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Abu Dhabi paid a reported $60m to host its own Formula One race but what will the emirate get back in return? CEO Middle East looks at the economic impact an F1 race has.

When 50,000 visitors pour into Abu Dhabi’s Yas Marina Circuit next month they won’t just be watching what could turn out to be one of the closet finals in years, they’ll be taking part in one of the city’s most ambitious events ever. Broadcast live to 350 million people, November’s inaugural F1 race will help catapult the emirate onto a global arena.

Abu Dhabi, which has 9 percent of the world’s proven oil reserves, is spending billions of dollars to diversify its economy. Its strategic plan, Plan Abu Dhabi 2030, is placing as much emphasis on creating cultural hotspots and world class sporting attractions as its approach to sustainability and urban development.

The emirate already owns British football club, Manchester City, and is hosting the World Cup in December. While both will further raise the profile of the emirate, particularly in Europe — where football is most popular — the F1 race is expected to have a huge impact economically.

F1 might still be a relatively new player on the global sports scene but its increasing popularity has secured its position as one of the most profitable sports in the world. According to Deloitte Sports Business Group, F1 generates $3.9bn annually, nearly $1bn more than football and topped only by America’s NFL and MLB.

That figure is only set to rise, says Alan Switzer, director of Sports Business Group at Deloitte: “Global revenues of more than $3.9bn and total viewing figures in excess of 350 million for the 2007 season make impressive reading and with measures such as the future Asian expansion, development of more ‘local heroes’ and the introduction of night racing we would expect these figures to continue to rise.”

F1’s growing popularity and return on investment has seen several emerging economies jump at the opportunity to host an event as its owner, Bernie Ecclestone, has accelerated its expansion outside of Europe. Bahrain became the first Gulf country to host an event in 2004 followed by Singapore in 2008. India and South Korea are also expected to join the calendar in 2010.

The sport’s popularity has significantly pushed up hosting fees during a time when F1 is struggling with debt amid the economic downturn. According to newswire Bloomberg, Abu Dhabi forked out a record $45m for a seven-year renewable contract to host the three-day event in February 2007. Other reports, however, suggest that the figure could have been as high as $60m.

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