As the sun set on the Yas Marina Circuit on the evening of 4 November, millions of people around the world watched as drivers jostled for position at the Abu Dhabi F1 Grand Prix.
After a gripping contest that saw a spectacular crash between cars driven by Nico Rosberg and Narain Karthikeyan, early race leader Lewis Hamilton retire and a stunning performance that took Sebastien Vettel from last to third, the race was won by Finland’s Kimi Raikkonen.
Now in its fourth year, the grand prix has become a highlight of the UAE’s annual sporting calendar, which now boasts events such as the Volvo Ocean Race, HSBC Golf Championship, Mubadala World Tennis Championship, World Power Boat Championship and an international triathlon. While this calendar demonstrates that Abu Dhabi can successfully host world-class events, they are dwarfed by the grand prix in terms of size and importance.
Huge investment into grand prix
Abu Dhabi’s grand prix is not cheap. The emirate has invested billions of dollars to join nearby Bahrain – which hosted its first F1 race in 2004 – and 18 other cities that currently host Formula 1 races.
In 2006, local developer Aldar Properties announced plans to develop a race circuit on the 25-square-kilometre Yas Island as part of a $40bn real estate play that would also include a Ferrari theme park, shopping mall, water park, marinas, golf courses and residential units.
The first phase of that plan, which included the track and hotels, was completed in time for the inaugural grand prix in 2009. The development has steadily expanded since, as projects such as the Ferrari theme park have been completed. The next project on the slate is the water park, which is set to open by the end of this year.
The Grand Prix reinforces Abu Dhabi’s position as a global city and destination for businesses to meet
Given the massive capital investment, many have questioned whether the money spent building the track and its surrounding facilities will ever be recouped from an event that is held for just one weekend each year. For Abu Dhabi, the event has macroeconomic importance and the government says the returns are much more than simply ticket sales and hotel bookings. The race is an opportunity to reinforce the emirate’s position as a global city and destination for businesses to meet, sign deals and promote their brands and services.
The biggest bit of business to be done in Abu Dhabi over the coming years is the Abu Dhabi Company for Onshore Operations (Adco) concession, which expires in 2014. The deal is a big one as Adco accounts for almost 60 per cent of the UAE’s total daily crude output.
With just a few weeks left before Abu Dhabi’s annual International Petroleum Exhibition and Conference, it is not surprising that the international oil companies that are involved with Formula 1 took advantage of the valuable branding and relationship-building opportunities.
The most high-profile was the Royal Dutch Shell Group, which this year celebrated its 500th grand prix with the Ferrari racing team. The UK/Dutch oil major is one of the team’s key sponsors and supplies fuels and lubricants. Since its first race in Monaco in 1950, the partnership has become one of the most successful in Formula 1, with 160 individual race wins, 12 driver championships and 10 constructor titles.
Shell is not the only international oil company capitalising on the branding opportunity that the grand prix offers. US oil major ExxonMobil sponsors the Vodafone McLaren Mercedes team and France’s Total works with the Red Bull Renault team.
Track-side business was not restricted to the oil sector. One deal that was signed just ahead of the race involved Abu Dhabi Commercial Bank (ADCB) and Spain’s Banco Santander. The contract will see the two banks collaborate to provide a broader range of services to Banco Santander’s clients in the UAE and to ADCB’s customers in overseas markets. The banks will specifically work together in areas such as trade and project finance. Like Shell, Santander is a sponsor of the Ferrari team.
Regional firms are also sponsoring race teams. The local Aabar Investments is one of the main sponsors of the Mercedes AMG Petronas team and local telecoms operator Emirates Integrated Telecommunications Company (Du) is a sponsor of the Red Bull Racing team, a partnership that was extended on 1 November, just ahead of the Abu Dhabi Grand Prix.
Abu Dhabi government-controlled investment vehicle Mubadala Development Company had been a key sponsor of the Ferrari team before it sold its five per cent stake in the organisation back to Italian motor giant Fiat for E122m ($155m), E8m more than it paid in 2007.
As regional companies such as Aabar, Mubadala and Du continue to grow and expand internationally, the Middle East will need more events like the Abu Dhabi Grand Prix that marry sport with business, allowing cities to demonstrate to a global audience what they are capable of, while at the same time providing international firms with a window into some of the world’s most exciting markets.