Thailand's F1 Dreams: A Risky 40 Billion Baht Gamble?

 

Thailand's ambition to host the FIA Formula One World Championship for five consecutive years, beginning in 2028, has taken a significant step forward with recent Cabinet approval in principle.

 

The proposed Bangkok street circuit event, slated to run until 2032, carries a hefty price tag of over 41.379 billion baht.

 

However, an internal analysis has cast a shadow over these grand plans, highlighting substantial financial risks for the state.

 

While proponents envision a considerable boost to tourism, related industries, and employment opportunities, government sources have expressed concern over the sheer scale of the investment.

 

The Cabinet Secretariat (CS) noted that several agencies view the proposed budget by the Ministry of Tourism and Sports as "rather high."

 

The current proposal stipulates entirely public sector funding for the five-year hosting period.

 

This includes the extensive costs associated with infrastructure development, the substantial rights fees to host the championship, and ongoing operational management.

 

Such an outlay, the CS warned, "may affect the country's fiscal status in the future," particularly given existing budgetary constraints and other essential government commitments.
 

 

A Double-Edged Sword: State Investment Risks

The feasibility study acknowledged some advantages of full state investment, such as complete control over the project's direction and the ability to safeguard broader public interests, while also building international confidence with Formula One's rights holders.

 

Yet, it also underscored a critical drawback: the entire risk of financial loss rests solely with the government. Should the event fail to meet its ambitious targets, the fiscal burden on the nation could become "significant."

 

 

Profits in Reverse: A Bleak Forecast

Crucially, a cost-benefit analysis focusing purely on event-generated revenue (excluding wider economic impacts) painted a stark picture.

 

Across all three scenarios modelled – the base case, a better-than-expected outcome, and a worse-than-expected scenario – the F1 hosting bid is projected to generate less income than its operational and investment costs.

 

This consistently results in a negative net profit:

• Base Case: A deficit of 9.788 billion baht.
• Better-than-Expected Case: A deficit of 6.824 billion baht.
• Worse-than-Expected Case: A deficit of 10.752 billion baht.

 

Despite these sobering financial projections, the Cabinet Secretariat maintained that the F1 bid remains a policy decision the Cabinet can pursue.

 

The government's stated objectives include elevating Thailand's international image, boosting its 'soft power' capabilities, and fostering long-term growth in sports tourism.
 

 

 

Five Prudent Steps for the Road Ahead

To ensure the endeavour is handled with due diligence and does not become an undue burden on the national budget, the CS has advised the Ministry of Tourism and Sports and other relevant agencies to consider the following:

Comprehensive Impact Assessment: Conduct a thorough review of all potential impacts, especially exploring avenues to increase revenue and reduce the government's financial outlay. This includes designing mechanisms to encourage greater private sector involvement.

 

Fiscal Prudence: Strictly adhere to Section 7 of the State Fiscal Discipline Act B.E. 2561, which mandates that any government action incurring financial obligations must undergo rigorous assessment for cost-effectiveness, benefits, economic stability, and long-term fiscal sustainability.

 

Infrastructure and Community Impact: Prioritise detailed studies of local limitations and infrastructure requirements, including town planning regulations, environmental assessments, traffic management, and the host city's readiness. Particular attention should be paid to potential social disruption, impacts on daily life, travel, and the possible forced adaptation of routines for local residents.

 

Public Engagement and Transparency: Conduct open and transparent public consultations to ensure the hosting decision is based on well-rounded information, mitigating the risk of long-term public disputes. All legal, regulatory, and Cabinet procedures must be strictly followed.

 

Private Sector Support: Actively seek financial backing from the private sector to alleviate the government's burden. Should this prove insufficient, annual budget appropriations can be made as necessary. Any surplus funds from private contributions must be remitted back to the state in accordance with relevant laws.