Watching today's GP in the desert in Bahrain, I wondered why they bothered building a track there. An interesting article in today's "New York Times" supplies at least part of the answer:
For McLaren, a Homecoming in Bahrain
By BRAD SPURGEON
As McLaren Mercedes arrived victorious at the Bahrain Grand Prix this weekend in Manama, there was a sense of its coming home.
When it finished first at the Malaysian Grand Prix last Sunday, the sport's second-most successful team ended its longest winless streak in a decade at just the right moment.
The team publicly thanked its driver Fernando Alonso, the reigning world champion it had lured away from Renault. Another root of McLaren's resurgence is the support from its new home country, Bahrain.
In January, Bahrain bought 30 percent of the McLaren Group of companies, injecting both cash and optimism.
Bahrain's investment in motor sports and that of its neighbors Abu Dhabi and Dubai may look like an exercise in vanity or a competition between rich Gulf nations. But behind the high finance, the glitz, the glamour and the testosterone lies a sober business strategy to develop one of the world's most dynamic regions.
Last weekend, for the first time since the deal closed in February, two of the team owners, Ron Dennis and Mohammed bin Essa al-Khalifa, chief executive of the Bahrain Economic Development Board, spoke about their partnership.
The country, the men said in an interview, has invested not so much in a sports team as in a small, multifaceted company with big ambitions, much like Bahrain itself.
"We have a very strong desire as a company, and they as a country, to pursue excellence and not be inhibited in our thinking as a result of size," Dennis said. "We have to use the world as our marketplace."
Dennis has built McLaren over nearly 30 years from purely a sports team to a constructor of luxury sports cars for Mercedes-Benz, sports cars of its own, electronics systems for racing teams everywhere — including IndyCar and Nascar and next year for all of the Formula One teams — and everything from hi-fi equipment to a catering service.
For the past six years, DaimlerChrysler has owned 40 percent of McLaren, and Dennis and Mansour Ojjeh of the TAG company each owned 30 percent. Bahrain bought half of Dennis's and Ojjeh's shares, and it has members on the board.
"It is in the non-F1 aspects of McLaren that we saw the value," Mohammed said. "In addition to that, of course, Formula One has incredible networking opportunities and we're already talking to a lot of the McLaren partners on helping to grow their businesses within the region, and looking at opportunities, in whatever field."
Bahrain, which has been host to a Grand Prix race since 2004, has only 650,000 inhabitants. Its land area is smaller than New York City's. It has the fewest natural resources of any Gulf state.
It has had predominantly an oil-based economy since the 1930s, and investing in McLaren is a way for the country to develop in preparation for the post-oil era.
One of the key areas of the McLaren deal involves developing Bahrain's aluminum industry. The government-owned Bahrain Mumtalakat Holding, which owns the McLaren stake and the Formula One track, also owns 77 percent of an aluminum smelter. It is one of the biggest in the world, producing just under a million tons a year. At the moment, Bahrain simply exports most of its aluminum.
"Our goal strategically is to capture more value within the country, create high-skilled jobs for the people," Mohammed said. "Through McLaren and others — and McLaren is one of the key partners — it provides us access to DaimlerChrysler or other manufacturers, where we can work with them to produce components for automobiles."
Yet there is also clearly competition between the Gulf states.
In July 2005, Abu Dhabi, through the government-owned Mubadala Development, bought a 5 percent stake in McLaren's competitor, Ferrari.
Mubadala is also involved in the aluminum business, and it too is making contacts within Formula One to develop an automotive component business for its new smelter, scheduled to open in 2010, according to a report in The Financial Times last Tuesday.
In February, Abu Dhabi said that it would also hold a Formula One race, starting in 2009, and would build a Ferrari theme park.
Last month, two Abu Dhabi companies, Etihad Airways and Aldar Properties, signed a joint title sponsorship deal with the Spyker team, whose parent company, Spyker Cars of the Netherlands, has been partly owned by Mubadala since November 2005, a year before Spyker entered Formula One.
"Abu Dhabi saw the benefits that came to Bahrain and decided to go down the same route," Sheik Mohammed said. "It's good for Formula One, because one of our original goals was to help grow the sport in the region. If you look at the map of Formula One, there was a gap. And this was a way that we positioned it."
Motor sports development in the region is not stopping at Formula One. Last Tuesday, the crown prince of Bahrain, Sheik Salman bin Hamad al-Khalifa, bought 30 percent of the ART team in GP2, a Formula One support series that starts this weekend in Bahrain.
Dubai recently created its own international racing car series, known as the A1GP, which pits nations against one another.
Sponsorship from the Middle East goes back decades — notably to a deal in the 1970s between Saudia Airlines and the Williams team. But the level of activity has blossomed recently.
"When Dubai started to emerge in the 1970s, everybody thought this would be a place for Formula One — they had sports car races and things like that — but it didn't really happen," said Ian Phillips, director of business affairs for Spyker. "I suppose it has taken the region, the Emirates, 20 years or so to really become a developed nation."
Phillips added that Formula One had also developed to the point of being a worldwide sporting event that puts such nations on the map around the world during a race weekend.
But Bahrain's investment in McLaren shows that the sport remains the driver for the rest of the company.
"If you liken it to a boat," Dennis said, "Formula One for us is the bow, the thing that creates the speed in the boat. It's the first part of powering through the economics that relate to the business."
