Edmonton race in jeopardy? UPDATE #5
This rumor is now downgraded to 'false.' The City of Edmonton will sit down with Octane Racing Group to negotiate a deal that would see the Indy car race remain in Edmonton for at least the next three years. Councilors voted 7-5 Wednesday in favor working on a sponsorship arrangement with the Montreal company, which would continue to hold the race at the City Centre Airport, Mayor Stephen Mandel said.
With the city centre as a back drop, the Edmonton Indy is a popular stop on the IndyCar circuit for drivers and fans alike. (Jason Franson, Sun Media)|
“When you look at what we get from it, it’s $18 million just on the (national) media coverage,” he told reporters following a closed-door meeting.
“That stuff is invaluable … in addition to all the intangible things.”
Although councilors gave acting chief financial officer Lorna Rosen a monetary cap for her discussions with Octane, details won’t be released while the talks continue, Mandel said.
Northlands has been in charge during the current three-year deal with the Indy Racing League (IRL), which expires after this weekend’s race.
Over the last two years it ran up a $9.2-million deficit covered by the city. Losses are expected to be smaller this year.
Octane, which runs the Montreal Grand Prix and other races, made the only bid to run Edmonton’s Indy before a deadline earlier this month.
The deal means the city won’t be responsible for any losses, Mandel said.
Octane will decide whether they want Northlands to continue having a role in the event, he said.
The company has a strong record for arranging federal government sponsorship money, receiving $75 million toward the Grand Prix, which bodes well for Edmonton, he said.
“Always the challenge in our race is we didn’t get the federal government support,” Mandel said.
“This is professional people. They know what they’re doing. There’s a big joie de vivre for the race … I think it’s very exciting to have a company like that involved.”
Last year Northlands expected about $2 million in federal and provincial grants, but received only $400,000.
Councilors have indicated in the past they might be willing to pay $1 million to $1.5 million annually in sponsorship as long as the city didn’t have to cover any deficit.
Coun. Don Iveson, who opposed the motion, said Edmonton is taking moves to increase its reputation that include the proposed downtown arena district and the Expo 2017 bid.
He doesn’t think the Indy is the best way to put the city on the map compared to the other approaches being considered.
He also shares Mandel’s concern that Edmonton hasn’t been able to attract large amounts of money from the other two levels of government.
“If they can reach an agreement (with Octane) there will still be a cost to the city,” said Iveson, adding he can’t provide details because of the negotiations.
“I think having a promoter who has done this before and done this in other markets will help the success of the race if it continues. The main thing is they assume the risk.”
Rosen has said the Indy could continue to be held at the City Centre Airport at least until 2013, even though one of the facility’s two runways is scheduled to be closed in the first week of August. Vancouver Sun07/21/10 Ticket sales for this weekend's Honda Indy Edmonton are down about 20 per cent from 2009, but the organizers' sponsorship goals have been surpassed.
"Our sponsorship efforts for the 2010 Honda Indy Edmonton have been very successful," Ken Knowles, President of Northlands, said after two more businesses -- Konica Business Solutions (Canada) Ltd., and West Edmonton Mall -- jumped on board.
"Corporate sponsorship and hospitality suite sales have been solid to date, and there are still terrific opportunities available for the business community to be part of this world-class event."
Knowles said three-day and single-day ticket sales are down about 20 per cent from last year "but we're optimistic that sales will increase, especially now that we're into the excitement of race week."07/21/10 So who is Octane? And why should city council vote Wednesday morning to give them Edmonton’s IndyCar race to run?
If there’s a future for the Honda Indy Edmonton which has been, at the same time, such a fantastic success and such a financial flop, it’s with The Octane Group which promotes the Formula 1 Canadian Grand Prix race in Montreal.
By now you should have heard of them. But who are they? And why do they want to run the Edmonton IndyCar race?
And why should city council, which lost $9.2 million in the first two years, turn it over to a bunch of guys based in Quebec, anyway?
The answer to the last question, in a word, is “expertise.”
It’s something this race, in its three years in the Champ Car Series and now three years in the merged IZOD IndyCar Series, has never had was a promoter.
And going from Northlands, which proved to be just about the least-equipped outfit to promote an auto race, to Octane, acknowledged internationally to be one of the very best, would not only be like going from night to day but from Dec. 21 to June 21.
But why would Octane want Edmonton?
Because, I’m told, they see so many similarities here to Montreal.
The two are Canada’s two summer Festival Cities, East and West.
They both have a strong sense of community and the perfect place to race, Montreal on Circuit Gilles Villeneuve at the 1967 Expo site where the track turns into a park when there’s no racing with people roller skating and biking and where there’s a beach with a lake in the middle.
They believe, I’m told, there could be a future for something like that in the transformation of the downtown airport site if they were awarded the event and could take it to a new level and make the city see what it has here beyond a weekend sports event.
Because they are in Formula 1, they’ve also seen that the trend with new tracks coming on board overseas is to design them very close to the model that Edmonton has in place here, a design where you can see the entire track from the stands.
And the No. 1 reason they apparently want to take over as promoters of this race for is, wait for it, because it’s a long way from Montreal and Toronto.
They feel they can make Indy in Edmonton to Alberta and Western Canada and the Pacific Northwest what the Canadian Grand Prix is in Quebec, Eastern Canada and the Northeast U.S.
Octane is a young company. It has only existed since the fall of 2008 when it was formed to run a NASCAR event and then to run the Grand Prix when Montreal got its race back in the war with Formula 1 mogul Bernie Ecclestone when the local, provincial and federal governments put up $75 million over five years.
Up to not having a race in 2009, Normand Legault was the promoter of the Grand Prix.
Legault’s ex vice-president, Francois Duontier, formed Octane out of the 20 full-time employees from under Legault with most of them having been on board since the early ‘90s.
The governments figured they would recover their investment in taxes from the 5,000 people who work the event alone.
The deal with Octane was a return of 30% of the money from ticket sales and sponsorship from a race weekend which draws about 200,000 and a race day which attracts about 100,000.
Their expertise is first of all knowing how to connect to motor sports fans and providing them customer service on site and doing their part to help create a great scene in downtown Montreal (you haven’t experienced Crescent Street if you haven’t been there on race weekend).
They are confident enough to believe they could succeed here in all areas — tickets, corporate suites and sponsorship — to put in a bid which the other tire kickers, knowing Octane was serious, didn’t attempt to compete against to win the promotional rights.
They’ve stayed away from media lobbying with the belief their proposal should stand on its own.
They may, however, have booked a few flights for Thursday and a few hotel rooms here this weekend just in case Edmonton city council agrees with them on that. Toronto Sun07/08/10 Until now the city of Edmonton was looking for a promoter of an auto race that didn’t have a place to race.
But while everybody seems willing to wait until the circus is in town — and city council takes the actual vote at a session on the Wednesday of race week — it appears that enough has happened to believe that the dithering and dathering group at City Hall has finally decided to keep the event as a big part of the Edmonton experience.
But at what stage the city became comfortable with giving the race a minimum of three more years at the downtown airport track, which has produced a steady stream of over-the-top rave reviews from the IndyCar drivers, isn’t clear.
“We’ve given that considerable thought in terms of the phasing. We believe this is doable until 2013,” city CFO Lorna Rosen told reporters Wednesday.
The place to race
What became clear earlier in the day is that the Octane Racing Group, which promotes the Canadian Grand Prix in Montreal, has submitted a proposal to run the race. And with that came the admission from Rosen that the place to race is the downtown airport facility. It shows the Edmonton skyline to such an advantage to the TV audience around the world, in front of the tremendous crowds and atmosphere, that it makes the best annual vehicle to promote this city that exists.
It’s an admission that the controversial airport closure and redevelopment couldn’t possibly get done in time to affect racing until 2013, if ever.
A Sun Media source says that, while it’s not done, the Octane Racing Group is now confident it’s going to get done.
And, if that’s true, it means Octane is confident that the city — which lost $5.3 million in its first year of underwriting Northlands, lost $3.9 million more last year and will likely lose another couple this year — is going to be there to back the event to some significant extent instead of underwriting it for all its losses.
These Octane guys aren’t a nickel-and-dime operation.
The Canadian Grand Prix, the biggest single-day sports event in Canada, was off the schedule last season until three levels of government put up a combined $75 million to secure a five-year contract for the race’s repatriation.
Read that number again. Seventy-five million. Five years.
While the size of the check Montreal has to cut to Bernie Ecclestone is considerably larger than the one Northlands was cutting to the Indy Racing League, you have to figure that Octane has figured out that the only thing wrong with this race is it has never had a business model which had a chance to make it financially successful.
Octane would certainly realize what Edmonton has here, even if a significant portion of the population isn’t so sure.
In 2005, a first-time Champ-Car Edmonton race drew 200,050 people, breaking the all-time record of 172,000 for an IndyCar weekend in Canada, including 24 years of the Indy in Toronto, 15 in Vancouver and three in Montreal, promoted by Octane.
The first three races here drew crowds of 78,080, 63,921 and 60,508 on race day, and it’s believed to have stayed above 50,000 for the last two IRL events (where a policy under Tony George until this year was to never announce attendance totals). More at the Toronto Sun
07/08/10 The City of Edmonton is considering a proposal from Montreal-based Octane Racing Group to run Edmonton’s money-losing Indy car race, probably for the next three years.
Octane, which puts on the Montreal Grand Prix, was the only company to put in a bid for the Edmonton event by Monday’s deadline, city acting chief financial officer Lorna Rosen said Wednesday.
The plan would see the race continue to be held at the City Centre Airport for the next few years, she said.
“The hurdle we have to get over is, is there going to be an Indy in the future? What we’re talking about … right now is to have an Indy at the airport,” she said.
“Typically, what we look at the IRL (Indy Racing League), it’s three years. I would think in terms of moving things on with council we would be looking at a three-year commitment.”
Although one of the downtown airport’s two runways is set to be closed in August as part of a phased shutdown of the entire aviation operation, Rosen said there would continue to be room for the race until at least 2013.
The city has spent $9.2 million subsidizing Indy losses since it asked Northlands to take over the operation in 2008. Montreal Gazette05/12/10 It would take perhaps $5 million for Castrol Raceway to whip its venue into shape for an IndyCar road race.
Castrol owner Rob Reeves met last month with Mayor Stephen Mandel and Northlands officials to discuss the merits of such a construction project. But Reeves, who came up with the $5-million figure based on the needed infrastructure on the site near Edmonton International Airport, doesn't want to finance it all on his own. In fact, he won't spend a minute or a dime on the proposal Mandel asked him to produce until he knows what kind of political and financial backing the race is likely to receive in the future.
Provided there is a future.
"This all hinges on whether or not the City goes ahead and signs a contract (with the Indy Racing League)," said Reeves. "I will put something together once I know the Edmonton Indy is going to continue."
The 2010 race gets the green flag in just 75 days and there isn't a person inside the city limits who can say with absolute certainty that there will be a 2011 and a 2012 Honda Indy Edmonton promoted by Northlands and held at City Centre Airport -- not even Mandel, who has been a huge proponent of the race.
Those four moving pieces -- an expiring sanctioning deal, a willing title sponsor, an embattled promoter and an endangered venue -- simply provide more questions than Mandel was either able or prepared to answer on Tuesday afternoon. But I tried anyway.
Can he guarantee the race stays here for 2011 and beyond?
"Council has to give that authorization."
Is he in favor of retaining Northlands as the promoter?
"I can't speak to that. It's council’s decision."
Can he confirm other promoters are interested in running the Edmonton race?
"We have had interest from other people."
Can the race be held at the City Centre Airport after 2012?
"If we continue with the race, we'll make sure the race has a venue."
How much money is the race going to lose this year?
"We should be in pretty good shape. I'm not going to say what pretty good shape is until after the race."
Despite Mandel's obvious reluctance to offer any insight at all, it's quite likely that City Council will decide to go forward, probably for two more years, probably at the downtown airport.
"The mayor feels they'll be able to run there until 2012," said Reeves.
Council will probably even provide financial support to the promoter, be that Northlands or a new entity like Green Savoree of Toronto, whom sources say are interested. And yes, the event will probably lose millions this July, despite Mandel's earlier contention it could come close to breaking even.
Whatever the bottom line now and going forward, if Edmonton is to stay on the IRL schedule, Council has to get moving. Potential fans and sponsors need to know there is a future here and the racing world isn't going to stand still long enough to let Edmonton climb back on board at its leisure. The City of Baltimore just committed $7.75 million US over five years for a street race that will be run for the first time in 2011. An IRL team of officials recently visited Quebec City, where a local promoter wants to stage an IndyCar race. There are ovals in the U.S. that would love to get in the game and the IRL sees itself as a global mover and shaker too, eyeballing the Chinese market. In other words, an IRL event, despite its financial challenges, is something of a prized commodity.
"I am an absolute believer that these IndyCar events are like franchises, and there are only so many, and that number is 18 to 20," said race promoter Kevin Savoree.
"There are other cities that want race events. As those cities become successful in lobbying, some cities are going to lose their franchises," said Savoree, who has not publicly admitted interest in the Edmonton race.
The IRL wants to release its 2011 schedule in early August, which means all sanctioning agreements have to be in place in late July. The clock is ticking.
"We have to go to Council with a report as soon as possible," said Mandel.
Presumably, that report would address the moving pieces. The race has a big-name, rock-solid title sponsor in Honda Canada, an outfit that already works with Green Savoree on races in St. Petersburg, Fla., and Toronto. Honda Canada brings the potential for stability and income but everything else is up in the air. Northlands has lost $9.2 million over two years and the airport is running out of time.
That's why somebody in the business community reached out to prospective promoters. That's why Mandel reached out to Reeves at Castrol Raceway, trying to attain long-term viability for the race.
Northlands, on the other hand, is simply trying to get through the 2010 event. They have cut expenses to the bare minimum, likely less than the $10.4 million in the budget. They are squeezing money out of the revenue side, too, and were thrilled to get $821,250 in federal government marquee tourism program money last weekend.
Sources say there is a chance Northlands will spend some of it to put a Honda Indy Edmonton logo on Canadian driver Paul Tracy and his car at the Indianapolis 500 at the end of this month. They could certainly afford secondary sponsorship on the engine cover of Tracy's ride for the iconic race that will be shown to millions of viewers on ABC television.
It makes perfect sense for Northlands to ride along with Tracy. After all, it will be announced shortly that Tracy will also be racing in Toronto and Edmonton and will be sponsored by Honda Canada. What goes around and around, apparently comes around and around. Edmonton Journal