Some of the greatest benefits of having Formula 1 race would be to gain international recognition and promote India. Besides the publicity, such an event would draw, the country would benefit in many ways. India could learn from the technology related to engine design and production. But the main aim for having a Formula 1 race in India is to bring in revenue from foreign countries.
There will be many critics who will feel that the Formula 1 circuit will not contribute to a healthier Indian economy as it will burden the country as US$120 million was invested on a racing track alone. Moreover it is undeniable that the Formula 1 and the Grand Prix are expensive sports. Each track that wishes to hold the GP will have to pay US$10 million a race.
Although the sport is expensive but revenue generated by it is also huge. As many say, Formula One is that giant vacuum cleaner that sucks up money at an alarming rate but also brings in annual revenue of more than US$270 million. Typically in a Grand Prix event some US$12 million is invested in advertising and promotions, and marketing for the event .The business community of the city where the Grand Prix event is held generates an income close to US$60 million. Even the official caterer for the Grand Prix makes around US$6 million in profit, catering to some 300,000 spectators who turn up throughout the days of the event.
Through ticket selling alone, the expected sales generated from just the grandstand tickets are about US$13 million. There is also some 60,000 passes ranging from US$66 and US$131 for the natural stand which can be offered through several international ticketing agents in Europe and other countries across the world. In order to boost ticket sale , the Indian circuit should have ticketing agents in several countries in Europe , Asia and some countries in North and South America.
Other than targeting the Indian circuit to just the Formula 1, the circuit can also target hosting other events like the Motorcycle Grand Prix (now called as Motogp)and various other forms for motorsport which are held every year throughout the world, but for this the circuit has to be designed and build in such a way that it should be suitable for any kind of motorsport, ranging from go-kart to Formula 1 Grand Prix to Motorcycling Grand Prix. Circuit authorities can also charge commercial companies that are interested to shoot advertisement at circuit. In the future the circuit can be given to various teams on rent for the testing of their racing cars which are usually during winter. For example Paul Richard Circuit in France, Valencia in Spain are very popular among Formula 1 teams for their winter testing program.
No doubt that they sound like some big money making schemes but there will also be heavy fixed operating cost incurred which will increase burden to the circuit authorities.
Another great way to generate revenue was through broadcasting and advertising. The Formula 1 event was the second most watched after the Olympics in terms of followers. There are 2.5 billion people watching each of its 17/18 races and research shows that 64 per cent of Formula 1 home viewer are in Asia. Broadcasting and advertising rights as the event was estimated to have reach 200 million people worldwide. But the race was televised live to 130 countries with an estimated 350 million viewers. For a good one and half-hour, all eyes will be on our country.
If we work out the advertising cost of one minute on TV and multiply it by 90, we can get some idea of advertising value this circuit will give. Indian circuit will be able to bring in more sponsors as most of the tobacco companies are restricted from advertising in several European nations. This is true to some extend. The event have a lot of viewer, but the broadcasting rights will not controlled by the Indian government but by the FIA.
Apart from giving the country worldwide exposure, there will be spin-offs for the tourism industry. Tourism industry would greatly benefit from the race event. There will also be a lot of revenue generated for the advertising industry. Hospitality sector will improve their status, as the auto-racing events might bring in great effects of tourism into the country. It promotes the country not only as one of the tourist attraction but will also attract sport lovers from all over the world.
The Government can aim to attract some 40,000 tourists for the F1 Grand Prix. For first few years the races tickets can be made cheaper, so as to attract maximum people not only from outside India but also from other parts of the country. Although the tickets might still be expensive for some, but the current focus is to bring in tourists who could afford it into the country. The tickets can be sold through various agents through out the world. There are some upper-class Formula 1 fans who are used to using helicopter around and to meet the demand of the helicopters it has to be sourced for other countries.
More revenue can also expected from the 2,500 people who will travel with the F1 teams who would be racing in Indian soil. There are 10 teams and each of them will bring between 150 and 250 people. These people would likely to become tourists.
More than 100,000 people usually flock to circuit to watch the event and many of whom will be wealthy enthusiasts who will spend a lot of money. Hotel and the hospitality industry will benefit greatly from Formula One, Entertainment, accommodation and food for their staff.
India is becoming a global hub for most of the major technology and finance companies, so having a Formula 1 racing in Indian will encourage more investment into the sub continent. India has a vast pool of brain and good infrastructure which will encourage government funded mission worldwide who can explore Formula 1 business and technology possibilities in the region, and in the future they can aim to make India a regional center of excellence for motor sports with the cooperation of various international motors ports industry. India can improve its automotive industry through motor sports.
This is also one way to encourage the growth of car industry and motor sports in the country. It might also give birth to new potential athletes in motor sports racing. However it does not only benefits the country as a center for motor sports development center but also the region as it is cheaper for foreign teams to base themselves here. The circuit would also complement the rapidly growing automotive industry and the need for research and development center and India can aim to develop their own Formula 1 engine so that they would not depend on other for the technology. Not only engine development but also other areas like oils, lubricants, tyres, electronic and software systems etc. will be benefited from this kind of research program.
Once a Formula 1 race takes place in the Indian soil then government can put efforts to educate and create awareness of the Formula 1 sport and technology among students and school children. Such initiatives can be taken in association with any of the major automotive or related companies.
Apart from educating the students on Formula 1 and technologies , various achievements can be highlighted in advanced automotive engineering and related fields as a result of involvement in this hi-tech and prestigious sporting arena. This will definitely inspire more students and school children to consider automotive engineering as one of the fields they would choose when pursuing higher education and career, which in turn will help in the future development of the Automotive industry in the country. This program will also cultivate and enhance interest among the young Indians in the Formula 1 sport.
Despite all the benefits from the race circuit , there are several undeniable impacts it has on the environment. Usually Formula 1 circuits are build at a distance from the main city and a big area of land is required to build the facility. India being an agricultural country, so the while building a circuit many of the agricultural lands might have to be sacrificed.
Agriculture brings a lot of revenue to the Indian economy and as such agriculture is clearly seen as more dominant as compared to the tourism industry. The question that people have in mind is that since agriculture is very important for Indian economy , so why would Indian government wants to turn the agricultural land into a racing circuit and by the amount of tourist the formula 1 is bringing in, it might not be able to justify the losses of agricultural revenue.
The government has to reallocate the people of this place who were dependent on agriculture to other government lands in other states. Moreover the size of the land that will be needed to build the circuit will make a up very small percentage of the total agricultural land in the country and therefore the impact would be minimal. On top of that, through modernization, the region where the circuit will be built and hence the races will be held will be a big revenue earner for the state and it will also bring in international recognition to the country. Opportunity cost of using the land for Formula 1 project instead of agricultural are not excessive.
As it changes the environment from agricultural base to a new developed town, cultures of the people living in those area and surrounding will change. The people from those areas will have to be displaced and reallocated to some other government lands. Some who have stayed there many years will be forced to leave the place. But to some others who does not want to move from the place will face unemployment. Even though there are a lot of job opportunities since so much of development will happen due to Formula 1 racing , they will have to face with re-skilling themselves.
Secondly, there will be tremendous development in the area. There will be more schools for the children's education, better hospital facilities, and more job opportunities. The government can provide more-trading opportunities for residents by building a common markets where the farmers can market their produce.
Thirdly, with so much of foreign sponsors coming in especially through advertising, many people are going to be influenced. People's beliefs or principles might be affected if method of advertising is not appropriate. Furthermore most of the Formula 1 fans are from western countries and the Indians will get a lot of exposure from the western cultures and values. This does not imply that the western cultures and values are negative but rather does not fit into the way of life of the Indian cultures. This might create what is called the generation gap between the younger generations and the older generations as the younger generations are influenced by western cultures while the older generations are by the traditional Indian cultures. India is famous for its traditional culture and respect for the elders.
With the Formula 1 circuit in Indian soil there will be more Indian car racers born and this might give them a chance to fulfill their dream of racing in the pinnacle of motorsport.
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