The event’s organisers – the Australian Grand Prix Corporation (AGPC) – and opponents are at loggerheads over the event, with the former arguing that the event provides an enormous revenue stream for the city’s coffers, while the latter argue that the event’s continued losses cannot be sustained.
The findings of the audit will be filed at the end of May, and despite the event attracting a total of 298,000 spectators over the four-day event – including a crowd of 111,000 on race day alone – it is expected to achieve a similar loss result to the record $50 million figure racked up in 2010.
Indeed, AGPC chairman Ron Walker has all but conceded that the loss should run close to last year’s result, or “perhaps a little bit less”, he told the ABC.
“It takes a while to get all the numbers put together and the auditors will present the government with the figures in the next three or four weeks,” he added.
And how times have changed in the fifteen years since Melbourne took over hosting rights for the Grand Prix from Adelaide when, in 1995, Walker promised that the event would make “a cash surplus each financial year”.
The finances of the Australian Grand Prix Corporation are a closely-guarded secret, but a review by Australia’s BusinessDay highlighted the event’s soaring promotional fees, declining ticket sales and reduction in corporate sponsorship.
Just two years after Walker’s bold initial claim, Walker and the AGPC changed their tune and offered a completely vague goal that the event would instead “maximise revenue and minimise expenditure”.
To its credit, the event has done well to curb the costs it can control, with ‘recurrent engineering’ – the infrastructure set-up and dismantling work of grandstands, crash barriers and the like – costing $24.5 million last year. In 1996, the figure was $15.8 million, meaning the cost has increased at roughly the rate of inflation.
However, one specific cost that remains shrouded in secrecy – to the point that it is effectively state law – is the actual hosting rights figure paid to Bernie Ecclestone. All that is actually shown on the event’s annual budget sheet is a single line called “Event management and staging”, an item that has doubled to $42 million in 2010 over the event’s 16-year history.
It will certainly be interesting to find out what figures are reported by Ernst & Young…
[Original image via GP Update]