Is the Australian GP under threat?

HondaF1

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Im posting a new thread for this because I think this could develop into a massive story. I found this on foxsports.com.au today


Australian GP under cash cloud


March 16, 2007


THIS weekend's Australian Grand Prix is being held against a backdrop of questions over its future with reports the occasion will lose $30 million.

Concerns have focused on dwindling crowds, the loss of popular V8 Supercars support race, and whether the Victoria government-backed event is value-for-money for taxpayers.

Melbourne is staging its 12th grand prix since pinching the race from rival city Adelaide, but some economists say rising costs and falling attendances mean the grand prix has a limited lifespan in Melbourne.

One economist estimated the race will lose more than $230 million by the time the current contract expires in 2010.

But race organisers and state government ministers insist that the bottom line is not the only measure of the race's importance to Victoria.

They point to three economic reports compiled on the Australian Grand Prix Corporation's behalf, analysing the 1996, 2000 and 2005 events.

Those reports show what is termed as a gross economic benefit to the state of Victoria of $95.6 million in 1996, $130.7 million in 2000 and $174.8 million in 2005.

The last report found the event enticed more than 8000 international visitors to the city and almost 20,000 from other parts of Australia each year.

Australian Grand Prix Corporation chairman Ron Walker said the race is watched on television by 360 million people in 132 nations, generating about $100 million.

"If you had to advertise Melbourne to 360 million people in 132 countries, it would cost you $100 million," he said.

"In 10 years of Formula One racing in Melbourne it is estimated that the event has generated over $1 billion in economic benefit.

"The grand prix has put Melbourne on the map globally and year after year it provides unquestionable tourism and promotional benefits for the state of Victoria."

But some economists disagree, with one, Francis Grey, telling The Age newspaper: "Economically, the race is a loser, every year.

"It's been a loser since the beginning, and the losses are only growing larger. Victorians are poorer as a result of having this race.''

Monash University economics professor Peter Forsyth wrote in a 2006 paper saying that "the economic impacts and net benefits of events, if rigorously assessed, are very much lower than those invariably claimed.

"The techniques of analysis widely used have inherent biases, which lead to overstatement of impacts on output and jobs."

"As a result," Forsyth wrote, "there is likely to be misallocation of events funding and excessive overall spending in promoting events."

While the Australian Grand Prix has never returned a profit in Melbourne and has grown more expensive each year, Formula One supremo Bernie Ecclestone receives a licence fee that increases every race and is widely reported as being currently $20 million, The Age read.
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Is this the opening Adelaide needs to make a bid and get the race back sooner than 2010?? Keeping in mind that Adelaide usually posted a profit by race day.
 

fbc

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In short, no, it's not under threat - it's just more baseless media speculation and politicians jumping on the bandwagon-of-the-week. These sort of media beat ups happen every year.

So no, you're not getting the race back :tease:
 

Red_Bull

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I guess if you look at it from that perspective, then every race is losing money. I don't know of too many European races that made a profit last season, and it's probably due to Ecclestone's much publicised desire to open up the Asian and Middle Eastern markets. It becomes clearer now why Walker and co are pushing the agenda for a night race, which would certainly help with the international ratings and potentially generate millions more in income for the race.

I can't see why Adelaide wouldn't suffer the same problem that Melbourne is enduring at the moment. I think we could afford it, I mean, the state government is planning/building new tramlines, expressways at costs approaching $1 billion. I'm not sure whether Adelaide made any profits or losses from our hosting of the Grand Prix between 1985 and 1995, but according to The Adelaide Review, the Clipsal 500 has generated far more income and is much more profitable for the state than the Grand Prix ever was. I guess there's potential then for it to be a success - the most gains would be in the tourism industry, its just as case of making Kevin Foley open his wallet a little wider.

Just a small post script, the Adelaide Grand Prix did actually return a profit for the state if the BMWF1Talk track guide is to be believed. It doesn't explain exactly how, but encouraging nonetheless.
 
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HondaF1

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I guess if you look at it from that perspective, then every race is losing money. I don't know of too many European races that made a profit last season, and it's probably due to Ecclestone's much publicised desire to open up the Asian and Middle Eastern markets. It becomes clearer now why Walker and co are pushing the agenda for a night race, which would certainly help with the international ratings and potentially generate millions more in income for the race.

I can't see why Adelaide wouldn't suffer the same problem that Melbourne is enduring at the moment. I think we could afford it, I mean, the state government is planning/building new tramlines, expressways at costs approaching $1 billion. I'm not sure whether Adelaide made any profits or losses from our hosting of the Grand Prix between 1985 and 1995, but according to The Adelaide Review, the Clipsal 500 has generated far more income and is much more profitable for the state than the Grand Prix ever was. I guess there's potential then for it to be a success - the most gains would be in the tourism industry, its just as case of making Kevin Foley open his wallet a little wider.

Just a small post script, the Adelaide Grand Prix did actually return a profit for the state if the BMWF1Talk track guide is to be believed.

In the last 4 Adelaide GP's, it was breaking even on Saturday or early Sunday and the rest was profit. It was a very profitable Grand Prix.
 

fbc

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In the last 4 Adelaide GP's, it was breaking even on Saturday or early Sunday and the rest was profit. It was a very profitable Grand Prix.

The game has changed since then - the fees grand-prix organisers have to pay for the right to stage the race have undoubtedly increased several fold.

Besides which, the grand prix may well generate an operating loss, but when you factor in the overall economic benefit (which admittedly is full of assumptions and guesstimates) it could be a 'profitable' event.

To be honest, if Melbourne were to ever lose the GP, it would be because it was lost to another country, not to another Australian city.
 
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0497

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The Gold Coast Indy 300 (incl. V8 Supercar round) is now a bigger event than the Australian GP. It also produces a greater 'partaay' atmosphere (F1 is much more corporate) that's difficult to replicate in autumn Melbourne.
 

Red_Bull

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The Gold Coast Indy 300 (incl. V8 Supercar round) is now a bigger event than the Australian GP. It also produces a greater 'partaay' atmosphere (F1 is much more corporate) that's difficult to replicate in autumn Melbourne.

One of my sources above claims that event is making a loss as well.
 

HondaF1

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The Gold Coast Indy 300 (incl. V8 Supercar round) is now a bigger event than the Australian GP. It also produces a greater 'partaay' atmosphere (F1 is much more corporate) that's difficult to replicate in autumn Melbourne.

I'd much prefer a Formula 1 crowd to an Indy or V8 crowd any day!! But thats just me, a lifelong Formula 1 fan!!
 

fbc

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The Gold Coast Indy 300 (incl. V8 Supercar round) is now a bigger event than the Australian GP. It also produces a greater 'partaay' atmosphere (F1 is much more corporate) that's difficult to replicate in autumn Melbourne.

Bigger? No, sorry it's not. If anything, the Gold Coast Indy event is reliant on the V8s being there (especially since ChampCar is a long way from it's former glory days). Without the V8s, I'd be willing to bet the Indy event wouldn't last much longer.

As for a party atmosphere - yes F1 is more corporate, nothing wrong with that - there's plenty of money to be made from the corporate world.
 

ashwalk

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bring the F1 to the gold coast at indy time :D we could have indy F1 and V8's all at the same time.... maybe space it over a week instead of just the 4 day weekend :D PARTY...

EDIT:- "Indy, 2006 From October 19-22 a crowd of 312,054 spilled through the gates at Surfers Paradise to experience a world class motorsport event and watch the Champ Cars and V8 Supercars do their thing, this was down on the previous year which was a record year with 316,459 though the gates."

"Total attendance for the 2006 Australian Grand Prix held in Melbourne was 301,500 with a raceday total of 103,000 (a drop from the 2005 total of 118,200.[16]"

so there around the same crowds at both, there probly both lossing money..........
 
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HondaF1

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bring the F1 to the gold coast at indy time :D we could have indy F1 and V8's all at the same time.... maybe space it over a week instead of just the 4 day weekend :D PARTY...

I couldnt think of anything worse, and besides, Indy doesnt have any pits!!
 

Devon

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You couldn't hold the F1 at the Gold Coast at the same time as the Indy, it'd be near impossible.

Also, Eccelstone is pretty confident that next year Melbourne will be under the lights. When Murray Walker asked him just before the race today he said, it will be under lights next year...
 

watto

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If you look at the small picture (ie: literally just the $$ the GP makes) then yes, it is posting a loss. BUT, when you look at the big picture in terms of how many overseas and interstate visitors come to Melbourne for maybe a week and spend their money in our economy, it's a big time winner.

People should be complaining about the World Swimming Champs not selling enough tickets, the GP is far more popular than the swimming is.
 

HondaF1

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Well, I can confirm that Ron Walker had a meeting with all the drivers today to discuss the possibility of next years race being under lights.

Unfortunately I can't find the link at the moment. I will keep looking though.
 

Hidden_Hunter

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perhaps they have a higher attendence if the tickets didn't start at $400 each
 
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