Finally, after a somewhat premature announcement from the Hanoi People’s Committee last week, Formula One have confirmed the worst-kept secret in motor racing: Vietnam will have its own Grand Prix from 2020.

Rumours of a Vietnamese stop on the tour have been rife for years with negotiations reaching an advanced stage on several occasions. However, the surprising element of this announcement was the decision to host the race in Hanoi, rather than Ho Chi Minh which had seemed to be the preferred destination of the previous dialogues.

Bernie Ecclestone apparently agreed a US$530 million (S$727 million), 10-year deal for a Ho Chi Minh Grand Prix as one of his last acts before leaving his post —but then changed his mind at the last minute. At the time, he said that the decision was based on two factors: the proximity to three existing races in Singapore, Malaysia and China, and the fact that — in his words — Vietnam “hasn’t got any racing history at all”.

The race fee then of US$53 million per year would be significantly higher than the average yearly fee of about US$41 million paid by hosts. The value of the deal this time is cloaked in secrecy — even the duration is not publicly confirmed, and only referred to as a “multi-year” deal. However, given the investment required to build the street race circuit, we can expect the terms are for at least five years.

From F1 owner Liberty Media’s point of view, this represents the first new race in the calendar as part of their planned expansion. There are doubts over the long-term future of races in Britain, Germany and Brazil, but there are already plans to expand the schedule to 25 races from the current 21, with Amsterdam, Miami, New York, Las Vegas, Buenos Aires and Copenhagen likely to be in the running.

As to why Vietnam has decided to invest in this race, we can see some parallels with Singapore’s situation a decade ago.

As the country seeks to raise its international profile, cement its place on the world map, attract tourists and investors, Formula One presents a great branding opportunity. Just like Singapore, this could be a game changing moment to showcase what Hanoi has to offer.

The Vietnamese government has side-stepped controversy around the cost of the race quite smoothly — saying that they will only proceed if the race financials are self-sustaining, and drawing up the F1 contract directly with Vingroup as the race organiser. Vingroup is the parent company of the country’s first car manufacturer, VinFast.

SPEED BUMP FOR SINGAPORE GRAND PRIX?

So, what would the impact be on Singapore?

Not much.

A Ho Chi Minh race would have presented a very different challenge, as that city’s allure as a tourism destination and cultural city would have given competition to Singapore’s race week calendar.

Hanoi is a more intriguing choice as a destination, and may attract some fans eager for a change. But while it has its own charms, it is perhaps not as big a draw to the international crowd as the more cosmopolitan Ho Chi Minh.

The distance from Singapore also makes it a different proposition from the Malaysian Grand Prix as a rival.

With Malaysia putting the brakes on the race, Singapore has seen a boost in attendance, and as long as the F1 circus and the local promotion of the week-long events calendar continue, so should that boost.

Perhaps the biggest impact for Singapore could be our timing on the calendar. It has long been rumoured that F1 would like to ease the travel burden and cost for the teams by reorganising the schedule such that Asian races are earlier in the season, followed by Europe and ending in the Americas.

The Vietnam Grand Prix has been penciled in for April as part of this shift, but so far Liberty Media has run into some resistance from some of the established races — particularly Japan — that has prevented them from adjusting the schedule.

Time will tell if F1 will pursue this change, and whether the Singapore Grand Prix comes under pressure to shift to an earlier date.

For now, F1 fans in South-east Asia will once again be able to enjoy a second Grand Prix — and a second street race circuit — to get their fix of motorsports action.

ABOUT THE AUTHOR:

James Walton is the Sports Business Group Leader of Deloitte South-east Asia