Melbourne Formula One Grand Prix: beyond the spin the numbers don’t stack up

by Joan Logan and Peter Logan | Apr 6, 2023 | Comment & Analysis, Latest Posts

Victoria commits around $80m dollars a year for Melbourne’s Formula One Grand Prix, an event with no business case and no updated cost-benefit analysis to show if the event generates value for money. Joan and Peter Logan of the Save Albert Park group debunk the spin.

Victorians may remember their then Premier Jeff Kennett assuring them that the Australian Grand Prix would not cost taxpayers a cent when he announced in 1993 that the race would move from Adelaide. He was right. So far it has cost Victorians more than one billion dollars, with a further billion expected to be added to that by the contract‘s end in 2037.

The Australian Grand Prix Corporation (AGPC) has systematically and continuously misled the public with false claims, which have been repeated by the Victorian Government and the mainstream media (with the exception of The Age’s Greg Baum, former ABC radio presenter Jon Faine, and a few others).

International exposure, what exposure?

In a 2002 interview with Jon Faine, the former chairman of the Australian Grand Prix Corporation (AGCP), the late Ron Walker claimed a cumulative world-wide, F1 audience of 55 billion viewers. That was no slip-of-the-tongue, as he had claimed “approximately 55 billion” that year in the AGPC’s annual report.

In May 2002, in a ‘commercial-in-confidence’ letter from the AGPC’s CEO, John Harnden claimed a global audience of “at least 54 billion people”. That figure was, either knowingly or unknowingly, used to gain Federal Government approval for tobacco advertising at the event.

For 21 years, the AGPC shamelessly boasted wildly inflated global TV viewing figures for the entire F1 season as the audience watching its event. Premiers Jeff Kennett to Daniel Andrews repeated these falsehoods, without scrutiny. When pointing this out to Daniel Andrews in 2018 that those boasts were false, and that the Herald Sun had also published their false claims. His reply was, “Well, you can’t believe everything you read in the Herald Sun, can you?”

We got it wrong, but

Responding to a FOI request, the AGPC finally admitted via an email to Save Albert Park in 2018 that it had got its 2017 TV audience figures wrong, stating that “this number referred to the 2016 Formula 1 World Championship Season.” No-one, however, is interested in this admission: not the government, not the opposition and, disappointingly, not the mainstream media.

According to Statista.com, the TV viewers of Formula One (F1) racing worldwide were 445 million in 2021, with each race attracting an average of 70 million viewers. Unsurprisingly, FIA – Fédération Internationale de l’Automobile – cites a higher figure of 1.55 billion worldwide viewers in 2021. But either way, quite a come-down from 55 billion.

Premier Daniel Andrews, has stated that “international exposure” is the most important GP consideration.

Anyone, anywhere, turning on the TV at the weekend seeing F1s going round and round could easily wonder where this event was held. ARAMCO was prominent as were QATAR airlines and other international brands. In other years the MELBOURNE AUSTRALIA signage was prominent, but not so this year. Billboard advertising goes straight into F1’s pocket, so one can assume that any ‘Melbourne Australia’ signage is not in F1’s best (financial) interest.

Economic benefit, what benefit?

Ron Walker did get one thing right when he once admitted this event would never make a profit because it’s held on a temporary circuit. In 2022, it cost Victorian taxpayers $43m for the pull-down of the race infrastructure alone.

The race also disrupts local sport for up to four months annually, causing clubs to lose potential members, home-ground advantage, and revenue. Government and the media have simply ignored their concerns, so the public continues to think – as Jeff Kennett repeated – that the event’s impact is just for four days each year. Government and media must believe young males driving aggressively at speed on park roads over four days does more for a Victorian’s long-term health than having other men, women and children participating in local sport all year round.

The Victorian Government has committed more than two billion dollars in total for an event where the only cost benefit analysis (commissioned by Victoria’s Auditor-General in 2007) showed the grand prix race generated a net economic loss to Victoria.

Instead of following up with recommended annual updates, the government commissioned a confidential economic ‘impact’ study. Economic impact studies ignore costs and can include dubious assumptions (such as Victorians leaving the state in droves to go to another grand prix). They tend to always come up with a positive figure.

Natural disasters – and the GP – do have an impact, but these disasters – like the F1 race – cause a net loss to the state in both economic and financial terms.

It is obvious: the AGPC wanted to avoid the tag of a failed business. Government – and the media too – continue to boast Grand Prix economic ‘benefit’ claims.

Record attendance, what attendance?

The AGPC published attendance numbers as ‘fact’ for ten years until the Save Albert Park instigated Ombudsman’s investigation in 2006 found them to be just estimates. This shows intent to mislead. When asked why at a Victorian Civil and Administrative Tribunal (VCAT) in 2007, the GP’s representative claimed turnstiles and scanners are “cost prohibitive”. Subsequent FOIs revealed no costings had ever been done.

Through an FOI request, the AGPC refused to reveal how it estimates its numbers, citing “commercial in confidence” and its competitors “could use that knowledge to their advantage.” The AGCP revealed that its crowd counting methodology is:

kept under extremely tight security, is password protected and known by only three people”, namely the General Manager, the CEO and the Finance Manager.

The AGCP went on to claim that if the documents became available to its competitors, “they would be likely to use the information in those documents for their own advantage and to the corporation’s corresponding disadvantage” and that “the estimated attendance methodology is highly commercially sensitive and valuable”.

At a 2012 VCAT hearing, the GP’s representative said using turnstiles would be an “unnecessary additional cost”. He also said he had no idea how AGPC competitors count their attendees, despite him having been to AFL matches at the MCG and having his barcoded ticket scanned on entry.

“National security risk” que?

In 2019, the AGPC claimed it would be a “national security risk” to reveal any data on attendance. However, a FOI response dated 17 October 2019 revealed that “37,562 free tickets were issued to schools and education programs and 3,539 to others”. This equals a total of 41,101 free tickets issued, but doesn’t say anything about the number of ticket holders who actually attended.

In a 2019 FOI request, we asked for ticket “sales” numbers for general admission, corporate and grandstands but were given a four-day “ticketholder” figure of 324,100. Suspecting the AGPC included staff in that figure we challenged this and was then given a ticketholder “sales” figure of “260,100”. The difference is 64,000.

The total general admission number for the ticket-holders is 208,543 and 144,543 for ticket sales which, we’re told, does not include “accreditations”. The difference is 64,000.

We also know that 16,000 staff are ‘counted’ every day, so 16,000 x 4 = 64,000, which is the difference between the number of ticket sales and ticket-holders.

In other words, it appears clear that the 41,101 free tickets issued for 2019 were included in the AGPC’s ticket ‘sales.’

The attendance numbers is a fairytale. Yet, the media continues to incorrectly publish GP estimated attendee numbers as fact. It does not question why the AGPC is the only sporting organisation to not do an honest attendance count.

The billion dollars lost on the Australian Grand Prix is an example of state incompetence as well as wilful ignorance of its own agency’s mendacity. With bipartisan support, the media has failed to hold the government to account. Victorian taxpayers need to hold the AGPC, the Government and the mainstream media’s reporting to account.

Disclosure: The authors are both active members of the Save Albert Park group.

Grand Prix, Supercars 500: public pain, private gain

Joan Logan is an ICU nurse in a public hospital, former state cross country champion and triple winner of the Zatopek 10,000 metres, also a part time farmer. She's a lifelong supporter of public access to parks which brought her into the Save Albert Park campaign, where she is the FOI officer.

Peter Logan is a member and spokesperson of Save Albert Park and a farmer. He was previously a logistic manager in Defence, and an independent local government councillor and deputy mayor in the City of Port Phillip. He’s also a life member of the South Melbourne Athletic Club.

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