F1 at Sepang: who pays, and who profits?

SEPANG: The Formula One race at the Sepang International Circuit (SIC) ends tomorrow afternoon, but for taxpayers the real questions are only beginning: how much the country has spent, and how much of the return actually stays in the local economy.

The Formula 1 Gulf Air Bahrain Grand Prix in Malaysia is being staged under an unusual model. Bahrain pays the hosting rights fee and holds the commercial rights, including ticket revenue, while SIC bears local operating costs such as circuit preparation and infrastructure.

Pre-event reports put Malaysia's local preparation costs at about RM40 million, against a rights fee of an estimated RM285 million to RM327 million borne by Bahrain.

The arrangement lets Malaysia play host without paying the F1 fee that was the main reason Sepang dropped off the calendar after 2017. It also means the most direct source of income from the event, ticket sales, does not flow to Malaysia.

Question one: what is the true cost to the government?

The RM40 million figure is only an early estimate for circuit preparation. It may not cover other costs borne by government agencies, including policing, traffic management, free shuttle buses and emergency services.

Rapid Bus, for instance, is running 95 free shuttle buses from Oct 2 to 4, while motorists around KLIA face three days of route controls.

A full statement of costs, broken down by agency, is needed to judge whether the event was truly cheap for the country.

Question two: who is paying for the RM200 Madani tickets?

Prime Minister Datuk Seri Anwar Ibrahim announced in August that MyKad holders could buy Madani tickets from RM200 for a three-day pass, following discussions and agreement with Bahrain.

The number of Madani tickets offered, the size of the discount on regular prices and who covers the difference have never been made public.

If the government is subsidising part of the ticket price, that cost belongs in the public tally for the event.

Question three: how many people actually came?

SIC chief executive Azhan Shafriman Hanif said in late September that more than 95,000 tickets had been sold and that sales were expected to reach 100,000, while the Youth and Sports Ministry projected more than 110,000 spectators.

Any final attendance figure should make clear whether it counts individuals or daily entries. A three-day pass holder who attends every day is still one spectator, even if recorded three times.

Question four: were the hotels really full?

Early data points to strong demand. Airbnb reported that accommodation searches for Kuala Lumpur, Sepang and the surrounding areas rose 160 per cent from a year earlier, with 75 per cent of searches coming from abroad and a median intended stay of nearly six nights.

The Malaysian Association of Hotels (MAH) said in August that several Sepang hotels were already fully booked, though BE Lim, chairman of its Kuala Lumpur chapter, described bookings in the capital as rising unevenly.

Searches are not bookings, and bookings are not spending. Actual hotel occupancy and the number of nights spent by foreign visitors after the event will be the better measure.

Question five: where is the RM1.3 billion?

Hong Leong Investment Bank Research projected that the event could generate RM1.1 billion to RM1.3 billion in economic output. The Tourism, Arts and Culture Ministry, for its part, targeted about 300,000 tourist arrivals.

Those are projections of economic activity, not revenue flowing into the treasury. Nor can the RM40 million in costs simply be subtracted from them to claim a net gain of more than RM1.2 billion.

The spectator experience counts too

Beyond the finances, the experience of visitors will shape Sepang's reputation as a host of international events.

After Friday's sessions, some spectators complained on social media about long waits for shuttle buses, including claims of queues of up to four hours, although those accounts have not been independently verified.

Motorists across the Klang Valley were also advised to plan their journeys, with F1 coinciding with the Kuala Lumpur Standard Chartered Marathon and Le Tour de Langkawi.

The reckoning after Sunday

SIC is open to bringing F1 back to Malaysia permanently, Berita Harian reported, although costs of more than RM300 million and a crowded calendar remain the main obstacles. Any such decision, however, should be tested against the fee Malaysia itself would have to pay, rather than the special arrangement with Bahrain, which may not be repeated.

A post-event report that publishes total public costs, unique attendance, the split between foreign and domestic visitors, hotel nights and actual spending would be the clearest answer to who paid, and who profited.