Bernie Ecclestone likes race promoters who do not talk a lot and deliver deals – before they go public. Thus he cannot be overly impressed with the Thailand’s government’s sports authority, which has been putting out stories for some weeks that it will be hosting a Formula 1 race in Bangkok in 2014. If a contract has been signed, numbers agreed and guaranteed by the government then it is a good moment to make a noise, but Kanokphand Chulakasem, the man in charge of the Sports Authority, admits that the negotiations are not yet completed and the project has not been signed off by the Thai government.
He says that he will sign a deal when he gets the nod from the government, but adds that the government will be paying only 60 percent of the costs; the rest being paid by private enterprise (read Red Bull and friends). He says that the deal will not cost more than $39.2 million per year. It would be a surprise if the Formula One group would be willingt to accept such a deal. One can understand that the total may have dropped from the high-spending days in the early 2000s, when deals up to $50 million a year were agreed. All the F1 contracts are believed to include a 10 percent increase per year, which means that a $40 million a year race fee with a normal 10 percent annual hike means that over a seven-year contract a promoter must find around $380 million, without including the money needed to either build a track or assemble and disassemble a street circuit each year. This will add around $200 million to the bill.
Thus the government must be willing to guarantee funds of around $600 million if a deal is to go ahead. If private partners are going to kick in 40 percent that is fine, but the guarantee is likely to be at government level only. While this is a great deal of money, an event does make sense for Thailand where the country is trying to build on recent growth in the tourism sector. Thailand underwent a messy coup d’état in 2006 and political disruption followed on and off until the election in 2011 when the Pheu Thai Party won a landslide victory over the Democrat Party. There have since been disastrous floods with widespread damage that has hurt the economy.
Despite all the troubles, the country’s tourism figures have moved upwards, rising from 10 million in 2003, to 14.6 million in 2006. They then stabilised after the coup, but in 2010 the number leapt to 16 million, jumping to 19 million last year. This year the Tourism Authority of Thailand has set a target of 22.22 million for 2013, hoping to latch on to the developing middle classes in Asia, at a time when European demand has weakened because of the Euro Crisis.
The Thais are also talking about a race in November, which makes little sense given that the World Championship showdowns attract the biggest TV audiences when they take place in the Americas, the time difference meaning that the races are beamed into Europe – the biggest F1 TV market – at prime time.