Is F1 in SA a short-term reality? This seems to be the overwhelming impression created by the Minister of Sport, Arts and Culture, Gayton McKenzie, after he attended the Azerbaijan F1 GP last weekend. The Minister posted the following on social media:


His post was backed up by another shared by the head of the Fédération Internationale de l’Automobile (FIA), Mohammed Ben Sulayem, who shared the following.


These are both extremely promising signs, the kind that sets the hearts of South African F1 fans racing. We’d like nothing more than to take a local flight, or drive, to watch the series compete on local soil. Minister McKenzie stated early on in his tenure that he’d have failed in his role if he cannot get an F1 race in South Africa. This has made him somewhat of a hero among fans of the sport. But what is the real likelihood?

Some Background

Formula One as a sport, and a business, has experienced rapid growth around the world over the last few years. This is, in large part, thanks to the efforts of new rights’ holder Liberty Media. The US-based firm has ramped up the sport’s global appeal by making it more transparent (through the docu-drama Drive to Survive) and ramping up the ‘show’ aspect. This holds particularly true for races such as Miami and Las Vegas, two recent additions to the calendar.

Liberty Media, realising the profitability of the series and the show, has increased the calendar to an unprecedented 24 races this year. However, there is one glaring omission from the schedule: a race in Africa. Stefano Domenicali, CEO of Formula One Group, along with the likes of the sport’s most successful driver, Lewis Hamilton, have commented about the need for a race on our continent.

Recent Developments

It is probably why the recent meetings between Domenicali, Ben Sulayem and McKenzie were seen in such a positive light. The Minister seems to be connecting with the right people at the top levels to be able to make this dream of so many fans come true. Our insiders tell us that obtaining such meetings is not that difficult, but what comes next is…

An Expensive Exercise

As much as we want to see a race take place in (South) Africa, there are some hard truths to consider. The first relates to hosting fees. Primary F1 revenue represents the majority of F1’s revenue and is derived from (i) race promotion revenue, (ii) media rights fees and (iii) sponsorship fees – source: Liberty Media.

This listed company has a very attractive product and it knows what it is worth. Therefore, hosting a race is not a cheap exercise. The ‘historical’ circuits are paying anywhere between $20m and $25m per year, to host a race. These include Monaco, Monza, Spa and Japan, although it is understood that the hosting fees for these circuits are being increased substantially when the promoters contracts are up for renewal. Newer additions to the calendar such as Baku, Qatar and Jeddah, are paying north of $50m. That equates to about R900m using a rounded-up forex rate of R18 to the U$. Source: Statista

Liberty Media is not running a charity, it has shareholders to answer to. As much as Africa is a priority, the profit column of its balance sheet is more important. Even if the company and F1 were to ‘cut Africa some slack’ they’d want to see some return soon. Liberty’s filings reveal that the race contracts “may allow for flat fees over the term, but more typically they include annual fee escalators over the life of the contract, which are typically based on annual movement in a selected consumer price index or fixed percentages of up to 5% per year.”source Forbes.com

A Political Minefield

The cost is a major stumbling block, not least of all because the idea of a local race and associated costs will become a point of political contention. The Minister may be optimistic, but his colleagues may not be as enamoured by the idea of supporting this expensive (and perceived elitist) sport. The ruling party has many factions within it. And that is before we go into the Government of National Unity (GNU) and its role in maintaining checks and balances.

Where To Race?

Then there is the small matter of where to race provided the African race is coming this far South. Kyalami Grand Prix circuit in Gauteng is a prime candidate. The Midrand facility hosted the last two F1 races to take place on the continent, over 30 years ago. As it stands, the track has grade two certification. The FIA requires a grade one level to host an F1 race. We have already chatted with the owner of Kyalami about his willingness and the track’s readiness to host a race, as you can read at this link. But even if Kyalami is willing, the circuit will still have to be upgraded. As a result, there will be substantial costs, at least in year one.

There has also been talk of a street race, potentially in Cape Town. Formula E visited the Mother City early in 2023. The event was, by all accounts, a success (as you can read by clicking here). However, the championship has not returned or been added to any future calendar. Rumours are that there local organiser could not come up with hosting fees, which is a tiny percentage of what F1 demands. An F1 street race in Cape Town would cost a great deal. That’s before the  resistance from local residents. A completely new circuit will be prohibitively expensive and Killarney is not suitable for Formula One.

Conclusion

So, where does that leave the future of F1 in SA? We are massive fans of Formula One here at Double Apex. We watch every race and publish many articles in a dedicated section. We have even saved up to attend races in Europe. We would like nothing more than to witness an F1 race on home soil. We hope it happens soon. But will it? That, we fear, will not be the case.