. In January, CEO of Vietnam Grand Prix Corporation Le Ngoc Chi appealed to the tourism industry to keep room fees reasonable. “Sometimes hotels have a tendency to just try to reap as much as they can,” Chi explained. “We have a lot of conferences with the hotels and tell them that they need to think for the longer term. This is for us but also for them, too – they need to make it sustainable.”

While the tourism industry could benefit from an influx of new sports fans, it is yet unclear how much the city, or the country as a whole, could gain economically from the event over the next few years. The first hurdle to get over is the actual cost of hosting in the first place. While the numbers vary wildly depending on the country, a typical track for an F1 race according to Formula Money comes to around $270 million, including the grandstands, pit buildings, electrics, and media and medical centres.

However, that figure does not include the annual hosting fee, which differs depending on the contract the country has to hold the race, and the length of time it will remain on the calendar. Running annual costs then come into play, meaning a 10-year run on the Grand Prix calendar could lead to a $1 billion fee for staging the race.

As a result of spiralling costs, some nations have pulled out after struggling to guarantee public funds, or over tax issues. Malaysia decided to end its association with the sport in 2018 after a 19-year run, citing diminished returns compared to the cost of hosting races. The added number of races in the year, including new tracks elsewhere in Asia, led to the Malaysian leg waning in popularity. The popular Mexico City edition almost pulled the plug last year, meanwhile, although F1 owners Liberty Media ensured continuation of the deal through to 2022 by lowering hosting fees for the country. Previously, former Grand Prix events in India, Turkey, and South Korea were also bogged down in financial and operational issues.

Other hosts, however, have revealed their glee at what the race can do for the local area. A recent PricewaterhouseCoopers report for Baku City Circuit revealed that the Azerbaijan event has generated over $500 million over the past four years. The figure takes into account direct and indirect spending linked to the race weekends in the capital, including hotels, restaurants, and transport services, as well as in catering, agriculture, telecoms, and wholesale trade and electricity.

In a statement that Hanoi officials will surely aim to replicate after its first-ever Grand Prix, Baku City Circuit’s executive director Arif Rahimov said of the report result, “We have always emphasised that Formula One in Baku is more than just a showpiece event but instead a spark for economic, social, and cultural change that will create increased opportunities and benefits for everyone living and working here.”

It remains to be seen how business in the immediate vicinity of the race will fare – for example, local groups and shopping centres close to the Singaporean circuit have reported severe drops around the time of the race due to road closures nearby, although any potential rise in tourists could offset this in the local economy elsewhere. Some firms will also enjoy free advertising and exposure on an international scale simply by being close to the action and, therefore, the cameras.

Potential hurdles

In the meantime, sports fans and businesses alike will be hoping the current coronavirus health crisis does not force motor racing officials into unfortunate decisions over postponing or moving race events in the near future.

The Fédération Internationale de l’Automobile (FIA), which governs motor racing events including Formula One, is “closely monitoring” the threat of coronavirus to the sports it oversees, including several Grand Prix events.

On January 30, the FIA revealed that it is keeping tabs on the issue in regards to the Shanghai F1 race on April 17-19, and potentially the Hanoi race two weekends beforehand.

“The FIA is closely monitoring the evolving situation with relevant authorities and its member clubs, under the direction of FIA medical commission president,” said the FIA in a statement. “The FIA will evaluate the calendar of its forthcoming races and, if necessary, take any action required to help protect the global motor sport community and the wider public.”

The last time a scheduled Formula One Grand Prix failed to take place for anything other than contractual reasons was nine years ago when the Bahrain edition was cancelled for security reasons.

The Hanoi Street Circuit, to give the track its official name, was designed by German engineer Hermann Tilke and is located next to My Dinh National Stadium. Nine stands will be named after the country’s most popular destinations. Although the racing itself comprises three days, the entire experience will take place as a seven-day event, with streets closed off and traffic rerouted around four or five days before the racing begins.

Back in October 2019, local automaker VinFast was named the official sponsor of the Vietnam Grand Prix, putting it alongside such esteemed company as DHL, Pirelli, Rolex, and Petronas.

As the title sponsor, VinFast will be invited to take part in the process of designing the race trophy, while representatives of the company will present the silverware to the winner.

“With the track itself nearing completion and grandstands starting to go up as the event draws ever closer, the excitement levels for the Formula One VinFast Vietnam Grand Prix 2020 are rapidly growing,” said Chi of Vietnam Grand Prix Corporation. “We are ready and we look forward to seeing you in Hanoi very soon.”

Tickets for the event, which takes place from April 3, are still on sale.

Based on MasterCMS Ultimate Edition Ver 2.9 2020