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Formula 1

Why Hamilton's big F1 wish is unlikely to come true any time soon

Kyalami is a venue frequently linked with a potential return to the F1 calendar, bringing Africa back into the World Championship. RacingNews365.com's Dieter Rencken examines the viability of such a possibility.

A standing joke in the Formula 1 paddock is that the sport races on all continents save Africa and Antarctica – and the latter will be first to plug the gap even if a Grand Prix around the Bay of Whales or up the Heiberg Glacier taxes Pirelli's softest compounds to the absolute limit.

That said, Africa regularly hosted Grands Prix on its southern-most country until 1985 - when F1 bowed to the inevitable and withdrew the South African Grand Prix from the calendar in the face of enormous (and justified) pressure from anti-apartheid activists. Ironically, South Africa's replacement was the Hungarian Grand Prix - staged in a country under communist rule, without a word of protest…

Since then, F1 returned to Kyalami twice: in 1992/3. Tellingly, the events were staged before Nelson Mandela was elected president and both were run on the tighter, anti-clockwise layout built in 1987 rather than on the traditional high-speed racetrack of which old-timers speak so wistfully. Indeed, the two circuits could hardly be more different in character despite having some sectors in common.

Since 1993, numerous attempts have been made to return F1 to South Africa, usually at Kyalami although Cape Town has (thrice) been mooted - including a 2014 project led by Anthony Hamilton, father of Lewis - as was a circuit situated alongside the airport on the outskirts of Durban. All came to nought for the simple reason that local and national governments would not (could not?) commit funding to the projects.

Kyalami constantly referenced for a return

Still, whenever F1 seeks bargaining chips in talks with other venues, references to Kyalami are trotted out; ditto when Lewis Hamilton is asked where he'd like F1 to race next. Result: sensationalist reporting from folk who don't even know the origin of the name or that some of the best-known sectors were consigned to an industrial park during the 1987 remodelling. Lest you're wondering: 'Kyalami' translates as 'My home' in Zulu.

"Every time Lewis or Stefano (F1 President Domenicali) mention Kyalami the media goes into hyperdrive," a source close to the situation told RacingNews365.com during a recent visit to South Africa.

"None of this speculation is helpful to the cause as it raises expectations," he said, adding that local fans' expectations are "raised sky-high, then almost immediately shattered. They've become cynical…"

Asked another local motorsport figure, one I have known for over 20 years and who has travelled to Grands Prix at his own (considerable) expense and can thus be classed as a true fan: "Why this obsession [with a SAGP]? We [South Africa] are way too poor; witness the devastation in [storm-hit Natal province], electrical load shedding and blackouts, etc." His subsequent WhatsApp messages were more explicit.

			© XPB Images | De GP van Zuid-Afrika in 1983
	© XPB Images | De GP van Zuid-Afrika in 1983

A consortium aims to bring a race to Kyalami

Still, Warren Scheckter, nephew of Ferrari's 1979 World Champion Jody, is hopeful of pulling all strands together to stage a race within the next two years. He and former SAB Miller [brewery] heavyweight Keith Doig founded the SA Grand Prix Corporation in 2015 and have thus been over seven years in the trying. They were granted sole rights to a SAGP - these have now elapsed - by F1 early in the process.

Warren - son of sometime F1 driver Ian - confirmed that the rights have expired, but the consortium remains hopeful of returning F1 to South Africa. So, what is the latest situation, RacingNews365.com asked Scheckter Jnr., in the wake of widespread speculation that a return to Kyalami was imminent.

"We've worked with Formula 1 for quite a number of years to try and make a [Grand Prix] in South Africa happen, and that's still an ongoing conversation," he explained.

"We're working hard with them to try and make sense of a business plan for South Africa. We're making good progress, but we still have some work to do. It's looking good, but not done yet."

He also suggested the hype is unhelpful for similar reasons outlined above, and concedes that unless a deal is signed within the next two years - 2024 at latest - SAGPC will need to reconsider its existence, spelling the end of the dream.

"I don't think we'd want to go beyond 2024; we haven't given up hope on '23 but it's unlikely because of the congested calendar," he said.

"Logistically, it's a tight timeline for us. If we were to look at 2024, it will be the absolute latest if we were to do it, so, yeah, we wouldn't go beyond that."

That's clear, then: 2024 or bust, despite eight years of effort and the support of Jody, who acts as chairman of the project. Against that background, if they can't pull it off, who can?

Why is Kyalami unlikely to host a race?

Why, then, is it so difficult to cut a deal for a venue with such a long and illustrious history, albeit forged mostly on the now-superseded layout? The bottom line is the country's political imperatives combined with a delicate economy hit particularly hard by COVID-19.

In short, South Africa faces massive political and social challenges, and while F1 may provide a brief PR fillip and boost tourism, the fact is a SAGP won't build the schools, hospitals, and infrastructures the nation desperately needs. F1 is perceived as an elitist sport beyond the reach of indigenous Africans - forget not that Hamilton was born in Britain to a West Indian father and English mother - and is thus a hard ministerial sell.

Indeed, Scheckter admits they are looking to the private sector to massage the numbers into place: "We're looking at a combination of everything from corporate partners to private investors to some support from government in a very small way, but nothing material [from state coffers]."

SAGP's business model, if successful, would be to rent the Kyalami from its owner, the Toby Venter family trust. Media reports (erroneously) have it that Porsche is somehow involved in the circuit, but the truth is that Venter is regional franchise holder for the brand (and Lamborghini and Bentley) in the country, with the circuit a separate if complementary project. Porsche AG have zero skin in the Kyalami game.

Saliently, Kyalami is now a major conference venue – having hosted but a single race meeting in two years: January's international GT race. The circuit holds a Grade 2 FIA licence which expires shortly and would require upgrades to crash barriers, run-off areas, and medical facilities to make the level required for F1. Garages require revised access, while the current paddock is too narrow to accommodate hospitality units.

			© XPB Images | De A1GP-race op Kyalami in 2009, die werd gewonnen door Team Nederland
	© XPB Images | De A1GP-race op Kyalami in 2009, die werd gewonnen door Team Nederland

The massive commercial risks of hosting a race

Indeed, the word is that F1 in October 2020 enquired about Kyalami's suitability for a COVID (spectator-free) race; talks came to nought: apart from Covid quarantines, extensive changes would be required and freight logistics were complex: the country sits at the end of one-way flight. Given the current capacity of 20,000 grandstand seats, double that would be needed to bring spectator numbers up to a maximum of 60,000.

Venter sees no need to upgrade Kyalami to F1 standards unless a Grand Prix eventuates, and such work does not come for free; thus SAGPC would need to guarantee the costs of elevating the circuit to Grade 1 levels plus maintaining the category licence for the contract duration. These costs would ultimately be reflected in the circuit rental, and thus ticket prices.

Let's do the maths: F1's average hosting fees pan out at $30m per race (before escalators), but a South African round would be in the higher reaches due to travel and freight costs, so around $35m. Add in circuit rental, Grade 1 costs and grandstands, and the figure spirals to $40 before promoter fees (marketing, security, ticketing etc) of another $5m – $45m all in at absolutely minimum.

The South African Rand currently trades at R15: $1, so R675m. Given Kyalami accommodates maximum 60,000 spectators and promoters have little or no other income, break-even is R12k per ticket, or more than many local teachers earn monthly. State subsidies would reduce the price but imagine the outcry – leaving SAGPC and private investors to run massive commercial risks to stage an event that whisks valuable foreign currency out of a cash-strapped country.

There are, though, two other alternatives for a race at Kyalami: the circuit, i.e. the Venter trust, promotes the event for its own account, or F1 enters into a joint-venture with SAGPC and/or Kyalami directly. Apparently, F1 has turned a J-V, although it has no qualms about such an arrangement in the USA. Possibly Kyalami is on the wrong continent…

What are the chances of a South African GP ever returning?

Venter would, of course, be delighted to have Kyalami stage a Grand Prix, provided someone else pays the fees – the rental is, after all, where it's at for him.

"Absolutely," he confirmed when the question was put to him by RacingNews365.com during a track inspection last week, but he reiterated that Kyalami is not in a position to pay the hosting fee: "We don't own the rights; Kyalami will not be able to pay the hosting fee as such, but we will be able to organise the [Grand Prix] and we are able to provide the circuit.

"Alternatively, a joint venture which I still do believe is not beyond our reach."

Thus, two of the three pillars that are crucial to the running of such an event - namely venue, promotion, and hosting fees - could be provided by Kyalami, leaving the thorny question of hosting fees, which is precisely where every project has come unstuck, whether at Kyalami, in Cape Town or Durban.

Significantly, Scheckter confirmed that SAGPC does not hold an exclusive deal with Kyalami, merely that the circuit would be their preferred choice were a deal to come together but does not discount a street race elsewhere. Cape Town?

"From the government side a street circuit would be preferable," he said.

"It would essentially showcase a lot more [of the country] and put something back into the economy; it'll create more jobs. But Kyalami is already built up, so it's a more cost-effective option which is a key factor because getting the right funding in place is difficult."

So that is the situation from various perspectives: Kyalami is ready and willing to stage an event if all costs are covered; SAGPC is hopeful of raising the requisite funding but admits that state support is unlikely and F1 aims to tick a box marked 'Africa' but only if said carton contains around $35m.

What, then, has changed since 1993? Absolutely nothing, so much so that a SPGP remains more likely than a SAGP – yes, South Pole could still beat South Africa to it. Alternately, Morocco could stage the next African Grand Prix – don't bet against it as an Africa box-ticking exercise.

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