Enzo Ferrari used to say that a win at the Monaco Grand Prix was worth half a world championship. He was not exaggerating. Today it might be worth even a little more.

The Monaco Grand Prix is the one event of the year that is guaranteed to make Formula One look every inch the world’s most glamorous sport. Silverstone, Monza and Spa are all about gear ratios and tyre strategies. Monaco is about the show. Even people who know nothing of the sport can picture the cars blasting through the streets of the principality, watched by beautiful people sipping champagne on yachts. For once, the stereotype is completely accurate.

Monaco on Grand Prix weekend really is as glamorous as they say. And every year new members of the world’s super-rich tie up their yachts in the harbour and come to see what all the fuss is about. Two years ago, Russian billionaire Roman Abramovich brought his gigantic ship Pelorus, which is said to have a mini submarine concealed in the hull, and was escorted on to the grid by F1 boss Bernie Ecclestone. Larry Ellison, who runs US software group Oracle, made the trip one year and last season it was steel magnate Lakshmi Mittal.

Monaco is the one venue that gives more kudos to F1 than F1 gives to it. If a circuit designer were to dream up the Monaco track today, with its 19 corners, and build it in on reclaimed land in Asia somewhere, Mr Ecclestone would not even make the trip to look at it. But because the narrow ribbon of tarmac picks its way through landmark buildings such as the Casino and the Hötel de Paris before disappearing into the Grand Tunnel then on to skirt around Monte Carlo marina, it is regarded as a classic.

The track, at just over 2 miles long, is the slowest on the F1 calendar with an average speed of just 90 miles an hour. Drivers spend 20 per cent of the lap time on the brakes and make 48 gear changes every lap – although today such changes mean a mere flick of a paddle on the steering wheel, not the blister-on-palm-inducing manual labour of the old days.

But the Monaco track feels fast to the drivers who have to thread their 750 horsepower machines through the eye of a needle between Armco barriers. To be quick at Monaco requires you to hook a wheel into rain gullies, to brush the barriers so close that you wipe the maker’s name off the sidewalls of the tyres. Former F1 champion Nelson Piquet once said that driving an F1 car through these streets was like riding a bicycle around your living room. It is a slightly surreal exercise but far from a pointless one.

Stand by the apex of the Tabac corner and you will see Lewis Hamilton or Fernando Alonso pointing straight at you at 100mph, turning fractionally at the last minute to shave the barrier. Around the swimming pool, they are doing 130mph in an area no wider than a tennis court. The impression of speed is shattering.

It is a supreme challenge for the drivers, all of whom dream of having a Monaco win on their CV. There is a dinner at the Royal Palace after the race, hosted by Prince Albert of Monaco, which all the drivers attend. That night the winner is elevated above his peers in a way that does not happen at any other stage of an F1 season, even when the new champion is crowned.

The tiny, 1.9 sq km handkerchief of land that is Monaco has been home to many F1 drivers in the past and current drivers living there include Jenson Button, David Coulthard and Nico Rosberg, son of F1 champion Keke Rosberg, who has lived there all his life and used to pass through the tunnel every day on his way to school. Most of them live in the new area of Monaco known as Fontvieille, near the football stadium.

But in recent years there has been a move away from the principality by many F1 drivers, especially those with families. Most have gone to Switzerland. It was Sir Jackie Stewart who blazed the trail, followed by Frenchmen Alain Prost and Jean Alesi. In recent times, Michael Schumacher left Monaco to make his home on the banks of Lake Geneva and Kimi Räikkönen, Fernando Alonso, Lewis Hamilton and Jarno Trulli have all followed.

For Monaco itself, the race is an important money spinner. It is the one circuit on the calendar that retains its commercial rights (apart from television), so it is free to profit from sales of track signage and hospitality as well as ticket sales. All other venues sign over all rights other than the ticket revenues to Ecclestone’s Formula One Management (FOM) group.

Monaco’s unique status has been fought for by the Automobile Club de Monaco (ACM), which has organised the Grand Prix since 1929. Monaco retains a certain independence that you can feel in the way things are done. FOM and the governing body the International Automobile Federation (FIA) fit around the ACM’s system, rather than dictate it as they do at all other venues.

The five-day event brings in a minimum of $98m to the local economy every year. It is the only race where Friday is a day off and cars practice on Thursday instead. The Friday off leaves you free to spend even more money in the restaurants and shops. And prices are high. A round of four ordinary drinks at Jimmyz nightclub costs about $235. Hotels demand their guests commit to a five-night minimum stay and it is $2000 a night for a room in a half decent hotel.

Everyone who works in F1 is busy that weekend, but none more so than the teams’ sponsor relations staff. The race is attended by all the chief executives of the big manufacturers and sponsors. Some of the world’s business elite are ferried round the harbour on tenders, then brought into the paddock to glad-hand drivers and other business leaders with an interest in F1.

Once the action stops for the day, the barriers are lifted at several key points and the streets are re-opened to traffic. Outside the Casino, Bentleys, Rolls-Royces and Lamborghinis quickly line up among the fleets of Ferraris. Ferraris are common in Monaco. Most are local, but many come from abroad, their owners itching for a chance to gun the engine through the tunnel when the white-uniformed police are not looking.

The place buzzes with activity all night. Bass beats thump out from boats in the harbour, the streets are full of people milling around soaking up the atmosphere, occasionally stepping aside as a Bugatti passes by on the same tarmac the world champion burned up just a few hours earlier.