Imagine this. You, as a motorsport fan, have been fortunate enough to go to circuit for a race. Let’s say a Formula 1 race – the pinnacle of motorsport. You experience an intense adrenaline rush as you watch the cars scream by because you are a motorsport fanatic and the growling of those engines are like Beethoven’s 5th Symphony to your ears. And then after the race, you go back home, excitedly making plans along the way to come back next year.
But have you wondered what happens to the circuit between now and then. How does such an infrastructure, build for such a specific purpose, sustain itself economically?
We have just the right person to answer all those questions. Sharmila Nadarajah is the Chief Commercial Officer of the Sepang International Circuit (SIC) in Malaysia and she knows how to run a motorsport circuit. Afterall, she was the brains behind turning around the loss-making SIC into a profit-making one in just one year.
Nadarajah started off in SIC as the Chief Strategy Officer and she and her team came up with a business model that would not only be self-sustainable but also growing at a steady pace.
The SIC held its first Formula 1 race in Octoeber 1999. This will be the 17thyear that they will conducting the race. We caught up with Nadarajah during her visit to Doha and spoke at length about the business of running a motorsport circuit. Here are the excerpts:
Qatar is now in talks to hold a Formula 1 race. They already have MotoGP and WSBK. What are your thoughts on motorsport in this region?
There's a lot of competition in motorsport in this region. But what we also realized is that there is also a market for motorsport in this region. And that’s because of what is associated with motorsport - healthy living and lots of sponsors.
How viable is it to run a motorsport circuit? Or to put it better how does one make it viable?
For Sepang International circuit, the Formula 1 race is a government-initiated event. So the rights fee is actually taken care of by the government of Malaysia. The circuit only takes up the operating costs and for that we get the ticket sales and that is more than enough. And the rest of the year we run private track days, bookings for manufacturers, wedding and concerts and that's what sustains the circuit throughout the year.
We did an economic impact study last year to determine whether we should continue F1 or not and the returns are still there in terms of the tourists spending within Malaysia.
Plus you can't beat the fact that F1 has 63 million viewers worldwide and that sort of puts Malaysia on the map. That returns is calculated in terms of media value. And if you add all that up it's still about 1:4 returns in terms of our investment.
Has the coming up of other circuits in the area affected you?
We've had F1 for over 17 years. During that time Singapore, Korea and then India came into play. These circuits haven’t impacted us greatly. Because we are marketed as a tourist destination as well wherein you come for the race and then go the islands, it didn't impact us that much. Also Singapore is a street circuit and it's a night race so it is a different experience altogether. We're like a hot, fast, loud kind of an experience.
What are your future plans for the circuit?
We had a facility development plan put in place about six years ago. The reason we did that was because we had one track- 365 days a year, sun up to sun down and we are running at full capacity every year. But what we did was we have 300 hectares of land and we capitalised on that. Over the last five years, in terms of sustainability of the circuit itself, we have put together a facility offering as opposed to it being just a motorsport venue. So we have done product launches, weddings, corporate events, concerts and other events. What it has done is that all of these things around it feed into the business of the circuit. In the next five years this development will be complete. and that's what we see as the future of the circuit.
So motorsport is a viable business?
I wouldn’t say it is profit making for the rider or the driver. But it is profit making for us at the circuit. The circuit has been there for 16 years. The team that we have running the circuit has been here only for seven years. Prior to that it was a white elephant. When I was first asked to join the circuit, they said that they needed a turnaround plan. When I came in, the circuit was barely 40 per cent utilised throughout the year. It came to a point where the government said that the land value was more as a commercial property or a residential property because they weren't getting the returns they were expecting. And then we were tasked to come up with a turnaround plan. And within a month we went to our share holders and I remember the looks on their faces when we put forward our business plan. But we said that it's much more than a motorsport circuit – there’s 300 hectares of land here.
The advent of competition shows that it is a viable business. We have so many circuits come up over the last few years. Most of them we considered as competition and yet it has not affected us as much as we thought. We try to help fellow circuits. We believe competition is good. It's not as easy to get business today, as it was when we first started out six years ago. We put the business plan in place, went out and it was easy to garner the attention of the world. But fast forward to today and I now have to compete with several other players to get the same amount of things. When it comes to circuits, safety is the biggest thing. When you have got that sorted and everyone else is trying to sell the same thing, then it becomes tough. In a way, we have weathered it over the last few years. We would like to be a little bit quiet sometimes but there is really no downtime.
As a woman, it must also be a challenge to be a part of this male-dominated world of motorsport. What has your experience been?
When I was the COO and I used to go to schools to talk to them about a potential career in motorsports, there were a few raised eyebrows. And I wasn't talking to them about racing.They used to wonder what's a girl doing in a motorsport facility. But truth be told almost 80 per cent of our work staff are all women. So the key thing for us right now is to go out and tell people that its not just about racing. And as for the business of the circuit itself, I don't see it waning or becoming a struggle like it was 6-7 years ago.
You can buy your tickets for the 2014 Formula 1 Petronas Malysia Grand Prix at: http://www.sepangcircuit.com/[email protected]_Tickets_Online-%C2%BB-Formula_1_Petronas_Malaysia_Grand_Prix.aspx
We might be going too...see you there
There are multiple advertising possibilities with the ILQ network, drop us an e-mail at [email protected] for inquiries!
If you have anything you want to share with us, send us an e-mail at [email protected]!
Want to send a tip? Drop us an e-mail at [email protected], anonymity is guaranteed!
You have successfully registered your account!Please confirm your e-mail address by clicking on the URL sent to you.The e-mail usually arrives in 5-10 minutes.
Salam! Welcome to our brand new site! Looking good huh?
We’ve got loads of cool new features and to help make sure your account is secure, you’ll need to reset your password the first time you log in.
New to ILQ? What are you waiting for? Sign up!
How ajeeb was that!? Thanks for contributing to our community! Your post will appear after we take a quick look!