January 23, 2011
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Financial problems have thrown the future of the race into doubt
While the Australian Grand Prix at Melbourne has a contract for Formula 1 until 2015, annual losses and a lack of investment have thrown the event’s future into doubt.
While the 2010 race saw over 300,000 in the grandstands over the three days, the A$49.2m loss per year was a huge worry, and the state government appears unwilling to foot the bill for much longer.
Robert Doyle, Lord Mayor of Melbourne, stated:
"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.
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?
My judgment would be: Get ready. Time's up."
While it is worrying that such a good race is threatened, there is still hope for the Grand Prix. This race has consistently made losses, but the revenue from the event has reportedly brought up to A$180m in economic benefits per year.
On the other hand, the Australian public do not seem to be behind the funding of the Grand Prix as much as us F1 fans would have hoped. A potential $70m loss this year will be a huge deficit to tackle.