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Geoffrey Harris5 Mar 2010
NEWS

MOTORSPORT: How $500 million's been lost

He doesn't say it specifically, but the folly of racing on temporary street circuits is shown by the review of the Gold Coast SuperGP by government-appointed David Williams


Friday motorsport report:

Finally, this week we've had a chance to read in full the report by Queensland events specialist and former bureaucrat David Williams into last year's Gold Coast SuperGP fiasco.

This, remember, was one of two reviews done -- the other by Queensland auditor-general Glenn Poole.

The Williams report was finished at the end of last November but none of it was released until a few weeks ago, coinciding with the revamp of the Gold Coast event, still generally called Indy, as the SuperCarnivale with a swag of international and expatriate Australian co-drivers for October 22-24 this year.

We had been greatly looking forward to digesting the Williams report because of excellent references we had of Mr Williams, a one-time member of the board of the Gold Coast event.

Much of what he covers in his 124 pages has been known for quite a while, so we won't dwell on those matters, but there were several points in the document that caught our attention and deserve an airing.

The first of these is 23 pages into the report when Williams says: "In the 18 years since the first Gold Coast motorsport event in 1991, the total investment by the Queensland government has been $218.45 million. The total estimated economic impact of the event to the Gold Coast is $764.35 million, which is a relatively modest return on investment of approximately $3.50 for every $1 of investment."

Yes, indeed. The economic benefit of investment in such events is expected to be a much higher multiple than 3.5.

Governments forking out the money for these kinds of activities would generally be looking for twice that return.

But it is the $218.45 million "investment" that specifically interested us. This is on an annual street race at Surfers' Paradise, accumulated up to 2008 -- so not including last year's SuperGP, for which at least another $11.6 million (the well-known Queensland government contribution) needs to be added.

Now, taken together with Melbourne's Formula One grand prix on the public roads in inner-city Albert Park, on which Melbourne Herald Sun newspaper columnist Alan Howe reported this week that the accumulated losses are now more than $205 million since 1996, that means that more than $400 million has been spent by two state governments (Queensland and Victoria) on motor racing events on temporary street circuits over the past 15-20 years.

Howe made the point that: "Victorian taxpayers will likely lose at least another $40 million on this month's event, so that figure could be $250 million within weeks."

So nearing $250 million in Victoria, and adding $11.6 million for last year on the Gold Coast to the $218.45 million of the previous 18 years, the combined bill is approaching $500 million.

Half a billion dollars! With next to no permanent legacy from either event. Half a billion dollars would have built a terrific permanent circuit -- or two. One in Queensland, another in Victoria.

There are now moves afoot (half-baked, we'd suggest) in Victoria to move the F1 race to Avalon near Geelong if that event survives beyond the 2015 expiry of its contract.

No such signs of a permanent home for major motor racing on the Gold Coast though.
Something else caught our eye on the very next page (24) of the Williams report.

"The 2009 economic impact assessment found that the most significant downturn in spectators to the Gold Coast motorsport event came from intrastate markets and primarily from south-east Queensland, where the decline in spectator attendance was down 60 per cent on the 2007 event," Williams says.

"Of the 205,000 reported attendance at the event, 52 per cent were spectators while the balance (48 per cent) comprised a range of categories that included guests of sponsors and corporate clients, VIP, media, volunteers, race and support teams, officials, free-of-charge guests, and so on."

Hang on? So almost half the supposed attendance -- or almost 100,000 over four days -- comprised people who were there either on free tickets or tickets paid for by others.

The tickets of corporate clients and guests of sponsors ought to have been, and in all likelihood largely were, paid for one way or another, but how many of these tickets would there have been? At a guess, 5000 to 10,000 a day, over four days, equals 20,000 to 40,000.

Which leaves at least 60,000 -- or 15,000 a day -- free tickets between VIPs, media, volunteers, race and support teams, officials, and -- of course -- free-of-charge guests.

VIPs? Not more than a couple of hundred, surely. Media? Another couple of hundred. Volunteers? A few hundred. Perhaps into four figures. Race and support teams? At most a couple of thousand.

Officials? Perhaps four figures, but surely less than 2000 people.

Free-of-charge guests? If more than a very small percentage of the overall total, and in light of all these other freebies, why?

We're finding it difficult to get the arithmetic to add up in any sensible way.
This is not Williams' fault; rather he would have been working with numbers that he took -- and that he ought to be able to take -- to be accurate.

Herein lies a problem.

There needs to be some serious auditing of attendance figures, not only at the Gold Coast event but others of significance around the country.

As we've asked here before, how can this most technical of sports have been unable to come up with the technology to accurately count crowds? How come the attendances are generally rounded off to neat thousands?

Something similar needs to be done on TV audience figures too? Certainly on figures of overseas viewers.

Williams makes the point -- and bear in mind again that this report precedes the revamp of the Gold Coast event without an international category this year, but with V8 Supercars Australia boasting enormous international reach now -- that there needs to be verification of the claimed TV audience reach of whatever the main category/categories racing at Surfers' Paradise, or other places for that matter.

But that is only part of the picture.

Sure, the organizers and the state governments (or others paying the bills) should know what the TV reach is, but far more importantly there should be strident efforts to get detail on how many actual viewers there are for an event within that reach.

The actual audience numbers inevitably will be only a tiny fraction of the reach, although in time they could amount to a serious following.

But it is the actual, verifiable audience (not reach) that surely is the determinant of the value of the money (usually government/taxpayer money) outlaid.

This is the nub of it all.

We note too that, at page 28, Williams refers to a company, Market Communications Research, having shown that "the primary supporter market for V8 Supercars is male white-collar workers, aged 40-plus (73 per cent), with 30 per cent having a household income in excess of $80,000 per annum".
A few other points from Williams:

>>> At page 39, "The contract between Gold Coast Motor Events Company (our note: the joint venture between the Queensland government and sports marketing company International Management Group, or IMG, which has effectively run the event since the mid-1990s) and A1GP (organizer of the ‘World Cup of Motorsport' that did not show up as it was contracted to at the Gold Coast last October) is unusual in that it was not signed with any of the UK parent bodies of A1GP (A1GP Holdings or A1GP Operations or A1GP Events), but with the Australian affiliate, A1 Grand Prix World Cup of Motorsport (Australia) Pty Ltd."

And: "The decision by GCMEC to sign the A1GP promoter agreement and pay the sanction fee to the Australian affiliate company (a company of very few assets or resources) may make it more difficult to purse any legal action for the return of the sanction fees or any damages claim against A1GP."

And: "The chairman of A1GP (Australia), Mr Alan Evans, advised that he was unaware the contract was signed with A1GP (Australia). Mr Rod Paech, the general manager and authorized signatory of the A1GP (Australia), who signed the contract, had not been involved in any of the negotiations pertaining to the contract."

>>> At page 41, Williams reports that: "On July 10, 2009, one day after Mr Teixeira advised of the liquidiation of A1GP Operations Pty Ltd (UK), GCMEC made its first sanction fee payment of $1.8 million to A1GP's Australian affiliate company, A1 Grand Prix World Cup of Motorsport (Australia) Pty Ltd."

>>> At page 55, Williams says: "The most resounding feedback to the review from the Gold Coast, businesses and residents alike, is that support for the event on the Gold Coast is conditional on having an international component. The clear and consistent message presented to the review was that, although the V8 Supercars are widely supported by motor racing fans, sponsors and TV audiences, there is a need to offer an international motor racing category to provide a point of difference between the Gold Coast motorsport event and other V8 Supercar events across Australia." Will 17 co-drivers, international and expat Aussies, suffice this October?

>>> And, at page 58, Williams reports: "V8 Supercars Australia advised that it has international broadcast agreements in some 140 countries through contractual arrangements with a number of television distribution companies (Appendix 2). However, it has not been possible to verify the coverage of the Gold Coast motorsport event in each country at the time of writing to determine the extent of the coverage and whether it was live, delayed or highlights packages."

Yes, but this was written by Williams at the end of November, little more than a month after the SuperGP.

More than another three months have elapsed since, and what has been done in that time about verifying the international coverage? Nothing we suspect.

Certainly nothing we've heard.

While V8 Supercars Australia claims its racing is seen in 140 countries, it was very coy last October about any details beyond the Seven Network telecast in Australia and on TV3 in New Zealand.

And the Queensland government palmed off inquiries about details of where the SuperGP was seen on the basis that it got all information on the telecasts from V8SA.

Having completed the review he was commissioned to do, the verification of coverage is not a matter for Williams.

Perhaps though it is the kind of thing that should come, annually, under the umbrella of the Queensland auditor-general, Glenn Poole, who did the other SuperGP review.

>>> At page 61, Williams says: "The Gold Coast Tourism Corporation believes that China has the greatest potential for future growth in the international tourism market. The televising of the Gold Coast motorsport event provides a good promotional platform for the Gold Coast into its strongest markets of Australia and New Zealand. Any new international motorsport series event should provide a wider ‘footprint' of television coverage, particularly into the international tourism markets that offer the greatest potential for growth -- Asia, Europe and USA."

>>> A1GP chairman Tony Teixeira, GCMEC then chairman and former Queensland deputy premier Terry Mackenroth, GCMEC then chief executive and IMG representative Greg Hooton, and former Queensland sports minister Jenny Spence emerge from the Williams report in a very bad light.

The report is littered with instances of Teixeira making statements that have turned out to be completely false -- at page 98, in a letter on September 3, Teixeira gives Phil Reeves (Spence's replacement as Queensland sports minister), "unconditional and irrevocable assurances" that A1GP will front at the Gold Coast.

A few weeks later, once A1GP's "withdrawal" from the SuperGP is official, Teixeira says in a press release that "A1GP will refund to GCMEC the sanction fee paid, and will donate A$50,000 to a charity designated by them."

On behalf of Queensland taxpayers, let us make a request: Show us the money, Tony!

How a man of Mackenroth's experience was taken along by A1GP/Teixeira's statements for so long without realizing his folly is beyond comprehension.

On September 8 Mackenroth wrote to minister Reeves that: "A1GP representatives, and in particular their chairman, have been open and honest regarding their financial situation."

Hooton was equally gullible.

On November 22, 2008, the day of the (first) confirmation that A1GP was to replace IndyCars at the Gold Coast in 2009, Hooton had said: "This is really something to look forward to ... A1GP will be the first truly international category of open-wheel racing to head to the Gold Coast."

And far worse could be found in the archives of the Gold Coast Bulletin.
And ex-minister Spence's words on November 11, 2008 -- coincidentally Remembrance Day -- will haunt her for years.

"We will certainly not lose anything with the addition of the A1s," Spence said.
"The audience for A1GP continues to grow each year with the broadcast reaching more than 700 million households across the world during this year's season. Television exposure equals tourism dollars."

What rubbish. Now A1GP is gone, with no reach and thus no audience.
And television exposure alone does not equal tourism dollars.

Targeted television advertising or promotion may, just may, generate some tourism dollars, but television exposure alone won't necessarily generate tourism.

If it did, wouldn't the same be said about the scene of mass murders, natural disasters ... all manner of things that appear on our television screens?

A few final points from the Williams report:

On September 28, less than a month before the SuperGP, sports  minister Reeves was advised by Hooton that ticket sales were down 40 per cent on the previous year's Indy.

On October 15, Mackenroth rang Reeves at 6am to tell him that A1GP was unlikely to arrive at the Gold Coast. The Gold Coast Bulletin was told the next day, and that there would be an expanded V8 Supercar program, and formal announcement was made the next afternoon -- October 17 -- within a week of the SuperGP.

And, it's revealed at page 119 of the report, that the last-minute addition of the Aussie Legends -- famous touring cars and many of their original drivers -- to the event program was a split, rather than unanimous, decision of the GCMEC board.

Lots in this Williams report, and lots of lessons to be learned.

Let's hope they are.

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Written byGeoffrey Harris
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