Time to kiss the GP goodbye
THE Grand Prix's future has been called into question by Lord Mayor Robert Doyle, who predicts annual losses will soon reach $70 million.
Writing in today's Sunday Herald Sun, Mr Doyle says the race no longer offers the state value for money.
"My judgment would be: Get ready. Time's up," he says of the Albert Park race, which is set for March 27.
Robert Doyle writes:
TWO of my most abiding political memories concern the Grand Prix.
The first harks back to when fresh-faced premier Jeff Kennett, with Ron Walker, snatched the Formula One Grand Prix from Adelaide and brought it to Melbourne.
That should be remembered as a stroke of genius. Victoria had been the rustbucket state for years. The city was in the doldrums.
Kennett had been in power for a little more than a year and our state had not yet recovered confidence or prosperity.
And Jeff and Ron brought us the Grand Prix. Glamour. Excitement. Controversy.
The Grand Prix became one of the cornerstones of an events strategy for Victoria. That strategy today is celebrated and makes Melbourne the No.1 overnight destination in Australia.
But there was controversy: vigils, yellow ribbons around trees in Albert Park and protest meetings.
One huge protest happened on May 15, 1994, and that is my first Grand Prix memory.
There was an angry self-righteous mob baying their opposition to the desecration of their park by these machines of Satan.
And through the seething mob that Sunday afternoon strolled Jeffrey Gibb Kennett just to hear what they had to say.
Jeff tells the story of being spat on, shoved and having a child's pusher thrown at him.
The second memory is of race day itself - the first Grand Prix in 1996. After the race was won by Damon Hill, Jeff strolled insouciantly down Pit Straight. There was an atavistic guttural roar from the grandstand: "We want Jeff! We want Jeff!"
On and on it went. I think Jeffrey quite enjoyed it.
And, over the years, the F1 Grand Prix has become a staple in the packed events calendar for March.
It is a world event. It has a band of faithful followers and draws a crowd of 100,000 on race day.
We have the licence until 2015, after which there are four possibilities.
First, F1 supremo Bernie Ecclestone will pick up his bat and ball and go home.
Despite best endeavours, the notoriously difficult, contentious and cranky Bernie will take the dollars of either an Asian or oil-rich Middle Eastern state. There will be no successful negotiation. End of story.
Second, given Ecclestone's ever more strident calls for a night Grand Prix, it will move to a purpose-built track either at Avalon or Noble Park, or possibly elsewhere Sydney or Perth.
The problem with Albert Park is that it is a 300ha park and a night race means lighting not only for the track, but also for enough of the park to provide patron safety. Too expensive. But equally, the cost of a purpose-built track is potentially $300 million and is probably untenable.
But even if such a track were built, it would not have the same romance or cachet as Albert Park. The Grand Prix would become one of those events we sometimes see out of Asia: empty stands, but a worldwide TV audience of hundreds of millions. To me that wouldn't really be an Australian Grand Prix, just a TV event.
A third option is that the race remains at Albert Park. That would require an upgrade of the park, costing up to $8-9 million.
It would require Ecclestone to accept that the Australian Grand Prix will never be a night race though, with Ron Walker's extremely able negotiation, it has become a twilight race. In its present form, it satisfies both local and TV audiences for real time and reasonable time-zone viewing. Sponsorship and advertising demand that.
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.
Fast forward to 2015, the year the franchise ends. Though the documented benefits for the city may include hundreds of millions of dollars of advertising value, tens of millions of dollars of local revenue, an event that will draw between 250,000 and 300,000 people over three days will come at a cost that will approach 70 million taxpayer dollars.
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?
The fourth and final possibility must be faced. I know of no city that has voluntarily walked away from a Grand Prix, but could Melbourne be the first?
The final possibility is that we decide that it has been 20 fantastic years, the benefits to the city and the state have been enormous, but the cycle has run its course.
It would mean we would need to replace the Grand Prix and major events don't come cheap. Nor, indeed, are there many out there that can be repeated year after year and drive the economic returns we get from the Grand Prix. We should start looking now.
In the end, it will be a government decision and one of the tough ones that Ted Baillieu faces in his first term. Does he undo the legacy of Jeff Kennett, his mentor, in his very first term and, ironically, through the same minister to first get the event, Louise Asher?
My judgment would be: Get ready. Time's up.