Melbourne Mayor: Drop Albert Park GP

By on Sunday, January 23, 2011

The start of the 2010 event

Melbourne's lord mayor Robert Doyle believes the city should not seek to renew its deal to host the Australian Grand Prix after it expires in 2015.

He wrote in the Herald Sun "We have the licence until 2015, after which there are four possibilities.

First, F1 supremo Bernie Ecclestone will pick up his bat and ball and go home.

Despite best endeavours, the notoriously difficult, contentious and cranky Bernie will take the dollars of either an Asian or oil-rich Middle Eastern state. There will be no successful negotiation. End of story.

Second, given Ecclestone's ever more strident calls for a night Grand Prix, it will move to a purpose-built track either at Avalon or Noble Park, or possibly elsewhere Sydney or Perth.

The problem with Albert Park is that it is a 300ha park and a night race means lighting not only for the track, but also for enough of the park to provide patron safety. Too expensive. But equally, the cost of a purpose-built track is potentially $300 million and is probably untenable.

But even if such a track were built, it would not have the same romance or cachet as Albert Park. The Grand Prix would become one of those events we sometimes see out of Asia: empty stands, but a worldwide TV audience of hundreds of millions. To me that wouldn't really be an Australian Grand Prix, just a TV event.

A third option is that the race remains at Albert Park. That would require an upgrade of the park, costing up to $8-9 million.

It would require Ecclestone to accept that the Australian Grand Prix will never be a night race though, with Ron Walker's extremely able negotiation, it has become a twilight race. In its present form, it satisfies both local and TV audiences for real time and reasonable time-zone viewing. Sponsorship and advertising demand that.

The big stumbling block to this scenario is the cost to the Victorian taxpayer. In 1996 when the race was a combination of a four-day event and corporate sponsorship was far more generous than it is today, the race still needed to be underwritten by about $1.7 million. Last year it was $50 million.

Fast forward to 2015, the year the franchise ends. Though the documented benefits for the city may include hundreds of millions of dollars of advertising value, tens of millions of dollars of local revenue, an event that will draw between 250,000 and 300,000 people over three days will come at a cost that will approach 70 million taxpayer dollars.

It is the old argument: pay up front but get many times the value of the upfront payment in downstream economic benefits.

For most events that formula is persuasive. But $70 million?

The fourth and final possibility must be faced. I know of no city that has voluntarily walked away from a Grand Prix, but could Melbourne be the first?

The final possibility is that we decide that it has been 20 fantastic years, the benefits to the city and the state have been enormous, but the cycle has run its course."

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