11 March 2005
	An SA perspective ON TRACK FOR A LOCAL GRAND PRIX By Ferdi de Vos

South Africa's involvement with Formula One stretches back more than 50 years, but since the last SA grand prix 12 years ago numerous bids to bring Formula One back to this country have failed. "The problem is the cost. To stage another grand prix locally will require R120m-R140m just to bring the teams here," says Dave McGregor, MD of Pole Position Promotions and erstwhile promoter of the SA grand prix. "Few local companies have that kind of money, so buy-in from government is needed." That is precisely what the latest Formula One bidding company wants. David Gant, CEO of the SA Grand Prix Bid Company, says the company would like national, provincial and local governments to buy a joint 35% stake, valued at about R100m, in the envisaged public and private sector partnership. The partnership would then build a new track - for about R500m - close to the Cape Town airport. The consortium led by Gant, Denis Worrall of Omega Investment Research, Sello Rasethaba of the OrlyFunt Consortium and Jay Naidoo, chairman of the Development Bank of SA, needs government funding if it wants to seal a seven-year deal, starting in 2008, with Formula One supremo Bernie Ecclestone's Formula One Management. The bid company has had preliminary talks with all three levels of government and is now in follow-up discussions with the city of Cape Town and the Western Cape province. According to Gant, the rest of the money (R400m) will come from the private sector and financial institutions, and about R75m has already been secured from the private sector, "but the companies want government buy-in". "Apart from dividends, government would also get increased income tax and Vat from the project, which will amount to almost R1bn over seven years," says Gant. In return the consortium will need government to commit to seven years of subsidies. Gant says each grand prix will bring in about R1bn/year through tourism. The building of the track will create thousands of jobs and the event should also make available new industrial sites that can generate up to R1,8bn in industrial property development. The closest thing SA now has to Formula One is the Altech-sponsored F1x2 event for two-seater Minardi Formula One cars. The first event, held in August last year, " attracted more than 90 000 spectators. This once again proves there is a huge following for the sport in SA," says McGregor. The charity event at Kyalami raised more than R3m for Operation Hunger and the Nelson Mandela Children's Fund. The shared sponsorship cost was almost R12m.