NOVEMBER 3, 2004
Australian GP reports $9.5m loss
The Australian Grand Prix cost the state $9.5m in 2003-2004 according to the latest report from the grand prix corporation. This year's figures reveal an increased attendance of 3.5%, resulting in ticket sales of $30m, with total revenues up to $38m. But expenditure has increased by 6.2% to $47m. This is due to contractual commitments to FOM, the cost of corporate catering and facilities and the extra costs incurred improving safety. The Grand Prix Corporation said that the costs of construction had increased faster than the rate of inflation.
Losses from the event are increasing with each year. Obviously calculations involving the historical exchange rates are complicated but we calculate that in 2001 the event lost $2.9m, in 2002 that went up to $4.8m and in 2003 it reached $6.9m.
The major costs of the event aside from the fees paid to FOM are the annual costs of set-up and take-down of the temporary infrastructure, which critics argue would be avoided if there was a permanent venue. What critics do not point out is that the venue of a permanent racing circuit could not be in Albert Park, which is close to the centre of the city, and so the crowds would be smaller and thus revenues would be reduced.
Victorian state premier Steve Bracks says that the Grand Prix is worth whatever it costs because of the effect it has marketing Melbourne around the world.
"It's good for our reputation as the major events capital of Australia," Bracks said. "It's helped with economic activity in hotels which are full, in goods and services which are purchased, in crews which are coming here."
Grand Prix Corp chairman Ron Walker says the event continues to provide "an outstanding return" on the state's investment in the event and estimates that the Grand Prix has generated more than $700m in economic benefit to the state since it began in 1996.
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