MOTORSPORT: Spotlight on GP costs

The V8 Supercar Championship starts next weekend in Adelaide and the Australian Rally Championship in Melbourne, with a new stadium event at Calder Park. At the moment though the focus is on the costs of the Australian Grand Prix, now less than three weeks away as the opening round of the Formula One World Championship.

These costs have come back into the spotlight after the revelation in Melbourne's Herald Sun newspaper last week that the Australian Grand Prix Corporation (AGPC) had struggled to secure a naming rights sponsor for the March 15-18 event.

It reported that international logistics company DHL had declined to take up the sponsorship and flagged that the Qantas name would be attached to the major signage at the Albert Park circuit again even thought the airline did not want to contribute any more money than it already was this year as a lesser sponsor, especially after recently announcing a hefty profit drop.

Within 24 hours the AGPC duly issued an announcement that Qantas had the naming rights again. Not only did this announcement not mention (not unexpectedly) any price for the naming rights, there was no mention of the sponsorship being for any longer than this one event -- usually such deals are for three or even five years.

The pleasure Qantas chief executive Alan Joyce had for the arrangement was expressed very briefly. Coming less than four weeks before next month's event, with little time for the sponsor to properly leverage it, it was difficult to view it as a real deal.

Melbourne's GP has turned in losses of $50 million for each of the past two years and AGPC chairman Ron Walker and chief executive Andrew Westacott have indicated that the loss this year will be at least $55 million, with Walker even going as high as $57 million. These numbers compare with the $1.7 million loss when the GP was first held in Melbourne in 1996, after 11 years in Adelaide.

Despite the escalation of more than 30 times in the annual cost to Victorian taxpayers of the race in Melbourne, Westacott has been quoted by The Age newspaper in the city claiming future increases will be "in line with the consumer price index over the next few years".

About the time of the "news" of the latest Qantas naming rights "sponsorship", The Age reported that the Victorian government wanted to extend the GP contract with London-based Bernie Ecclestone's Formula One Management beyond 2015.

That's despite Victorian premier Ted Baillieu saying, in September 2010 when in opposition, that the annual $50 million a year loss had become "a real worry".

"We would certainly be looking for the GP to improve its performance before 2015 if it is going to survive in this state," Baillieu said then.

Nine months ago Baillieu's tourism minister Louise Asher said Victoria would not be renewing the GP contract with Ecclestone unless the state was given a much better deal.

Asher told a parliamentary committee the Baillieu Liberal government would only negotiate a new contract that "had a lot less in it for my good friend Mr Ecclestone and more in it for Victorian taxpayers".

It is not Ms Asher who is good friends with Ecclestone but fellow (although not an elected representative) Liberal Walker, who engineered the transfer of the GP from Adelaide to Melbourne in his capacity as chairman of the then Melbourne Major Events Company, and who has been chairman of the AGPC for all of its almost two-decade existence.

In stating now, while leading a Victorian trade mission to India, that he wants to renew the GP deal, Baillieu seemed at some pains to stress at the weekend to an Age journalist traveling with him that he "didn't say [in September 2010] that [$50 million] was the price tag [or Liberal cap, for the GP]".

"I said it was a significant cost and we would be seeking to reduce costs," Baillieu said.

Age reporter Clay Lucas highlights in today's editions of that paper Baillieu and Asher's lack of success in reining in that cost since taking office more than a year ago.

The GP has always polarised Victorians and that has been reflected yet again in comments in the latest debate about the value of the GP and the wisdom, or otherwise, of renewing the contract.

Victoria Events Industry Council chairman Peter Jones is a passionate supporter of the GP and his business has handled many entertainment and promotional activities for the AGPC over the years. Welcoming word of the state government's desire to extend the contract, Jones talked of the benefits the GP had on "accommodation, hospitality, catering, transport and taxi and retail services".

"These are all labour-intensive sectors," he said.

The City of Port Phillip, within whose boundaries the Albert Park temporary street circuit sits, was "bitterly disappointed" at talk of the GP staying beyond 2015, saying its residents had "suffered" for 17 years. And the Save Albert Park anti-GP group called the event "a failed business model" that "the government can't come to terms with".

"They (the Liberal government leaders) are hypocrites ... they are full of spin," said SAP's Peter Logan.

The Labor Party, which vigorously opposed the idea of the GP at Albert Park when Victoria -- then headed by Liberal premier Jeff Kennett -- snatched the event from Adelaide, later supported it throughout its decade in power until defeated by the Baillieu-led Liberals.

Back in opposition, Labor's Gavin Jennings would not state his party's specific stance on the GP, other than to say there were more urgent priorities for the government than funding the now massive losses. However, an anonymous Labor spokesman echoed the SAP view of the Baillieu government as hypocritical.

"Mr Baillieu and Ms Asher in opposition routinely complained about the GP and its cost. Now, in government, they are its biggest fans and promoters," that Labor spokesman said.

And John Eren, now Labor's sports spokesman in Victoria, asked: "Is Mr Baillieu doing this for his mate Ron Walker or is he looking after Victorian motorsport fans?"

If these arguments continue to rage up until next month's GP they inevitably will come to a debate about the value of the event's TV exposure.

In the announcement last week of the Qantas naming rights Walker talked of Formula One having a TV audience of 520 million around the world. That 520 million can be divided by 19 (the number of GPs in the world championship last year), producing an average TV audience per race of 27.73 million viewers.

Then there is the question of whether the Australian race is above, below or on that average. In its favour is that it has been, apart from 2006 (because of Melbourne's Commonwealth Games), the opening race of the championship, after an off-season of more than three months.

Working against it, even with the 5pm start of recent times, is that the Melbourne race is at a time unfriendly to most of F1's major markets in Europe.

Any which way, an audience of anywhere around 27.73 million is a fraction of the figures Walker has previously bandied about. He also claimed last week that 4.23 million people in Australia watched last year's Oz GP.

Australian TV's recognised ratings agency, OzTAM, for that race on March 27 last year showed an average audience of 1.112 million in the country's five major capital cities over the duration of the race -- 687,000 on Ten and 425,000 on its digital sister channel OneHD.

The five-capitals average is the industry standard, but not the total audience -- it does not include any regional viewers, who may account for about one-third of the total, and does not incorporate peaks (most likely at the start or finish of the race).

Yet it is a giant stretch from 1.112 million to 4.23 million, which -- if correct -- might have made the Australian GP the most watched single program or sporting event on Australian TV last year. Bigger even than the AFL or NRL grand finals, the Australian Open tennis, the Bathurst 1000. Oh, and perhaps the Melbourne Cup, although that horse race only takes a couple of minutes to run.

Is there any anecdotal or, better still, credible evidence of that?

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