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| Vol. 4, Issue 5 May 2012 |
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Reporting & Essays |
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Reportage |
Where the Rubber Meets the Road
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| India’s maiden Grand Prix arrives in the middle of a simmering controversy over land and development |
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Published : 1 November 2011 |
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DANIEL BEREHULAK / GETTY IMAGES |
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| A car from Team Red Bull performs during the media
preview of the Buddh International Circuit in Greater Noida on
18 October.
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HE JOURNEY FROM THE CENTRE of Delhi to the new home of India’s Formula 1 racetrack takes you to the periphery of the perpetually expanding urban agglomeration that surrounds the capital. When I travelled, by cab, to visit the track one morning in early October—in what may or may not have been unusually heavy traffic—the journey
lasted a brief
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three and a half hours.
The first faint signs of Formula 1—or rather, of the company behind the race—appear as soon as you cross the Yamuna river and enter Uttar Pradesh: among the myriad hoardings and billboards in Noida, most of them selling real estate in some form or another, the footprint of the Jaypee Group is light but visible, crowded by competition from the dozens of other developers doing business at Delhi’s frontiers. But as you head south through Noida, towards the area known as Greater Noida, and the area beyond that, now known as the Yamuna Expressway Industrial Development Authority—which we will perhaps soon call simply Yeida—the Jaypee Group logo seems to be represented on the majority of available flat surfaces. The hoardings advertise the company’s residential projects (Jaypee Wish Town, Jaypee Greens Sports City), its subsidiary businesses (Jaypee Cement, Jaypee Infratech), its luxury hotel (Jaypee Greens Golf and Spa Resort) and, of course, its upcoming Formula 1 Grand Prix, a project of Jaypee Sports International.
In fact, the last road on the journey to the Buddh International Circuit at Jaypee Greens Sports City is another Jaypee undertaking, the Yamuna Expressway—a  15 billion megaproject that will eventually stretch 163 km from Noida to Agra. Past the built-up areas of Greater Noida, the highway cuts through the jagged border where city and village overlap. Along the roadside, scattered construction projects kick up clouds of dust around unfinished concrete towers with steel rebar still sprouting from their uppermost floors. Here and there, narrow dirt roads branch off the highway into nearby villages, while a few villagers can be seen selling fruit and vegetables from wooden carts under an interchange.
| IAN GAVAN / GETTY IMAGES |
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Paris Hilton poses with a Red Bull-sponsored Formula
1 car at one of the many parties held during the Monaco Grand
Prix in 2010. |
The gate to Jaypee Sports City sits right at the highway’s edge, marked by a temporary sign and manned by a pair of guards. Inside, parts of the development are still under construction, ringed by boundaries of barbed wire. Next to a dirt lot filled with about 100 parked cars, a series of low-slung pale yellow brick buildings that look like hurriedly-constructed military barracks house the offices of Jaypee Sports International (JPSI). Workers with walkie-talkies clipped to their belts hurry back and forth between the buildings, from the sales barrack to the marketing barrack to the canteen. Most of the activity buzzes around the administrative building, where employees rapidly stride past carrying files with labels like “Driver Lodging” and “Inauguration of Buddh International Circuit”.
The company’s senior managers work in a line of small offices along a dimly-lit corridor, where the engraved nameplates outside each door include a surprisingly high proportion of retired Army majors and generals. (When I asked a JPSI executive about this, he simply said: “They get the work done quickly.”) At the end of the hallway, a clean-shaven man in his early 30s named MY Khan receives visitors who’ve come to see Sameer Gaur, the CEO of JPSI and the son of Jaiprakash Gaur, the founding chairman of the Jaypee Group—the country’s 48th-richest man, he has a fortune estimated at $1.5 billion. Sameer keeps a lower profile than the offspring of some other Indian billionaires, though he makes the occasional appearance in the society pages while launching a luxury watch or inaugurating a project in the company of Bollywood stars.
Outside Gaur’s office, a few men waited patiently for their appointments with Gaur. Khan, who had a plug of tobacco in his lower lip, politely and calmly deflected my request to see the boss. “Sir is not ready to meet journalists until the race ends successfully,” Khan told me, in a genuinely convincing tone. “He is even saying no to the big TV channels.”
| BRYN LENNON / GETTY ALLSPORT |
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President and CEO of the Formula One
Association, Bernie Ecclestone (centre), at the Toyota Formula
1 team launch in Cologne, Germany. |
Gaur has been waiting for the success of this race for a long time. Serious talk of bringing a Formula 1 race to India began in 2005, when the Indian Olympic Association (IOA) president Suresh Kalmadi—not yet disgraced by his role in the Commonwealth Games scandals—proclaimed that he was “trying to get a track ready in Mumbai, Delhi or Bangalore”, not long after Formula One boss Bernie Ecclestone, who controls and administers the sport, said he would like to see an Indian Grand Prix “within three years”. By 2007, Kalmadi was in serious talks with Ecclestone, who had given “provisional agreement” for a race in 2009, and newspapers breathlessly reported on several scouting visits by Hermann Tilke, the preeminent racetrack designer and architect, who was reported to be inspecting possible locations around Gurgaon and Greater Noida.
In September 2007, Kalmadi excitedly announced that he had met Ecclestone in London and agreed on a draft contract for 10 years of races beginning in 2010. The site was still undecided, but in October, Kalmadi told reporters, “We are in negotiation with the governments of both Haryana and Uttar Pradesh to acquire land.”
When the deal was finally signed in November 2007, the IOA was out of the picture; instead, JPSK Limited, a newly created subsidiary of the $1.5-billion Jaypee Group, reached an agreement to hold the Indian Grand Prix at a site in Greater Noida. The deal later came under scrutiny when it was revealed that Kalmadi’s son, Sumeer, was a minority partner in JPSK, which had been incorporated in the weeks before the contract between Jaypee and Formula One was signed. (Jaypee insists the partnership has been dissolved, and JPSK has since become Jaypee Sports International.)
| AIJAZ RAHI / AP PHOTO |
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A Formula 1 car racing along a stretch of the Bangalore-
Mysore highway during a promotional event on 27 September,
ahead of India’s first Formula 1 Grand Prix. |
According to a spokesman for JPSI, the contract stipulated payments of $200 million to Formula One for race sanction fees over five years. At the time of its signing in late 2007, Jaypee had not yet acquired the land where the track now sits from the UP government, but the company had good reason to expect it would be able to do so.
For Jaypee, the road to Formula 1 began more than four years earlier, in January 2003, when the company was awarded a contract by the UP government to build what’s now known as the Yamuna Expressway. The terms of that agreement, signed during current UP Chief Minister Mayawati’s first stint in office, required Jaypee to underwrite the costs of constructing the 165-km highway; in exchange, the government would acquire the land required for the road, which would be sold to Jaypee at cost—along with 6,175 acres of additional land at locations along the expressway to be used for real estate development; Jaypee would derive further income from the concession to collect tolls on the highway for 36 years after its completion.
At the time of its signing, the agreement was regarded in some circles as an innovative—and highly unusual—new financial model for infrastructure development. Where previous public-private partnerships typically required the government to fund a share of the costs to provide an incentive to the private developer, the UP government offered lucrative rights to additional land for real estate development—in other words, it paid in real estate rather than cash, capitalising on the state’s power to acquire land at will from its owners. The social and political costs of such methods may not have been immediately apparent, but the wave of protests that has convulsed the region around Greater Noida in the last year, led by farmers angry at the terms of compensation and the government’s increasing appetite for land, has made the drawbacks all too clear.
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N AN ERA WHERE THE LINE between professional sport and big business has been almost entirely erased, few sports look more like companies than Formula 1. The financial structure of the sport’s promoters, the Formula One Group, is an impenetrable web of holding companies and subsidiary operations; its principal owner is a holding company that is
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itself mostly owned by a private equity fund.
Xander Heijnen, a motorsport expert and former adviser to Formula 1 teams who now publishes “Formula Money”, an authoritative guide to the sport’s finances, told me that Formula 1 was “a money-making machine”. Between team sponsorship, race sanction fees, television rights and trackside advertising—of which flow to Formula One rather than the hosts of each race—the Formula One Group had estimated revenue of $1.6 billion in 2010, according to the latest edition of “Formula Money”.
Caroline Reid, one of the guide’s authors, told me in an email interview that she estimated the Formula One Group would earn $58.8 million from the Indian Grand Prix: in addition to the sanction fees paid by JPSI, roughly $40 million each year, another $20 million will come from trackside advertising and luxury suite tickets, which cost upwards of 200,000 per person.
The leveraged buyout that saw majority ownership of Formula One pass from one holding company to another holding company in 2006 was funded by loans worth roughly $2.8 billion, a debt that has provided further incentive for the sport to add new races and expand into previously untapped markets like India, Singapore, Korea, the United Arab Emirates and Bahrain.
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Readers' Comments |
Total Comments
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Simone
20 April 2012
01:18 PM
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Coming down heavily asniagt real estate firms and the Mayawati government , the Allahabad High Court on Tuesday scrapped acquisition of 589 hectares of land in Patwari and Dewla village coming under Noida Extension. The bench of Justice Sunial Ambawani and SS Tiwari ordered that the acquired land in Patwari and Dewla villages falling in Dadri tehsil of Gautam Budh Nagar be returned to the farmers. About 1,600 farmers were affected by the acquisition in these two villages and had later moved court which pronounced its decision on Tuesday. The HC decision would deal a blow not only to the projects of several big builders but also affect many commoners who booked an apartment in projects coming up in this area. Projects of Supertech, Arihant, Amrapali, Sampoornam, Ajnara, Patel Neo Town are among a dozen odd builders who would be affected by the order. The land in the two villages was acquired by the state government after notifying it in March 2008 for industrial development. But later the land was changed to residential and sold to builders for constructing apartments projects. Villagers had claimed that the land was being sold at exorbitant rates by the builders while they were forced to surrender their land for paltry sums. The order comes on the back of the Supreme Court decision on July6, which annulled acquisition of 156 acres in Sahberi village falling under Noida Extension and directed the Greater NOIDA authorities to return the land back to the farmers. The SC had on upheld the Allahabad High Court order, which had questioned the acquisition of land under the urgency clause of the Land Acquisition Act for public purpose without hearing out the objections from the farmers. The Sahberi order of the SC was followed by several similar decisions by the HC canceling land acquisition in Noida Extension area. The next two days would the HC announcing its decision in some other cases. On Wednesday the HC would decide the land acquisition issue of Roja and Yaqubpur village in Greater Noida, and on Thursday the court would pronounce its verdict on acquisition in Itheda, Haibatpur, Jalapur, Malcha, Birak and Ghangola villages if Greater Noida. Acquisition of nearly 2,000 acres of land in Greater Noida and surrounding area has been challenged in court where builders have proposed to construct nearly 2.5 lakh flats.
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Rock River
28 November 2011
04:04 PM
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A successful push is under way to put more motor vehicles on the road in India, and the racing sport should be understood in that context. Racing romanticizes something that is in fact a damaging addiction. Why not learn from the mistakes elsewhere such as in the US? Upon our car habit we've built vast tracts of suburbs. These locations are very poorly suited to the re-localization process indicated by peak oil, they will become vast slums and a terrible drag on our national and well being in the future. Was it worth it, to enrich a few car companies?
The automobile's appetite for land isn't going to do India any favors. Land is the most valuable thing there is (along with air and water). Throwing it away for such junk as the fleeting feelings of power and liberation marketed by the transport industry is a disgraceful folly.
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S
16 November 2011
03:12 PM
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Great piece. Might also be worthwhile to explore the stories of those who are suffering the most here - landless agricultural labour / sharecroppers. There's not a single rights group or sangathan that represents their interests. And that includes BKS.
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Sri
14 November 2011
06:16 PM
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@Avinash... Swearing at Farmers you ****... Every grain u eat has their name written on it.. You Pizza eating ******..
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Rupali
13 November 2011
08:27 PM
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The fact of the matter is India has entered another era of slavery/. The difference is that earlier the slavery was political and now it's economical. This will never happen in a communist state. Long live revolution. Revolution will come.
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Avinash
8 November 2011
06:26 PM
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**** farmers. We want F1 here. Have you even heard the roar of the engine?
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Akash
5 November 2011
08:50 PM
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It seems Caravan has got into the habbit of bullying wealthy Indians. Arindam Chaudhri was the first one, Karunanidhi the second, Arvind Kejriwal third, who is not wealthy but means business, then Manmohan Singh, PM, and now Jaypee. Prove me wrong. Continue doing this until 2013, when your magazine will be making money through Jaypee, Congress, IIPM and Karunanidhi.
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Bijal
3 November 2011
12:59 AM
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Wonderful story.
Ram, I have a similar concern. I also use an article-saving service, readitlater, and have found saving Caravan articles a difficult affair. The problem lies in the style of the magazine, specfically the enlargement of the first letter to signify a major transition in the story. Trying to save a feature like the one above leads to a chunk of each transition paragraph to go missing. It is not a terrible inconvenience but I do believe article-saving services are on the rise and it would be better to fix this problem sooner than later.
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Pragya
2 November 2011
04:33 PM
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"A tall, broad-shouldered man in his 50s, Singh wore aviator glasses, had a bushy moustache and sported golden rings on two of his stubby fingers." I see how this description might be relevant to the rest of the report though I don't see it right now. Maybe it'll come to me?
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Anupam Mishra
31 October 2011
12:24 PM
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F1 is a flop show. jaypee cannot change the love for cricket in this country. cricket is for everyone. we can buy a ticket for 500 rupees. all the indians players are from poor or middle class families. we dont want micheal schumacher or narayan kartikyan likes, we want our god tendulkar. tendulkar will never play on the groun of farmers, he will play on the ground of india!!!!!!!!!!!!!
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Ram
31 October 2011
12:14 PM
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Could you please link your website to Instapaper. Being a longread magazine, I think it would be highly beneficial for users if you could link it so that we can read the issue at a later time. Hope you consider the suggestion.
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Ronnie
30 October 2011
04:31 AM
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This project is clearly the most blatant example of the complete apathy towards urban planning in this state of UP. The middle class of this region is so sick and tired to see such vast sums of money being wasted on such ostentatious projects.
You enter Noida from the toll road and head towards the Sector-18 mall and observe the
Disregard to traffic rules
Inefficient web of connecting roads
Cycle rickshaws on the most important road
If one has to go back to Delhi after leaving the Centrestage mall, heh must drive a good 2 Kms to get to the other side of the road. I have been working in Noida since 2007 and till date I have not seen bus service connecting Delhi ashram to Sec-18 via the toll road. What have we come to? Is there absolutely no sensitivity towards the basic needs of the common man here?
You just have to see the chaos created at the junction of Noida sector-37. What is scary about all these developments is tat when construction happens so swiftly and in uch an ad-hoc manner, it creates greater chances for mishaps & disasters. We have all seen the metro accidents in the run up to CWG.
It really pains to see how the powers to be are working on the infrastructure development in such a short sighted manner.
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Neeraj
28 October 2011
10:18 PM
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Well done caravan, again. the article clears the picture of how politicians and businessmen create a space for their own business ventures at the cost of society. i live in noida, and i know how ridiculous this all PPP planning is. if we look into it in detail, it is nothing less than a murky nexus.
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