[Analytics] Vietnam revs up for Formula 1 debut
As the 2019 Formula 1 season revs into action on Sunday (March 17) in Melbourne, Australia, the first of 21 races that will be run over the year, many are already looking ahead to Vietnam’s debut on the circuit in April 2020. John Duerden specially for the Asia Times.
Vietnam is the latest Asian nation to take a punt on hosting Formula 1 racing, the premier circuit which started in 1950. Over the years, some host nations have won profitable audiences, while others have lost out due to a lack of local interest.
Singapore is currently the only Association of Southeast Asian Nations (ASEAN) member to host the Grand Prix. But the region has long been part of the sport’s plans for expansion, as it seeks to wean its dependence on its traditional European markets.
Chase Carey, the chairman and chief executive of Formula 1, said in November’s announcement that Vietnam was a natural destination for the sport.
“We have talked about developing new destination cities to broaden the appeal of Formula 1 and the Vietnamese Grand Prix is a realization of that ambition,” Carey declared. “We are thrilled to be here in Hanoi, one of the most exciting cities.”
The feeling is apparently mutual. Vietnam is home to one of Asia’s fastest growing economies and a rapidly emerging middle class with a pronounced taste for Western pop culture. The country’s communist leaders treated the recent US-North Korea nuclear summit meeting, held in Hanoi, as a marketing opportunity for the city and nation.
While Vietnam may have little motor sport culture of its own, analysts say it has plenty of market potential. For Vietnam, it seems, hosting a Formula 1 race will present big branding opportunities for the nation as a site for world-class sporting events.
Indeed a race around some of the city streets of Hanoi, usually teeming with motorcycles, could put the capital on the global map like never before and showcase a new, dynamic Vietnam to a cumulative global audience that reached 1.7 billion in 2018. Promotional materials say the Formula 1 Grand Prix in Hanoi will race on a street circuit 12 kilometers west of the city center, using a mix of existing and newly built roads.
Organizers include Vingroup, a local conglomerate involved in real estate that has signed a multi-year deal to stage the race, which is said to cost around US$57 million a year in running costs alone.
Vingroup chief executive officer Nguyen Viet Quang said: “An essential part of this collaboration has been making sure that we not only showcase the city of Hanoi but also deliver an exciting race for Formula 1 fans in Vietnam and around the world… VinGroup wants to bring this race to Vietnam because of the general benefits to the society, such as more jobs will be created, the infrastructure of Hanoi will be upgraded, and other bigger worldwide events will be encouraged to take place in Vietnam.”
Vietnam should enter the field with its seat belt fastened and eyes wide open, though, as history shows it can be a challenge to grow interest in the specialized sport in Asian countries that have little motor car-racing experience and culture of their own.
Japan has plenty of so-called “gasheads” to fuel a Grand Prix race (As Formula One races are know) that started in 1963 and has become a much-loved part of the national calendar. In neighboring South Korea, however, Grand Prix racing was a short-lived experience.
Building a track in the rural southwest of the country, far from the capital Seoul, was one mistake made by South Korea’s organizers. When the races started in 2010, they didn’t produce the spark many hoped would kindle a passion for the sport in one of the continent’s richest countries.
With low attendance figures and a regional government that balked at the expense after the private sector struggled to cover costs, South Korea’s race received the checkered flag in 2013.
That was the same year India also pulled the plug on its Grand Prix experiment, just two years after starting and amid a heated tax dispute between organizers and the government.
With strong government support, Vietnam is expected to motor through any initial bumps and establish itself firmly on the circuit as exotic destination, just as Malaysia did back in 1999.
Some feel Vietnam should look to its fellow ASEAN member, the first in the region to get involved in Grand Prix racing, for guidance.
“In the early stages of its organization here, the F1 races helped to promote [Malaysia] as a world-class sporting destination, as well as promoting Malaysia as a global tourist destination,” said then prime minister Najib Razak in 2017.
This is clearly what Vietnam aspires to. In the medium and long-term, however, there will be challenges. Najib acknowledged that the benefits eventually ceased to outweigh the costs of hosting the race; 2018 was the first year this century that Malaysia was not involved on the circuit.
In 1999, only 16 countries played host to the prestigious race, including two Asian nations. That figure has since increased to 21 nations, including six Asian countries, a competitive expansion which has diminished the returns to certain organizing countries.
Singapore’s night race around the rich city-state’s streets has already become an iconic part of the F1 calendar, while Malaysia’s now shuttered Sepang circuit lacked the same glitz and spectacle.
Malaysia has since turned in a bigger way to MotoGP motorcycle racing, which is increasingly popular in Southeast Asia and much easier and cheaper to host. The races are also much easier for fans to attend and view.
This is will be the long-term challenge for Vietnam, as well aw Liberty Media, which purchased the sport for US$8 billion in 2017. A Formula 1 Grand Prix is the pinnacle of motorsport, but does not automatically provide a strong commercial foundation for host nations.
Indeed, Vietnam was not in the top 20 of F1’s biggest viewing markets in 2018. Of the ten teams that will take part this season, nine are European with one from the United States. Of the 20 drivers, the closest there is to an Asian is Alexander Albon, who was born and raised in the United Kingdom, but has a Thai mother.
The lack of local connection makes it harder to attract Asian sponsors and fans, as well as inspire potential local drivers. Even those who are inspired to compete will find there is not much of a pathway to the top without first moving to and racing in Europe.
In the short-term, as long as the backers have the cash and interest, the immediate benefits for Vietnam as a host country are almost assured. To prolong those and follow Malaysia’s example may be a realistic target, but following Japan and building a long-term F1 culture will be a hard road ahead.