At India's F1 track, a $400 million bet

Nearly 40 miles from the center of Delhi, in the sleepy Gautam Budh Nagar district of Western Uttar Pradesh, sits India's most serious bid yet for recognition on the international sports circuit.

Updated: October 17, 2011 12:14 IST
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Nearly 40 miles from the center of Delhi, in the sleepy Gautam Budh Nagar district of Western Uttar Pradesh, sits India's most serious bid yet for recognition on the international sports circuit.

Nearly 100,000 people are expected to flock to the newly built Buddh International Circuit racetrack when it hosts the Formula One Grand Prix on October 30. While the run-up to last year's Commonwealth Games in Delhi, a government-run endeavor, was fraught with chaos, India's first tryst with Formula One has, so far, been showered mainly with praise.

Officials from the Formula One Association said the project, which will be officially unveiled on Tuesday, has stayed on time and on budget. One possible explanation is that Formula One's foray in India is an entirely private venture, in which the government's role has been limited to acquiring land and granting regulatory approval.

Executives with Jaypee Sports International, the company created to build the track and manage the race, attribute its success so far to the fact that the subsidiary of the 40-year-old construction company Jaiprakash Associates is a fast-moving, tightly run ship.

Jaiprakash Gaur, the construction company's 80-year old founder, set the tone when he met Bernie Ecclestone, the president and chief executive of Formula One Management and Formula One Administration, in mid-2009. Ignoring the advice of his legal team, Mr. Gaur signed the $200 million contract at his first formal meeting with Mr. Ecclestone to clinch the agreement. Few if any governments could have moved that fast, but Mr. Gaur's speed stands in especially stark contrast to the months Indian public officials spend debating even minor decisions.

The 5.14-kilometer circuit, designed by the German architect and racetrack designer Hermann Tilke, will boast the fastest straight-line speed of any circuit in the world. Not only will fans get to watch Sebastian Vettel tear up the track in his quest for yet another podium finish, it will also host Metallica's and Lady Gaga's first Indian performances.

Whereas athletes arriving at the Commonwealth Games Village were exposed to dirty bathrooms and unkempt living quarters, the Jaypee Group is hosting members of the F1 teams, drivers and prominent guests in its posh 60-acre golf and spa resort. The resort offers its guests a leisurely swim amidst pergolas and exotic flowerbeds, an ayurvedic health spa, salon, lawn tennis and squash courts and even a discotheque.

All this flash, of course, comes with a high price tag. The venture has cost $400 million, including the acquisition of 2,500 acres of land. It will be able to recoup only $16 million of that amount through ticket sales.

"We've taken a long-term view on this," said Sameer Gaur, managing director and chief executive of Jaypee Sports. Although the Formula One Association controls the sponsorship and television rights for the race, the group expects the racetrack to drive up the price of apartments, offices and malls it is also developing nearby. "People will want this address," he said.

As part of the company's agreement with the state government, it will set aside more than a third of the 2,500 acres for public sporting facilities, including a cricket stadium, hockey stadium, tennis courts, squash courts and a shooting range. On the rest of the land, Jaypee plans to build apartments, offices and malls.

"Formula One will put Noida on the map," predicts Anshuman Magazine, chairman and managing director OF CB Richard Ellis India, "changing its perception to a more desirable location."

To make sure the track is put to use for other events, Jaypee executives said they have studied the success of the Sepang International Circuit in Malaysia, which is usually booked for 250 days each year.

"We're in talks with MotoGP, the Grand Prix of motorcycle racing, as well as other car and bike racing competitions for use during other parts of the year," Mr. Gaur said. The company also has a tie-up with Mercedes-Benz, which is planning on opening a motor racing academy at Buddh. And to infuse a sense of inclusiveness, racing enthusiasts will have the opportunity to test their skills on the track for a fee of 5,000-6,000 rupees ($102 to $123).

But however hard it may try to be inclusive, many believe Formula One remains "an elite, aspirational endeavor" at its core, whose economics have little in common with the Indian reality, unlike more grassroots sports like cricket and hockey.

The company has sold all but eight of its 55 "platinum boxes," which range between 3.5 million rupees ($70,000) and 10 million rupees ($200,000). The race's cheapest ticket sells for 2,500 rupees – about half of an average Indian rickshaw driver's monthly income. Still, officials say they have had sold 60 percent of the tickets three weeks before the race.

Hotel rooms in Delhi are booked solid for the race weekend. F1 fever is palpable. Nearly 2,000 people attended a ‘mini-race' showcasing an older Red Bull racing car in the middle of a blazing Saturday afternoon last week, even though it was barely advertised.

Fans' emotions are running high. Duhita Jagtiani, an independent filmmaker and avid fan, could scarcely control her excitement for the upcoming race. "After 15 years of following every curve and twist, yelling my lungs out at the TV while supporting my teams, I can finally see them live," she said at the showcase race. "It's an incredible feeling."

Still, not everyone is happy. The Uttar Pradesh government acquired 7,200 acres of land for its urbanization drive, promising landowners quotas in the housing projects and jobs in return. An added source of conflict has been the price at which land has been acquired by the government, which landowners believe to be as little as 0.5 percent of its market value.

Some of the land was sold to Jaypee for the development of the Yamuna Expressway and Formula One projects. "We gave up our land in the hope that industries would come up and provide employment to our people. After taking away our livelihood, the administration has not provided our children with any alternative sources of employment," Nathiram Sharma, a resident of Dankaur village, which has been partially levelled to make way for the racetrack, told the Indian Express.

Residents of Dankaur are planning a protest the day before the race. In keeping with the spirit of the moment, the protest will be in the form of a sports tournament with games of kabaddi, cricket and wrestling. Unlike the race, however, spectators hoping to take in the protest tournament will not have to book their tickets in advance.

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