Business Times, Singapore 15th March 2001

MALAYSIA is finding out there's more to hosting a Formula One Grand Prix than a US$112 million (S$197 million) circuit and a home team that just won its first championship points.

Poor pickings: Sepang has raised only RM$36.7 million through ticket sales so far

With less than a week to go before the second leg of the 17-round Formula One in Kuala Lumpur on March 18, Sepang International Circuit Sdn, which is hosting the car race, hasn't found buyers for about two-thirds of the tickets.

That's even though home team Sauber-Petronas scored its best start in the first leg in Melbourne two weeks ago.

"Everyone thought F1 was a gold mine, but the response has been very bad so far," said Basir Ismail, chairman of Sepang International, a unit of Malaysia Airports Holdings Bhd.

With the economy slowing, Sepang's bet on the Formula One race risks becoming a grandiose project in the country that is home to the world's tallest building and its longest driverless rail system. It may even force Sepang to seek help from the government.

The company, which manages a 5.5 kilometre world-class racing track it built in 1997, blames poor pickings for scrapping the live broadcast of the race by Sistem Televisyen Malaysia Bhd and the customary race night dinner.

Sepang has raised only RM36.7 million (S$17 million) through ticket sales.

Once envied for winning a contract from Formula One's Bernie Ecclestone to host the Kuala Lumpur leg of the race for 10 years, Sepang and Malaysia Airports now face the prospect that they have a white elephant on their hands.

Malaysia Airports, which spends RM100 million a year hosting the race, lost RM23 million on last year's race and other related events.

Broadcasting rights to out-of-cash Sistem Televisyen Malaysia Bhd didn't help trim its RM536 million debt. This year might be worse.

Running a sporting event where each race is viewed by an estimated 350 million people may be too expensive for Sepang and will force it to turn to the government for assistance, company executives said.

"The group intends to seek support from the government to continue organising world-class motor sports at the Sepang F1 circuit," said company secretary Muhammad Arshad. Events surrounding the race this year included a Formula One powerboat race in Johor state that drew a sell-out crowd in February.

Digi.com Bhd, Malaysia's sixth largest mobile phone operator, will sponsor a performance by rock group Deep Purple in one of the post-race performances.

To get more people into the stadium, Malaysia Airports asked the country's large companies to buy some tickets. For instance, Technology Resources Industries Bhd, the country's biggest cellular phone operator, is offering a 15 per cent discount on tickets to its subscribers.

Sepang's Mr Basir is unimpressed. "The response from the corporates has been cold," he said, blaming hotels for raising rates and turning away fans -- a charge Malaysian hoteliers refute.

International fund managers and investors, who swapped suits and ties for T-shirts and caps last year, won't make it this year.

For Malaysia, which prides itself as a venue for high-profile sporting events, Formula One's turning out to be a flop.

Sepang's hopes that the roar of exhausts and the smell of rubber on tar will drag people to a day at the races are unlikely to be realised. -- Bloomberg