Melbourne keeps the Grand Prix till 2020

Melbourne keeps the Grand Prix till 2020
Not just for 2-3 years, but right through to 2020…Ron Walker has negotiated for Victoria the Grand Prix.  A real deal…a good one, does it matter?  Victoria's major events strategy contributes A$1.4 billion to the Victorian economy annually and generate some 3,500 jobs. The Formula One Australian Grand Prix alone generates between 351 and 411 full-time equivalent jobs and up to $75 to $80 million of economic benefits. Ron Walker was Australian Grand Prix chairman from 1994 to earlier this year; he is replaced by John Harden of Melbourne Commonwealth Games and Cricket World Cup renown.

Greg Baum writes in The Age: “To conclude that Melbourne’s grand prix costs taxpayers three times as much as Canada’s is to make a false comparison between apples and oranges, Australian organisers say.
In June, it was announced that Canadian authorities would pay $C187 million ($184 million) to host the grand prix in Montreal for the next 10 years. Federal, state and local government would split the cost. Last week, it was announced that Melbourne would host the Australian Grand Prix for another five years. No figure was given. But – based on the state government’s earlier report that last year’s race cost taxpayers $50.7 million – an estimate of $250 million for the next five was widely circulated. That would make the Melbourne race nearly three times as expensive as Montreal’s.”

The Vic government won’t let out real numbers. Mind you, South Australia doesn’t publish costs of the Tour Down Under.  Major Events Minister Louise Asher, noted that the Grand Prix Corporation was bound by commercial confidentiality. ‘‘Melbourne faced intense competition to stage the grand prix here, and to prevent a bidding war with other Australian cities, the successful figure – negotiated over many months – remains confidential, as it did under the previous Labor government,’’ she said. The history of Victoria snatching the race from South Australia is lost save among those who were bloody-nosed.

The comparison with Montreal does reveal the sort of money involved. It seems the amount declared for Montreal was just for the Formula One. Separately, there has been Quebec province and city funding to upgrade the existing, purpose-built track. Melbourne has to create its street circuit track each year. And that carries a cost of  $25-$28 million (2013/2014 figures), as well as other variable costs.

The Accommodation Association of Australia is thrilled that the Victorian Government has secured the Formula 1 Grand Prix in Melbourne through to 2020. “It is terrific that the Victorian Government has chosen to continue its commitment to the Melbourne Grand Prix,” said the Association’s Chief Executive Officer, Richard Munro.  You betcha!!!
Interesting to note that Bernie Ecclestone has managed to get out of a corruption case in Germany which centred on the sale of a stake in Formula One to private equity company CVC Capital in 2006. The 'Ecclestone entity', well, he does seem to run it, is now 35.5%-owned by CVC Capital. There is churn and after 40 years at the helm, perhaps Bernie will soon step down. CVC has been negotiating for much of this year to sell part or all of its stake.

In 2014 alone, along with Melbourne and Montreal, Sao Paulo has renewed its GP contract, Sochi will stage its first race, Baku has secured rights for a 2017 GP.

Eric Winton

Director, New Millennium Business

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