Chinese Grand Prix, hosted at the $450m Shanghai International Circuit since 2004, may see its end in 2010 when the contract with F1 expires.
“We’re doing the assessment. By next year we should be able to give you an answer,” Qiu Weichang, deputy director of the Shanghai Administration of Sports, told AFP on Thursday when asked about the future of the racing event. Early this month, Shanghai Grand Prix was announced by F1 to be rescheduled to play in April next year, a move, according to Chinese media, is to avoid clash with the ATP Masters Series next October.
Shanghai Grand Prix received 130,000 visitors this year, which is only half the number of its first year in 2004. According to Chongqing Evening News (CEN, 重庆晚报), the circuit needs to make RMB 625 million only to break even of its costs, which includes first phrase development the circuit, annual hosting fee to F1 and TV broadcast rights purchase. Shanghai Grand Prix generated RMB 300 million in 2004 and 216 million in 2005 in ticket sales. Its best year was 2006, making about RMB 400 million as the circuit hosted the farewell match of Michael Schumacher, then it plunged again to about RMB 200 millon last year. The CEN reported that the circuit at least makes a loss of RMB 200 million each year. “Of course we would like at least to break even. But there are two factors - one is the assessment; the other part is the win-win situation that we can create,” Qiu noted. By assessment, Qiu was obviously referring to a global profile and new opportunities the event can bring. But with the World Expo 2010 to be held in the city, will Shanghai still need F1 to do the branding?
Though China still remains a fast-growing economy when most of other countries suffer this winter, statistics suggest that the pace of the middle kingdom slowed. In order to boost its economy and consumption, Chinese government recently decided to throw a stimulus package of RMB 4 trillion (roughly $600 billion USD). “The stimulus plan is mainly about infrastructure development projects such as railways and airports, and it seems that it has nothing to do with raising people’s salaries,” said Mao Yushi, chairman of the Beijing-based Unirule Institute of Economics. “Millions of Chinese could lose their jobs next year. Salaries will shrink and people will be less likely to buy.” So consumer confidence will not soon be recovered. This is, without doubt, gloomy news for most business owners in the country, and the racing event now looks like more of a drag to Shanghai’s economy.
AFP: Shanghai may axe F1 Grand Prix
The Economist: China’s stimulus package
Photo: Bert van Dijk