Emerging markets form a line to host profile-raising F1 Grands Prix

Emerging nation with cash to spend seeks confident sporting partner for mutual profile raising and commercial gain: oil-rich Azerbaijan has found its perfect match in flashy Formula One.

The former Soviet republic was confirmed this month as the latest country to hitch its ambitions to the world's richest motorsport series, as details were announced of a new Grand Prix to be raced around the streets of Baku, its fast-developing capital, from 2016.

At the launch, Bernie Ecclestone, F1's commercial chief, hailed the "latest addition" to the calendar and anticipated a "world class event" on the shores of the Caspian Sea in two years' time.

Azad Rahimov, Azerbaijan's minister for sport, says bringing F1 to Baku was a logical step after it staged the 2012 Eurovision Song Contest and won the right to host matches for the Euro 2020 football championships.

"F1 is one of biggest sporting events in the world, after only the Olympic Games and World Cup," he says.

Arif Rahimov, the Baku Grand Prix chief executive, adds: "We wanted this Grand Prix to put ourselves on the map and we are confident we will show the world a top-quality race."

Baku is following a path that is well trodden. Emerging markets from China to Singapore, Abu Dhabi and, most recently, Russia have all sought to use F1 as a vehicle for establishing or building an international profile - a 200mph advertisement for their newly acquired wealth, self-confidence and openness to investment and foreign visitors.

But success requires skill and significant resources, including a fee to the commercial rights company that Ecclestone heads.

Sports minister Rahimov declined to reveal how much Baku planned to spend on the circuit and infrastructure, or the cost of the right to stage the race.

But Mr Ecclestone's company receives about $700m a year in hosting fees from the 20 circuits, with newer additions paying considerably more than established races such as Monza or Monaco.

Other costs, from building the circuit to redeveloping transport and other infrastructure, can cost many times more. The circuit that was built to host last month's inaugural Russian Grand Prix, in the Black Sea resort of Sochi, is said to have cost about €200m.

Is it worth it? Robin Fenwick, chief executive of Right Formula, an F1 marketing company, stresses the benefits.

"Azerbaijan or Sochi would not be places you would think of as destinations for tourism or business. [But] there are few sporting events that can create global awareness [of a host city], and F1 is one of those," Fenwick says.

A Grand Prix, he says, brings a global television audience, sponsorship from international brands, tourism potential, as well as stimulating other forms of investment. "Hotels, airlines, bars and restaurants all benefit," Fenwick adds.

He notes how Singapore, which held its first Grand Prix in 2008, has put the race at the centre of its drive to become the premier business and leisure destination in Asia. Bankers and business people flock to the city state during Grand Prix week for a splurge of dealmaking, while Singapore's tourism board estimated in 2012 that the race had generated more than S$560m ($447m) in receipts from visitors over the preceding four years.

"Five or 10 years ago, you would say the hub for the region was Hong Kong," Fenwick says. "You could say it is now Singapore. F1 has not been responsible for that, but it has been a contributing factor."

Ecclestone's thirst for new races is unlikely to end in the Caucasus. Mexico City, which last hosted a Grand Prix in 1992, is set to return to F1 next year, while Argentina could be added to the race calendar, according to the F1 boss. "We are always open to doing something with Argentina. When we meet some serious people, it will happen," Ecclestone was quoted as saying this year.

And it is not just emerging markets that are prepared to invest to bring a Grand Prix to their country. Austria was added to the 2014 calendar, thanks to financing and sponsorship from Salzburg-based Red Bull, the energy drink group that also owns the Red Bull Racing team. Ecclestone says even austerity-hit Greece has looked at hosting a race.

Not everyone is so keen to get involved. Although Austin, Texas will stage the United States Grand Prix this weekend, the Grand Prix of America, a planned blast through the streets of New Jersey with Manhattan's telegenic skyline as a backdrop, has been postponed for two years running. New York and Baku, it seems, have different tastes.

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