Bahrain races ahead
The Formula One Grand Prix in Bahrain has significantly contributed to Bahrain’s economy, both directly and indirectly

It is suggested that as many as 500 million people from the around the world watched the third leg of Formula One’s 2008 season unfolding at Bahrain International Circuit (BIC) at Sakhir on April 6.

In fact, this marked the fifth time that Bahrain hosted the Grand Prix. Bahrain’s deal with Federation International Automobile (FIA) to host Formula One World Championship commenced in 2004 and extends to 2013. Formula One is the third most famous international sporting events after the Olympics and World Cup. However, unlike the other two events, F-1 is held annually.

Money matters
It is estimated that activities related to Grand Prix 2007 injected some US$548 million into Bahrain’s economy. The figure represents a rise of 40 per cent over that achieved in 2006. This is a sizable amount for an economy with a gross domestic product (GDP) of nearly US$16 billion in current prices and US$11 billion in constant prices.

Spending covers matters such as ticket sales, TV coverage, transport, accommodation, food and beverage, merchandise and souvenirs and other leisure activities. The figure includes about US$11 million in ticket sales and US$34 million expenditures by race-goers on merchandise, food, drink and other items at BIC during the three-day event. Branded items belonging to different teams participating at the race are sold at prohibited prices.

Also, TV rights, commissions, facility rentals, sponsorship referrals and catering commissions brought in almost US$8 million. Many financial institutions operating in Bahrain tend to rent the most prestigious spots for their guests. Bahrain is home to some 300 financial institutions. Some banks have the habit of inviting clients to the event (offering their customers first class tickets, five-star hotels, amongst other benefits).

Demand and supply
To be sure, hotels do not offer special deals during the race, as demand tends to outstrip supply. Still, building on growing prospects of the Grand Prix and other activities held at BIC throughout the year, several leading hotels in the country have over the last few years, opted to expand their facilities. This is true of the Ritz-Carlton, Sheraton, Gulf, and Radisson SAS, to name a few.

In addition, Bahrain’s economy earned nearly US$105 million from spending on accommodation, food and beverage outlets, retail stores and travel services (including air, car rentals and
taxi services).

Independent research
The statistics are trustworthy partly for being carried out by an independent source. Mumtalakat Bahrain Holding Company has commissioned Dubai-based Godo Research and Marketing Consultancy to carry out the research. With more than US$10 billion in assets, Mumtalakat manages all state-owned investments including BIC and Gulf Air. Actual figures related to 2008 season should be out in the days running up to 2009 calendar.

Also, the event provides Bahrain-based carrier Gulf Air, owned wholly by the government, with extraordinary exposure. The event is known as Gulf Air Bahrain Grand Prix.

Still, indirect advantages entail raising Bahrain’s global profile. The event also helps raise Bahrain’s profile, as the country becomes the global focal point of motor sporting for three days.

Ambitious plans
In April, Mumtalakat revealed an ambitious plan to develop the area near BIC, located southwest of the capital city of Manama. Amongst others, the plan calls for developing a business park capable of attracting some US$350 million of investments in the first phase. The figure could reach as high as US$5 billion by completion of the
third phase.

At the moment, RUF of Germany has undertaken a US$50 million facility to manufacture special cars for racers and collectors. The RUF Bahrain Automobile Manufacturing and Assembly are being built within the BIC complex.

Also, a mega project, known as al-Areen Desert Spa and Resort, is being developed at the cost of US$750 million near the site of BIC. The project is a joint venture between Gulf Finance House and the Government of Bahrain.

Still, local commentators charge the authorities of being uniquely slow in realising what F-1 offers to the local economy. These critics argue that Mumtalakat, together with Economic Development Board (EDB), only made such promises in the days leading to the annual event. EDB is mandated to develop and implement economic strategies for Bahrain. The announcement was made during Motor Sport Business Forum Middle East last month in Bahrain. However, the fact that both Mumtalakat and EDB could not specify dates for phases one to three suggests that plan was probably hastily arranged.

At any rate, Bahrain’s economy’s gets direct and indirect benefits from hosting the annual event. These include expenditures by visitors during Formula One, private investors in terms of developing facilities and the public sector with regards to expanding road network. It is believed that EDB managed to attract potential investors to Bahrain to attend F-1.

Fresh rivalry
Rivalry is always healthy. The fact that Abu Dhabi will be hosting F-1 starting from 2009 season serves as testimony to Bahrain’s decision to host the annual race for the first in 2004. Undoubtedly, successful adventures tend to invite new entrants. Good news is that Bahrain and Abu Dhabi will be hosting Formula One at different intervals. Still, chances are that other regional places (notably Qatar) succeed in convincing FIA to host the annual race local facilities.

At any rate, all indications suggest that Bahrain is committed to securing its position in motor sporting. Recently, Bahrain acquired a 30 per cent stake at the McLaren Group that included Mercedes team. In short, the purchase clearly suggests that Bahrain is gradually becoming more than just a host of motor racing.
 

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