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Since 1985, with the exception of the 2006 and 2010 seasons, Australia has hosted either the final race or the opening race of the F1 calendar. After starting in Adelaide at the end of the season, the race moved to the Melbourne street circuit in 1996 for the first round, and a contract signed last September extends it until 2023, although significant subsidies from the Victorian government have made the event more costly than profitable, drawing criticism from taxpayers.
The Australian Grand Prix is organized by the Australian Grand Prix Corporation (AGPC), the same organization that organizes the MotoGP event, and it depends on funding from the Victorian State Minister of Tourism. Since the race moved to Melbourne, taxpayers have been footing the bill. The first edition cost €14.77 million, according to a document published by an Albert Park advocacy group, and subsequent editions have remained below €10 million. It was not until 2001 that the price exceeded the €10 million threshold, reaching €22 million in 2005 and more than double that, €46 million, for the 2015 race. The AGPC's annual reports provide an overview of recent spending: between 2010 and 2015, the figures for the Australian Grand Prix are shown in the table below.
Since 1996, Victorian governments have paid more than $1 billion to keep the Grand Prix alive. A more troubling observation comes from the Herald Sun, which reports that senior officials pay the FOM an amount equivalent to the Grand Prix's revenue, meaning that the event is running at a loss. In 2015, the revenue didn't even cover the FOM's demands. It's no surprise that Victorian taxpayers are appalled by these figures, and comments from Premier Daniel Andrews are unlikely to appease critics. In a Facebook video, Mr. Andrews claims that the race generates an economic return of $35 million, according to a recent study, and provides invaluable international visibility. He describes the contract with F1 as “good value for money.”
A closer look at the data reveals a different reality. An audit conducted by Ernst & Young on the 2011 Australian Grand Prix found that of nearly 110,000 unique attendees, only 9,000 were overseas visitors, compared to 25,000 Melbourne residents. The event generated an economic impact of around €30 million for the city and region, with each tourist spending an average of less than €1,000. In short, the Australian F1 Grand Prix is not profitable and does not generate enough economic benefits to justify its cost.
What about the MotoGP race at Phillip Island? Although the sums involved are smaller, Victoria's share in 2014 was 57%, very close to the 60% share for F1. Comparing the two events in 2014, the cost per spectator was €88 for MotoGP (based on 77,900 participants over the weekend) versus €131 for F1 (based on 314,900 participants). Revenue per spectator also differed: a MotoGP fan brought in €66, while an F1 fan brought in €84. This difference reflects both the reduced capacity of MotoGP and the price of tickets: around €200 for a three-day grandstand seat at the start/finish line for MotoGP, compared to €215 for a comparable four-day seat in F1. In short, two- and four-wheeled sporting events are costly for the region, which is trying, against the will of taxpayers, to preserve the only global advertising platform it has. This problem is not unique to Australia, but F1 remains an expensive spectacle for a country that uses the huge media coverage to promote tourism while reaping only modest economic benefits. The question now is how long this model can survive without causing further collateral damage. Content written by Mickael Guilmeau and published by www.FranceF1.fr.
