Business

Thursday September 17, 2009

Malaysia is entering a team for F1 next year; what is the purpose?

Making a Point - By Jagdev Singh Sidhu


FORMULA One (F1) is the pinnacle of motorsports in the world. It’s an event that is followed by hundreds of millions around the globe, a sizeable number of them religiously. It costs a lot of money to be part of and the exposure nonetheless is tremendous.

Malaysia, however, is no stranger to this sport. We have had a race on the circuit for more than a decade, a big sponsor and former participant in Petroliam Nasional Bhd (Petronas) and a group of businessmen had in the past sponsored a team to get a drive for Alex Yoong.

The cost-benefit analysis of past ventures would swing from one extreme to the other with Petronas reaping tremendous value from its sponsorship of F1 through the years. On the other hand, Yoong’s time in F1 can be kindly categorised as an experience.

But when news broke that Malaysia, together with some local prominent businessmen, was entering a team for F1 next year, I was a little surprised.

I wondered, what is the purpose? Are we serious in trying our hand at one aspect of an expensive sport that we have not done yet?

Firstly, the intention appears to be serious. Sepang International Circuit said it was allocating a huge swathe of land to house the headquarters of Lotus F1 Team.

Plans are underway that would see the owners of the team – 1Malaysia F1 Team Sdn Bhd – commit huge sums of money to build a wind tunnel and all the other facilities that go towards putting a Malaysian-made F1 car in the race next year.

From the face of such plans, a lot of money is going to be committed. And to be successful, teams spend hundreds of millions of dollars each year to be competitive in this sport.

The more you spend, the better the chance of success. The leaders of the F1 spending list would feature the big manufacturers such as Toyota and Ferrari and established teams such as McLaren.

Although cost would be reined in with the sport looking to slash budgets dramatically over the next few years, it will still remain an expensive proposition. And when taxpayers’ money is involved, especially at a time when the fiscal deficit is extremely high, people will start to raise a lot more questions especially if the results are not flattering and if there is no trickle down effect on the sport and the economy.

People would ask if money being spent on the F1 team would be better used elsewhere or the cost benefit of using taxpayer money on a F1 team.

While energy is being dispensed to deliver a team onto the F1 circuit next year, efforts to develop motorsports in the country should also be made at the grassroots stage where there is still a lot of room for improvement.

● Jagdev Singh Sidhu is a deputy news editor at The Star. He wonders if other Asian countries would follow Malaysia’s move in sponsoring a team next season.

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