What has it taken to make and market the Formula 1 phenomenon in India?
When Formula 1 cars, high on jet fuel, race down the tarmac in speeds of up to 320 km per hour for three days late October in Greater Noida, Suresh Kalmadi may finally get reason to smile. It was, after all, the discredited and jailed ex-president of the Indian Olympic Association who first invited Bernie Ecclestone in 2007 to bring his F1 races to India. Never the one to miss an opportunity to hit the headlines, Kalmadi had said F1 would come to India in 2010. Two years later, in 2009, he did a summersault and said “there’s no way IOA could have either taken the responsibility of the highly capital intensive premise of acquisition of land, construct the circuit and raising millions of dollars every year to conduct the race”.
This is when the Jaypee group, which has interests in cement, construction, real estate development, infrastructure and hospitality, stepped in. It had built a golf course at Greater Noida and set up Jaypee Sports City in the Delhi suburb. Sameer Gaur, the younger son of Jaypee patriarch Jaiprakash Gaur, had met track architect Herman Tikke in 2007. Tikke had seen some land at Sohna near Gurgaon but what he saw at Jaypee Sport City impressed him. So when IOA moved out, Jaypee Sports International moved in and paid Ecclestone the licence fees of $40 million.
The 5.14-km track of the Budhh International Circuit track has been designed by Tikke with inputs from Ecclestone. It covers 865 acres. Six thousand workers have worked here along with 300 engineers. Four million cubic metres of earth had to be dug up and 100,000 cubic metres of concrete used. There are 16 croners in the track. All told, 120,000 people will be able to watch the race at any time, with 30,000 in the grandstand. Some work has been contracted to the likes of Shapoorji Pallonji, Hitachi and Siemens. The end result, those who have seen it inside out say, is not bad. Vicky Chandhok, the president of Federation of Motorsports in India, who has worked closely with Gaur, finds it “a very spectator-friendly track”. All told, Jaypee Sports International has invested Rs 1,700 crore in it. Gaur says it’s no big deal because the group has executed far bigger and complex projects like hydro-power plants. He next wants to build a cricket stadium, a hockey stadium and a gold course at Jaypee Sports City.
Construction on Buddh International Circuit began in 2009 and F1 made its first inspection checks in 2010. It was in September 2010 that F1 officially announced that the Indian Grand Prix would be added to the Formula One calendar, provided it cleared the inspection. This was just before the Commonwealth Games started in New Delhi and scepticism over India’s capability to hold such events was at its peak. Charlie Whitting, the F1 inspector, made three visits to Greater Noida. There was a nervous wait for the all-important homologation inspection which was to be held in August but was postponed by a month. Whitting finally came earlier this month and gave his thumbs-up to the track. Though F1 has to complete all inspections 90 days before the races, in India is happened with less than 60 days to go. However, this is not the first time something like this has happened — the 2010 Korean Grand Prix got its approval barely two weeks before the race was held.
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As soon as F1 announced the Indian Grand Prix last September, Mohit Beotra, the head of brand and media at Bharti Airtel, made a phone call to Ecclestone in London from the company’s headquarters in Gurgaon. Would he like to take Bharti Airtel on board as the title sponsor for India? In February this year, Ecclestone was at Gurgaon and met Bharti Airtel CEO Sanjay Kapoor in his sixth-floor office along with Beotra. By the time their second meeting took place over lunch at the new Leela Palace in downtown New Delhi, Kapoor and Beotra could sense that they would clinch the deal, unless “something went awfully wrong”. The deal meant three things to Bharti Airtel: One, it would forever be remembered as the brand that got F1 to India; two, the F1 equity of precision engineering, dynamism and speed would rub off on it too; and three, it would put it on the same pedestal as the other F1 title sponsors like Singtel (Singapore) and Petronas (Malaysia).
Kapoor and Beotra found out from the first day that Ecclestone had done his full homework — he knew everything about Bharti Airtel. When they told him that the deal would have to be eventually blessed by Sunil Mittal, the Bharti chairman, Ecclestone said he was aware that all such decisions were escalated to him! What followed was months of negotiations. “We are Bharti Airtel. We negotiate hard,” says Kapoor. “At the end of the day, both the parties walked away pleased with what they had got.” Ecclestone personally led the negotiations, flying in and out of Delhi in his private jet. In fact, he has done all the title sponsorship deals himself and has never made public the money. Kapoor and Beotra just had some “guesstimates” to negotiate. Were there others too in the race? “We would be foolish to believe there weren’t,” says Kapoor.
Once they had agreed on the price, it was time to draft the contract. Kapoor, who is an F1 fan and has seen all the three races in Singapore, and Beotra sought the advice of Singtel, Bharti Airtel’s partner. The advice that came from Singapore was that Ecclestone protects the brand equity of F1 with great zeal, so they should spend two more weeks to read the fine print before signing on the dotted line. The result is an open-ended deal. Amongst other things that come loaded with such deals, Bharti Airtel has got the rights to show F1 footage in its advertisements. It has given the contract to make the four trophies (the first three drivers and the winning team) to a London designer, though it won’t be able to put its name or logo on it. The trophy will be unveiled sometime next month.
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Ecclestone is also a good student of global trends. All his recent expansions have been in Asia — Malaysia, Singapore, China, South Korea and Thailand. Now it is India and next could be Iran. There are benefits for the host country as well. Ten years of F1 have brought Australia gross economic benefits worth $1 billion and 28,000 jobs. In Bahrain, F1 race is amongst the biggest sources of income to the travel & tourism industry. Thus, all the hotels in and around Greater Noida are full during the India Grand Prix. Each of the 12 teams comes with a crew of about 100; then there are about 500 F1 functionaries and 10,000 guests expected. That will give over 11,500 rooms to the hotels around that time.
And F1 races are watched by over 500 million people on television — next only to the football World Cup. ESPN, which holds the broadcast rights for F1 in 24 Asian countries, says its inventory of 800 advertising seconds during each race has been sold out at the rate of Rs 150,000 for a ten-second slot. This may be well below the Rs 600,000 it got for the final match of the cricket World Cup earlier this year, but not bad for a lifestyle sport. Sony, Samsung, MRF, Shell and Tata Motors are amongst those who have booked their slots. This year, the average viewership in India of the ten races held so far has been 21.7 million; the channel expects it to rise at least 20 per cent during the Indian Grand Prix.
Tickets have been priced from Rs 2,500 to Rs 35,000, and Gaur says the “response has been fantastic”. According to Ashish Hemrajani, CEO of Bookmyshow.com, in the first three hours of going on sale the website sold tickets worth Rs 1.5 crore. Most bookings came from Delhi and its suburbs, followed by Mumbai and Chennai. The Rs 2,500 tickets have been sold out. Gaur estimates revenues of around Rs 75 crores from tickets alone, including the corporate boxes. There are about 55 corporate boxes, priced from Rs 35 lakh to Rs 1 crore each; according to Gaur, most have been booked, including one by Shah Rukh Khan and companies like JK Tyre and Bharti Airtel.
The India Grand Prix is expected to be the marketing event of the season with companies — mainly automobile majors — anxious to get associated with it. Hero Motors is sponsoring Indian driver Narain Karthikeyan and his team, Hispanic Racing Team. The F1 teams have been on the promotional bandwagon for the last three years. Red Bull brought in its then F1 driver, David Coulthard, in 2008 to promote the brand. Red Bull also plans to airlift its F1 car to one of the highest roads in India, closer to the Indian Grand Prix. Vodafone has got Lewis Hamilton on a couple of occasions as well. Force India, the Formula 1 team owned by Vijay Mallya, launched a reality show around F1, ‘The Fast and the Gorgeous', on MTV. Mercedes, which is the official automobile partner of the F1 race, will set up a driving academy in Noida. It will also provide safety cars at the race as well. Mahindra & Mahindra will provide intervention vehicles — 25 Scorpios. Hospitals are vying with each other to be at the race as the official provider of medical aid.
Bharti Airtel has partnered with lifestyle channel Zoom to select grid girls. The process will be interactive and viewers will be able to participate. It plans to put up F1 simulators in youth hangouts like college campuses and shopping malls. In both the events, the winner, along with a friend, will get an all-expenses-paid ticket to the races. The friend is important as it fits in with its new advertising campaign around social networking and friendship.
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Ecclestone, it is learnt, wanted to postpone the Indian Grand Prix to the second week of December to fit in Bahrain which had lost out because of the Jasmine Revolution in the region. But the teams put their foot down because this would have eaten into their Christmas holidays. So, the races will start on October 28, the day Ecclestone turns 81.
For Gaur, it will be back to business once the carnival is over — he has huge investments to recover. F1 will have the track only for seven days, and for the rest of the year he is free to use it for any other purpose. Though Gaur isn’t forthcoming on the details of what sort of events he is planning to hold, he does say that there are talks going on with MotoGP to hold a race in 2012. MRF and JK Tyre, two companies which organise motorsports events around the country, are hopeful that the track and the F1 race will bring in more interest in motorsport. Interestingly, on both the companies’ website, two events have already been earmarked to be hosted at the Budhh International Circuit. Meanwhile, those who buy Jaypee flats in Noida now will get free tickets to the races as incentive.