Cities and Formula 1, just like the Olympics? - David Adam, Managing Director, Global Cities

In Singapore, as IOC President Jacques Rogge tore open the gold envelope to announce the name of the city to host the 2012 Olympic Games there was jubilation in London and a mix of devastation and disappointment in Paris. Meanwhile, the calculating strategists seeking to reposition Shanghai globally were prepared to invest $450 Million in building an F1 racing circuit with the aim of breaking even by 2014 but looking for benefits far beyond income generated by the 250,000 or so spectators at each race.

The ultimate prize is always the legacy. But given the challenges faced by cities hosting major sporting events how do they find the winning strategy to ensure local economies flourish?

Some venues enjoy the global sporting spotlight annually – others every four years – as hosts of golf majors, tennis grand slams, test matches, rugby and football tournaments along with Formula 1 Grands Prix. Like the Olympics, these events offer a chance to show-off the venue, the city and country to massive worldwide television audiences and bring significant economic advantage to their surrounding locales. But is the cost really worth it?

The Canadian Grand prix is worth $100 Million to Montreal, and according to a 2009 Economic Impact Study, the British Grand Prix event at Silverstone Circuit pulls in £54 million to the UK economy. 94% of this impact is within 60 miles of Silverstone – boosting occupancy rates at Birmingham’s 4 and 5 star hotels, for instance.

Formula 1 in the UK supports more than 1300 FTE jobs across the country, and more than half of those are in the immediate area close to the circuit bringing spillover effects in the local visitor economy through suppliers of food and drink, merchandise, transport services and entertainment and so on.

But what happens once landmark events draw to a close and the big crowds travel home?

Many prestigious UK venues have developed museums or education centres, so Wimbledon operates throughout the year and not just during the tennis fortnight. The Bird’s Nest Stadium in Beijing is a magnet for people across China.

Sweating the asset is crucial for 365 operations and the key to any lasting, meaningful impact on local economies. Taking F1 again, traditional and new venues are diversifying their business offers to include Technology Parks, and conference centres alongside their track hires, as well as promoted events and driving experiences. The Yas Marina circuit at Abu Dhabi sells itself as an all round leisure destination complete with trackside 5 star hotels and the Ferrari World theme park.

The more forward-thinking locations are using their hosting rights as a possible catalyst for growing automotive clusters around venues, with both Delhi and Austin in the USA as cases in point.

But beyond exploiting the physical legacy there is possibly an even greater benefit of staging a world sporting event – a shift in attitudes both how cities view themselves and how others see them. Perhaps this is what World Bank President, James Wolfensohn, meant when he contributed to a debate at the 2008 Games in Beijing declaring “No city that ever hosts an Olympics is ever the same again.”

MIPIM 2012 will dedicate a whole afternoon to looking at the role of sports in urban development.

Check out other posts on sports and their value to cities!

Find out more about the relationship between sports and urban development in this month’s Urban Intelligence newsletter, with new exclusive content from cities expert and blogger, Greg Clark.

Image: Salva Mendez

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