Hosting a Formula 1 (F1) race in South Africa could greatly benefit the economy as major sporting and entertainment events just like it has proved to noticeably increase a country’s Gross Domestic Product (GDP), said North-West University’s Professor Waldo Krugell.
“Major events like the [Fifa] World Cup or Grand Prix can be a source of additional spending in the economy and could aid economic growth,” said Krugell in an interview with eNCA.
An F1 race will not only spur domestic consumers to spend their savings on tickets, merchandise, and the like, but also motivate international tourists to visit South Africa which will see an influx of foreign currency into the economy.
As a result, “the money spent on hotel rooms, Airbnbs, and dining out associated with the [event] gets multiplied and spent over and over again in the economy,” said Krugell.
According to Etonomics, it is estimated that the GDP of Monaco – host of the most iconic F1 race on the calendar – expands by $110 million (R2.1 billion) during race week and the population increases five-fold in the build-up to the race weekend, which in turn benefits local businesses tremendously.
In Bahrain, one of the lesser attended races, the direct economic gains stemming from F1 amounts to around $100 million (R1.9 billion) annually.
Amongst others, it has significantly boosted the Middle Eastern nation’s tourism sector with hotel occupancy rates increasing by 70% to 100% during race weeks, and has led to greater investment into sports infrastructure such as the Bahrain Sports City project, which is forecasted to stimulate enormous economic growth.
South African F1 dead in the water
Unfortunately, hopes of a Kyalami Grand Prix were crushed last year when RacingNews365 reported that F1 abandoned all plans for a local event as a result of South Africa’s close-knit relationship with Russia.
The Fédération Internationale de l’Automobile (FIA) which is the governing body of F1 instated a blanket ban on Russian and Belarusian participation following the former’s invasion of Ukraine in February 2022, except for those willing to sign a neutrality agreement.
South Africa’s “neutral” stance regarding the Eastern European war has been dragged into the limelight numerous times due to questionable practices from a country that is purportedly not taking any sides.
The local government allowed sanctioned Russian ships and planes to land on local soil and leave again without any repercussions, ran joint naval exercises with Russia and China off the coast of KwaZulu-Natal, and even proposed providing diplomatic immunity to BRICS members in an attempt to avoid arresting Russian President Vladimir Putin when he was expected to attend a summit in Pretoria late last year.
These actions have deemed a domestic F1 race “untenable in the near future.”
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