Australian F1 Grand Prix’s Promotional Value Worth Financial Losses, Chairman Says

John Harnden

Victorian taxpayers will once again have to pick up the bill after Formula 1's traveling caravan leaves town, but organizers say it is worth it. Australian Grand Prix Corp. Chair John Harnden told SBD Global that Sunday's season opener "is a promotion" for Melbourne and Victoria.

"When you look at the grand prix it's about an investment," he said. "It's an investment that the state has made to promote itself and to generate benefits."

But those benefits come at a price. Last year's Australian Grand Prix lost close to A$62M, as total revenue of A$39.8M stood opposite expenditures of A$101.5M. Since '11, the event has cost taxpayers nearly A$280M, and this year's event will add to that figure. "There are certain costs and there are revenues," Harnden said.

"There is always going to be a gap between, which is the investment that's made in the event. Everyone works incredibly hard on the event to not only minimize it, but also ensure to get the best bang for our buck." This year's race will mark F1's 21st appearance at Albert Park after the Australian Grand Prix moved from Adelaide to Melbourne for the '96 season. Playing host to the global motorsports series fits into the strategy laid out by the Victorian government in the early ‘90s when the state was called the "rust bucket," Harnden said.

"The government at the time came in and adopted a very aggressive strategy about events, tourism, building infrastructure in the city and really improving the quality of life. It paid enormous dividends and the grand prix was an essential part." Today, events in Victoria are worth A$2B ($1.5B) a year to the economy, Harnden added, with tourism contributing another A$20B a year.

Unlike his colleagues at the Circuit of the Americas in Austin, Texas — home of the U.S. Grand Prix — the AGPC chairman does not anticipate funding cuts from the Victorian government. Last year, Victoria fought off attempts by New South Wales to steal the event and bring it to Sydney by extending its contract with F1 until '23. "A lot of people wanted the race, but on the other hand Melbourne does it better than anyone else," Harnden said.

"It shows the strategy of the government to invest in this."

'Melbourne Walk'

PUSHING THE BOUNDARIES: Over the past two decades, Melbourne has hosted F1's season opener for all but two years — '06 and ‘10. Being the first race of the season has its benefits, Harnden said.

This year the Australian Grand Prix will see the introduction of a new qualifying elimination format and the debut of a new U.S. team — Haas F1.

Competition from new circuits on the F1 calendar forces Australian organizers to push the boundaries in terms of fan experience and surrounding programs. "The big challenge is to make certain every year it's fresh," Harnden said.

"What's new? What's different? We want to be a pacesetter. We want to be the best race in the world."

Last year, organizers launched the "Melbourne Walk," which gives fans an opportunity to get up close to the drivers. This year, organizers have created "M-Lane," which showcases Melbourne's best local chefs, food trucks and music. On the sponsorship front, Rolex will again be the race's title sponsor, a position it has held since '13. Overall, AGPC has been able to retain the majority of its local partners.

A notable absence, however, is Qantas. The airline, which was the race title sponsor between '10-12, is not listed on the AGPC's website. Organizers work closely with F1 in regards to sponsorship acquisition. AGPC declined to talk about the financial terms of its partnerships.

The Australian Grand Prix has drawn more than 6 million spectators over the last 20 years. Organizers declined to comment on ticket sales ahead of the event. Last year, the event drew an estimated 296,600 over four days, and Harnden said last week that ticket sales are "tracking in line" with '15.

"Formula 1 is the biggest annual championship in the world," he said. "More people will see it on an annual basis than any other sport. We as a promoter are taking a really aggressive approach. It's our brand." HJ Mai/Sportsbusinessdaily

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