Singapore Cuts Formula 1 Costs

After our recent class sessions about project management and a brief intro to forecasting one article online caught my eye. Although I am not a car fanatic or know much about the sport, this (past) weekend the Formula One race was held in Singapore. Along with the race itself, negotiations for Singapore to continue hosting the event for the next five years were also underway.  Prior to these negotiations data had to be collected and analyzed to see what needs to be done for the upcoming years. Singapore’s Ministry of Trade and Industry expect the expenses to hold the event to drop about 15 to 20 percent. This drop in expenses will come from “optimization of infrastructure, operational efficiencies in the race organization and revised terms with the race promoter.” This is good since the government co-funds about 60 percent of the cost which ultimately comes from tax payer dollars.  Along with this the event coordinators expect an increase in tourism as well as an increase in attendance to the event. “The event will help boost tourists as Singapore forecasts arrivals to increase to 17 million and tourism spending to reach S$30 billion by 2015.” According to the article, the event has attracted more than 150,000 international visitors over the past four years and has brought in about $140 million to $150 million, in Singapore dollars, annually and these numbers are expected to increase.  Due to the popularity and size of the event, more companies have decided to sponsor the event. Also after looking at flight information the country has noticed that people are arriving earlier therefore staying longer which also plays a role into the way the above figures will change in upcoming years.

As we mentioned in class, there is a lot of planning that goes into big events like this whether it’s building the infrastructure to hold the event, deciding when and where to hold it, and how to fund the event. There will always be obstacles you will have to work around because you will most likely never have ideal circumstances. In the case of the Formula One event, it helps that the city has hosted this event before and therefore already has most of the planning done and many of the components necessary which allows them to adjust these factors and improve on them for future years. Previously hosting the event also helps them in the forecasting that they did for the upcoming years. But even with all the data and information gathered there is always room for error and anything can happen from now until next year.

 

http://www.bloomberg.com/news/2012-09-23/singapore-cuts-formula-1-costs-in-extension-deal-southeast-asia.html

4 thoughts on “Singapore Cuts Formula 1 Costs

  1. Hey Michael! Your blog shows that Singapore has found a great source of income. This Formula One race event is a great opportunity to boost tourism and help Singapore. Singapore used to be a richer third world country and is now considered a poor first world country. Because it is a multi-ethnicity country, it attracts many people from China and India . I think that this Formula One race event will only bring in more revenue to Singapore and help it become a wealthier first world country.

  2. Great blog post Michael. I’d like to add a little of my own insight into the Formula One situation. To begin with, Formula One has hosted the event before. As you alluded to, because of this, Singapore now has historical data that it can use to forecast. This will allow for the forecast to be more accurate because it is not a number that was created completely out of the blue. In addition, something that was not mentioned is that they should continually be forecasting. The longer the forecast is set for, the less likely it will be accurate. For instance, the company will be able to better predict 6 months than five years from now. As such, Formula One will need to reevaluate after the event and see how it compared to their original plan. If they were on target, they will just need to update it for the following year. In the event that something unforeseen happens, they will need to completely redo their forecast going forward.

    Last thoughts – overall great analysis and nice choice of an article!

    Regards,
    Catie

  3. Hello Michael. That seems like a great idea to keep Formula One racing for the next five years. It would be great for Singapore if it can generate $30 billion over the next 5 years, but what if the sport doesn’t pull in the amount of money that is expected of them? Would there be a backup plan if it doesn’t live up to its expectations?

  4. Hey Michael, That seems like a great plan and i dont see it to fail in the next future if they tend to go through with it. They have introduced the formula 1 in bahrain in the past couple years and every year they host one of the many famous races in the world and one of them is in Bahrain. They have generated at least 400 million dollars each event, including the hotels that are fully booked, and considering the fact it brought Bahrain on the map to be recognized around the world.

Leave a Reply

Your email address will not be published. Required fields are marked *