Melbourne’s Lord Mayor, Robert Doyle, has again brought the ongoing viability of Albert Park hosting the Australian Grand Prix into question by predicting that the event’s losses will soon hit an untenable $70 million.
Writing in one of the city’s leading newspapers, the mayor believes that the event – staged at the Albert Park parklands circuit since 1996 – is no longer providing the state of Victoria with serious value for money, on the back of last year’s event generating a mammoth $50 million loss that the state’s taxpayers landed up covering.
Of further concern is that newly-elected State Premier Ted Baillieu has echoed the previous state government’s opinion and conceded that the contract for the event – which expires at the end of 2015 – may not be renewed unless costs can significantly be reduced in the interim.
Losses have run up to the tune of over $130 million in the last three years that the event has been staged in Melbourne, with last year’s losses alone amounting to double that posted for the 2006 Grand Prix.
“The Grand Prix has been great for Melbourne and great for Victoria but we look forward to the Grand Prix performing financially better than it has and we will be looking to make sure that happens,” Baillieu said.
In an open column written in the Herald Sun, Mayor Doyle believes that the event has run its course in Australia’s second-largest city.
Despite pressure from F1 supremo Bernie Ecclestone to stage the Australian race as a night race to suit the larger European TV audience, Mayor Doyle argues that such an option is “too expensive” and would not be possible given the current losses being experienced by the event.
“Though the documented benefits for the city may include hundreds of millions of dollars of advertising value, tens of millions of dollars of local revenue, an event that will draw between 250,000 and 300,000 people over three days will come at a cost that will approach [by 2015, a taxpayer-funded figure of ]$70 million,” he writes.
“It is the old argument: pay up front but get many times the value of the upfront payment in downstream economic benefits. For most events that formula is persuasive. But $70 million?” he asks.
Mayor Doyle has hinted that the state government could even opt to walk away from hosting duties come the end of the current contract – making it among the first hosting venues to do so in the sport’s history – leaving it open for another Australian venue (possibly Sydney or Perth, he suggests) to give it a go.
But he argues that such a change in venue “would not have the same romance or cachet as Albert Park. The Grand Prix would become one of those events we sometimes see out of Asia: empty stands, but a worldwide TV audience of hundreds of millions. To me that wouldn’t really be an Australian Grand Prix, just a TV event.”
Not surprisingly, Australian Grand Prix Corporation boss Ron Walker has dismissed the concerns for the moment, but acknowledged that the event’s “future is a matter for the government but the Grand Prix Corporation board does it’s best to keep costs down every year.”
Unfortunately for Mr Walker, the numbers simply don’t add up, with the event posting a loss in every single year of its history at Melbourne, and with these losses surpassing those of previous years, year on year.
[Original image via AusMotive]