Grand Prix costs Melbourne $50 million as Sydney looms large
The 2011 Australian Formula One Grand Prix cost taxpayers in excess of $50 million to run, the Victorian State Government announced today.
Meanwhile, an independent costing report has estimated the immediate economic benefits to range between $32 million and $39 million and created 350 jobs.
Despite this, Victorian tourism minister Louise Asher defended her government’s subsidy of the race.
‘You have to look at the whole year, at ongoing branding of Melbourne,’ she said earlier today.
This year’s expense was a $700,000 increase on last year’s estimated $49.3 million loss.
However, Ms Asher did suggest that the level of government support was too high.
‘I am not comfortable with this level of subsidy,’ she said.
‘The contracts under which the Grand Prix is run were signed by the previous Labor government.
‘The event is a good event. The contract is a typical Labor contract.’
The contract itself, signed during the tenure of the previous Labor government, expires in 2015, with negotiations due to start with Formula One chief Bernie Ecclestone in 2014.
‘Do I want to keep the event?,’ continued Asher. ‘That will be subject to a cabinet sub-committee discussion, and will be subject to the financial arrangements of a future contract being put before us.’
Contracts for Formula One Grands Prix are written to include a fee that increases with each passing year.
Operating costs for the Grand Prix in Melbourne have continued to grow on top of the original $1.7 million payed in 1996.
By 2000 the cost had exceeded $3.9 million, while last year it hit a then-record of $43.9 million.
‘Mr Ecclestone, and I take my hat off to him, has clearly negotiated a very good deal, legitimately, with the previous government.’
The key, she says, will be to negotiate with Mr Ecclestone for a smaller fee beyond 2015.
‘This is no doubt an expensive event, but you’ve got to get as much value out of it as you can so it continues to be the cornerstone of major events and tourism in this state.’
Meanwhile, opposition spokesman for tourism Justin Madden has called for the Liberal government to make up its mind on the Grand Prix rather than sending ‘mixed messages’ as to its stance on the event.
‘If the Government want to hold on to this event, they’ve got to take a strong position on this,’ he said, suggesting that New South Wales would be ready to pounce on it, should Victoria’s contract lapse.
‘New South Wales is well awake to the fact that this Government is dithering and they will poach this event.’
Analysis: The cost of Formula One – featuring Joe Saward (coming soon)